2020 Outlook | Tayo Odunsi

2020 Outlook of the Real Estate Market

Tayo Odunsi, CEO | Northcourt Real Estate

Real Estate & The Economy

GDP, Real Estate & Construction Growth

4.00

2.352.9

2.1

-0.36

-2.06 -2.24

-1.30-0.52

0.55

1.401.92 1.95

1.50 1.812.38

2.01 1.942.28

6.75

7.83 7.578.26

6.46

7.577.17

7.59

6.34

7.216.79 7.04

5.63

6.836.5 6.6

5.58

6.44 6.21

4.34 4.5

3.223.58

4.13 4.3

3.09 3.414.18 4.25

3.043.49

4.044.51

3.013.48

4.094.45

3.01

-4.00

-2.00

0.00

2.00

4.00

6.00

8.00

10.00

Q1 201

5

Q2 201

5

Q3 201

5

Q4201

5

Q1 201

6

Q2 201

6

Q3 201

6

Q4201

6

Q1201

7

Q2 201

7

Q3 201

7

Q4 201

7

Q1 201

8

Q2 201

8

Q3 201

8

Q4 201

8

Q1 201

9

Q2 201

9

Q3 201

9

GDP Growth, Construction and Real Estate Contributions (%)

GDP Growth Real Estate Contribution to GDP Construction Contribution to GDP

Price Growth + 2020 Forecast

10.61

1.360.94

1.91

1.02 0.85

1.541.19

4.48

0.95

2.39 2.65

0.54 0.420.94

0.62

1.320.7 0.59

1.07 0.83

3.09

0.66

1.65 1.83

0.970.56

1.250.82

1.75

0.94 0.781.42

1.1

4.11

0.87

2.19 2.43

0.94 0.9 0.8

2.1

0.6 0.8 1

1.8

0.90.5

0.9 11

1 1.01 0.91

2.47

0.69 0.931.2

2.13

0.990.62

1.07 1.12 1.11

6.306.90

7.80

4.904.30

5.40

6.30

2.70

-1.60

0.80

1.802.28

-4

-2

0

2

4

6

8

10

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

All Property Price Growth

Lagos (Total) (%) Lagos Island (%) Lagos Mainland Abuja National GDP Growth

Factors to Impact Real Estate in 2020

EFCCPolitical- Reduced political spending- Watchmen: EFCC, TSA, 100M Threshold, FIRS- 20% reduction in budget for housing capital expenditure- Directing exchange rate policy

100M Threshold

Economic

- Low, but improving purchasing power- Demand for indirect commercial real estate- Improved construction activities, resulting to higher

construction costs- Access to finance (mortgages & construction finance)

TSA

FIRS

Social- Change in taste and requirements- Reduced activity of HNIs- Emergence of HENRYs- Migrations creating more investment property and less use

property

Technology & Environment

- Sustainability requirements on the rise- Adoption of technology in construction, real estate

management and brokerage - Environmental pollution impacting Port Harcourt market

Sub-sector Forecasts:Challenges

Residential- Some regulation to enter

sector- No social or affordable

housing policy to support its emergence

Office- B & C grade office will lose tenants relocating to A-grade

- Co-working & conversions to continue to steal market-share

Retail- Few malls are getting tired and need to renew novelty

value to keep up- Proliferation to lead to apathy

in some locations

Industrial- International entrants are self-building

- Local developers lack expertise on contemporary industrial space development &

management

Hospitality- Too susceptible to economic &

environmental shocks

Industrial- Increasing demand for warehousing &

logistics facilities- Introduction of Grade A features

Office- Improved occupancy rates

- Increased migration of tenants to new Grade A office buildings

- Improved awareness on sustainability & energy efficiency

Retail- Focus on family

entertainment features- More local & international

brands to enter

Hospitality- New branded and boutique hotel

openings & starts- Room rates to increase

Sub-sector Forecasts:Opportunities

Residential- Smaller housing units

- Mixed-use developments- Student Accommodation

General Notes

§ Yields will favour operational real estate having development and business income. Example – Student Accommodation, Entertainment Centres (Family Entertainment Centres, Lounges, Co-working

§ Construction costs to rise by mid-year as development activities rise

§ More international entrants in retail, hospitality and proptech

§ Finance bill once operational to favour indirect real estate investment including REITs amongst other factors pushing for REITs

§ Recapitalisation of mortgage banks and insurance companies to create traction in those sectors which have positives for real estate

§ While Government spend on housing is budgeted to reduce (20%), activities of agencies like NMRC and FHF are expected to ramp up

§ A general shift from HNI-led market to a middle-income-led market has begun, a de-focus on oil & gas, to the real sector (Entrepreneurs, investment bankers, technology, agriculture, influencers, entertainers etc.)

2020 Global Property Growth Rates

*Growth rates are not adjusted for inflation or currency differences* Computed assuming all countries grow at Nigeria’s forecasted growth difference

between 2019- 2020, which was computed as 11% Source: Global Property Guide, Northcourt

1.37% (Canada)

1.49% (South Africa)

2.65% (Nigeria)

2.00 (Ghana)

0.46% (UK)

1.23% (US)

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

0 1 2 3 4 5 6 7

2020 Forecast Property Growth Rates

©Northcourt Real Estate

Thank YouTayo Odunsi

tayo.odunsi@northcourtrealestate.com+234 802 325 0289

@tayoodunsi

@northcourt_rewww.northcourtrealestate.com

5B Adewale Kolawole Crescent, Lekki Phase 1 – Lagos01-291 0707