Going by the current economic realities, there are indications that some of the retail mall projects scheduled for completion before the end of this year may not be feasible. These projects, nine in number, are expected to provide an additional approximately retail space of 65,000 square metres to the already existing malls in Nigeria.
The new shopping mall projects are Benin Mall in Edo State, Capital and Novare malls in Abuja, Silver Valley mall in Port Harcourt, Royal Gardens, Twins Lake, Victoria Plaza, Westfield and Lennox malls in Lagos State. While the promoters planned the delivery of Novare Central, Silver Valley, Twins Lakes, Westfield and Lennox malls for 2018, others were not specified. Investigation by New Telegraph shows that a few days to the last quarter of 2018, some of these projects have been put on hold. Factors such as slow growth of the economy, funding challenges, forex issues, inflation and continuous depression in the real estate sector despite 1.5 per cent growth of the nation’s Gross Domestic Products (GDP) have been blamed for the delay. Besides, major challenge in filling the existing malls in Nigeria coupled with low purchasing power of the people is also a discouraging factor. Speaking with this newspaper, Principal Partner, Kola Akomolede and Company, Mr. Kola Akomolede, noted that the property market had been slow to react even at the end of the nation’s recession. According to him, most the on-going projects during recession were stalled, while many people lost their jobs, adding that scarcity of funds have limited continuation of the real estate projects after the slump. Besides, he stated that now that the economy had come out of recession, not everyone that lost jobs have got them back. “Not all the housing projects that were stopped have got money to resume. Even the facilities they were using, most bank stopped facility to developers. So, it takes time for the economy to recover as far as real estate sector is concerned,” Akomolede said.
In its Real Estate report for 2018, one of the Principal Partners, Ubosi Eleh and Co. Mr. Chudi Ubosi, said that initiators of the retail mall projects did not have a choice but to bite the bullet and complete them. “Rather than raise the debt profile, many are seeking more equity participation and seeking more investors to whom they can sell off part of these projects even in their uncompleted states,” he said.
Nigeria with a population of 180 million people as at December 2017 had a total mall space of just over 500,000 sqm and purchasing power parity of $5,440, according to the 2016’s World Bank data. Ubosi noted that real estate was still depressed like every other aspect of the economy, urging the government to complete its economic recovery programme and ensure it impact positively on the economy. An estate surveyor and valuer, Ubosi blamed high retail rents in the country on number of factors, saying that Nigeria has the most difficult operating environment in the world.
For instance, he noted that investors were being compelled to pay high and multiple taxes from many arms of government, while land values and titling costs are high as a result of concentration of infrastructure and services in city centres. He added that obtaining approval for development had become an onerous task for developers, who have to deal with multiple agencies, performing the same operation. On the outlook, the Broll report stated that the retail sector would continue to face some challenges despite the recovery recorded in wider macro-economic indicators, noting that the effects of a fairly stable naira, reduced inf lationary pressure and the economy’s emergence from recession are yet to have significant ripple effects on the sector.
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