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Lagos, Nigeria
Real Estate Investment Report
Q4 2012 - Q1 2013
1. Wider Economic Trends
2. Introduction
3. Nigeria Economic Overview
4. Real Estate Trends
5. Investment Opportunities
6. About Us
1. WIDER ECONOMIC TRENDS
 Foreign Direct Investment – Even through the recent global economic turmoil and Nigeria’s own reform challenges
and security issues, Nigeria is seeing increased levels of foreign direct investment reaching a record $5.2Bn in the
year to January 2013.
 Increased Lagos Infrastructure Development – The Lagos State Government is making concerted efforts to
improve infrastructure development in the state with a particular focus on much needed transport infrastructure.
Projects are currently being undertaken either by the state on its own or via private sector partnerships.
 Power Sector Reform – The reform of the power sector continues to gather pace. The promises of the economic
benefits that improved power supply is expected to bring to Nigeria are huge.
 Oil and Gas Sector Reform – The disappointment from the long wait for the passage of the Petroleum Industry Bill
has given way to excitement at the promise of capacity development in the oil and gas industry via the ongoing
implementation of the Local Content Act.
 Steady Hands overseeing the Financial Services Industry – The Central Bank of Nigeria supported by the
Ministry of Finance and the Asset Management Corporation of Nigeria (AMCON) have made concerted efforts to
bring about stability in the financial services industry. Financial market reforms have also been undertaken at the
Nigerian Stock Exchange and the Securities and Exchange Commission. Inflation appears to be under control and
falling.
2. INTRODUCTION
Welcome to our latest report which covers the period from October 2012 to March 2013 (Q4 2012 – Q1 2013). Our reports
are focused on the growth of the Lagos Real Estate Market, arguably one of the most vibrant real estate markets in Africa
with huge opportunities for investment and development. The aim of this report is to provide investment professionals,
developers, professional service providers and other stakeholders with an interest in the Nigerian real estate space an
overview of activity in the market. We hope you enjoy the report and that it assists your decision making process in relation
to investment in Nigeria and the Lagos real estate market in particular.
You can watch a televised presentation of this report on CNBC Africa at:
http://www.abndigital.com/page/multimedia/video/power-lunch/1574897-Lagoss-Real-estate-Market-with-Munachi-Okoye
3. NIGERIA ECONOMIC OVERVIEW & WIDER ECONOMIC TRENDS: Q4 2012 - Q1 2013
Economic Overview
The Nigerian economy has faced numerous challenges over the past 6 months which have impacted overall economic
activity up until the end of 2012 and into 2013. Declines in the real growth rates of economic activity were experienced in
both the oil and non-oil sectors. Oil production was less than expected due to security challenges, and floods which

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occurred in the latter part of the year, while the non-oil sector (notably Agriculture, Wholesale & Retail Trade) was mostly
affected by the floods and weaker consumer demand.
GDP Growth
Gross Domestic Product (GDP) grew by 7.1 per cent in Q4 2012, compared with 6.9 per cent in Q3 2012. Q3 figures
showed a decline of 0.38 percentage points from the 7.37 percent recorded in the third quarter of 2012. GDP grew by
6.34 percent in the first quarter and 6.39 percent in the second quarter of 2012.
These growth rates were lower than those recorded
in the corresponding quarters of 2011 being 6.96
percent and 7.50 percent respectively. Therefore the
economy declined by 0.62 percentage points and
1.11 percentage points respectively in the first two
quarters of the year compared to corresponding
quarters in 2011. Increased growth later in the year
was attributed largely to the increase in the
contribution of the non-oil sectors, particularly the
industrial sector.
Inflation
February 2013 inflation rate stood at 9.5%, an 0.5% increase on the January rate of 9%, the lowest it had been on a month
by month basis since early 2008. End-period headline inflation rate (year-on-year), for the fourth quarter of 2012, was 12.0
percent, compared with 11.3 percent for the preceding quarter and 10.3 percent recorded at the end of Q4 2011. Inflation
rate on a twelve-month moving average basis was 11.7 percent for the month of February 2013 compared with 11 percent in
the corresponding quarter of 2012.
In relation to prices, the inflation rate is expected to moderate significantly going forward. The inflation rate is projected to
average about 9.8% through 2013. These projections are driven by the assumptions that the CBN will continue to promote
moderate monetary policy and domestic fuel price stability.
Power Sector Reforms
Huge expectation continues to trail the much awaited reforms in the power sector. The settlement of outstanding benefits of
Power Holding Company of Nigeria (PHCN) staff, the signing of a long term management contract with Manitoba Hydro
International of Canada to manage the transmission network and the purchase and transfer of ownership of Power Holding
Company of Nigeria (PHCN) distribution and generating companies to the private sector all bode well for much needed and
hugely improved power supply in Nigeria.
Oil and Gas Reforms
With vested interests continuing to kick against reform in the oil and gas industry, ongoing delays to the passage of the
Petroleum Industry Bill remain a major disappoint in the much awaited economic reforms process which was expected to
improve revenues from the oil sector, increase efficiency and reduce the endemic corruption prevalent in the sector.
Meanwhile international investment in the oil and gas sector continues to remain on the sidelines due to the uncertainty in
the sector.
Foreign Direct Investment
Even with delays in government reforms, international investment continued to increase with foreign direct investment (FDI)
reaching a record N800 billion ($5.2Bn) in the year to January 2013. The IMF projects FDI to grow to $7.3 billion this year,
$8.7 billion next and $9.6 billion in 2015. Foreign Direct Investment (FDI) inflows increased by circa 207 percent over the
same period last year, highlighting investor confidence in the overall Nigerian economy. Inflows and investment
commitments were focused on infrastructure development, construction of power plants for the enhancement of electricity
generation, mining, healthcare, agriculture and agro-allied sectors of the Nigerian economy, areas where there have been
concerted efforts to turn things around.
With lacklustre economic growth in most developed economies and a downturn in the economic engines of the BRIC
countries of Brazil, Russia, India and China, international investors are showing increased interest in frontier economies and
in particular in the newly created economic block of the MINT countries which include Mexico, Indonesia, Nigeria and
Turkey. This new economic block consists of countries which display strong economic growth supported by a growing

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middle class with economic spending power. The MINT countries are believed to have long term investment potential and
economic benefit. Africa in general also features very prominently in international investor interest with a recent survey
conducted by The Economist Group of 217 global companies based in 45 countries reveals that expansion in Africa is a
priority for two thirds of them within the next decade.
Infrastructure Development
Lagos continues to make giant strides in infrastructure development with ongoing planning, development and
implementation of a number of infrastructure projects including the Lagos Urban Rail Mass Transit project, the Lekki Free
Trade Zone, Lekki-Epe Expressway, Badagry Expressway, Lagos Independent Power Projects, the Lekki-Epe International
Airport, the construction and rehabilitation of roads in all the local government areas of the State, Lekki Seaport and Lekki-
Ikoyi Link Bridge. These projects are either being funded by the state or under Private Sector Partnerships as a joint venture
between private institutions and the state government.
Security Issues
The security situation continues to cause unease with the proponents of violence which started in the northern part of
Nigeria seeking to export their extremist views through violence to the rest of the country. However, there appears to be a
greater sense of purpose by the Federal Government to halt the incessant loss of lives and complete disregard for law and
order. The Federal Government is actively seeking both military and non-military means to end the sporadic outbreaks of
violence and it is hoped that a solution is found soon because without a concerted effort to put an end to the violence, it will
continue to remain an impediment to international investment and attendant economic growth.
3. REAL ESTATE TRENDS
3.1 LAGOS REAL ESTATE MARKETS
The Lagos real estate market continues to benefit from the gains derived from a stable and progressive state government
committed to improving the state infrastructure, rule of law, governance and security. Lagos continues to remain an
attractive destination for real estate investment in Nigeria and Africa based both on land and property appreciation and also
in terms of achievable rental returns. Real Estate investment continues to flow into the retail, residential and office sectors
with ongoing development in up-market residential estates, development of modern shopping malls and numerous new
office developments in the pipeline.
Lagos and Abuja have been listed among the top four cities in Africa with the highest cost of living, according to an index
released by the Economist Intelligence Unit. The survey places Abuja as the second most expensive city in Africa second
only to Luanda, Angola while Lagos comes fourth. The survey backs a recent report by Knight Frank which identifies Luanda
as having the most expensive commercial office space in Africa beating Lagos to second place.
Lekki-Epe Axis
The Lekki-Epe axis continues to develop at a rapid pace, fuelled by the continuing development of the Lekki-Epe
Expressway, a private tolled road that runs from Victoria Island to Ajah and beyond to the outskirts of Lagos. The
expressway has opened up out of town areas on the outskirts of Lagos and has caused price rises in formerly difficult to
reach areas. One has seen the development of numerous residential estates along the axis and as densities continue to
rise, there is an expectation that retail and commercial development will continue apace. The Chevron campus is a well
known landmark and the cache of the Chevron name has attracted a number of middle class estates to be developed in the
immediate area to cater for housing for well paid oil sector workers. Prime residential land in the immediate area can go for
as much as US$700 per m2 however yields are low at circa 5% and below.
The area offers a good road network, good security and is considered affluent. With the opening up of new areas via the
expressway the area continues to draw both renters and owner-occupiers. This bodes well for property and land asset
prices and it is expected that demand pressure will continue to cause price rises for the foreseeable future. Potential
infrastructure development at the Epe end of the axis remains a strong driver for future growth with the Free Trade Zone and
proposed Sea and Airports offering potential for huge future development and economic growth in the area.
3.2 REAL ESTATE FINANCING

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The high cost of financing at rates of 20% per annum and above before fees makes development of real estate projects
challenging in the local markets. In addition, local banks have been put off by the long gestation periods of two to five years
before developments start to yield returns. Banks had traditionally found the short turn-around hyper returns of oil trading
and importation a lot more attractive. Where banks are willing to invest, majority are seeking cash investments of up to 40%
of the cost of development of the project while also seeking long leases or pre-sales of a similar percentage before they
show any interest in providing debt funding for projects. The stringent conditions and high cost of financing continue to
dampen the enthusiasm of local investors for investment in real estate development. The recent failures of numerous oil
trading businesses brought about by the tightening of regulation in the oil trading sector has shown that hyper returns often
come with hyper risks.
However, the silver lining is that international funders and investors are showing greater interest in the local market and are
able to access international funds and use them to finance local developments at rates well below what is available from
local banks. As offshore funds continue to make in-roads into the local market, hopefully, this will encourage the local banks
to re-consider lending to well planned, good quality real estate projects.
3.3 PRIME LAND PRICE MOVEMENTS
Victoria Island, Ikoyi, Banana Island, Oniru & Lekki 1 price per m2– 18 Months (Sept 2011 – March 2013)
With over 18 months of data, we are able to validate price movements for prime Lagos land over a longer period than one
year. Victoria Island prices appear to be on a decline, with a price of N289,000 psqm in late 2011 compared to a current
price of N239,000 psqm to date, showing a decline of 17% over the 18month period and a decline of 7% over a 12 month
period. Victoria Island price falls contrast with Ikoyi prices which in late 2011 were at a discount of 30% to Victoria Island
prices but today, 18 months later, have recovered to a point where they are now 11% higher than Victoria Island prices. Old
Ikoyi prices are now the highest in Lagos at circa N265,000 psqm regaining their position as the most expensive land in
Lagos. Banana Island continues to show the greatest price appreciation over the 18 month period of 63% and an
appreciation of 6% over the last 12 months with the greatest appreciation over the 18 month period in early 2012.
Lekki 1 prices at N116,000 psqm closely match Oniru prices at N120,000 psqm. However Lekki 1 prices have appreciated
28% over the 18 month period while Oniru prices have not moved at all with a negative growth of -2% over the 18 month
period. On this basis, Lekki 1 appears to be benefiting from vibrant residential and commercial demand and the uplift
already taking place with the expected opening of the Ikoyi-Lekki link road. The pricing differential between Ikoyi land at
N265,000 psqm compared to Lekki land at N116,000 psqm or 44% the value of Ikoyi land plus the ongoing strong price
growth of Ikoyi land does suggest there is considerable room for growth in Lekki land prices as the prices of the two areas
are expected to show greater convergence once the link bridge is opened.
3.4 THE RESIDENTIAL MARKET
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
LandPricepsqm
Lagos Island Land Price Movt.(Sept2011 -Mar 2013)
VI
IKOYI
BANANA ISL
ONIRU
LEKKI 1
-17%
+28%
+63%
-2%
+28%

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The Lagos residential real estate market is showing signs of increased vibrancy once again. Lagos continues to remain a
growing and dynamic city with demand for housing being driven by population growth, the attraction to Lagos as a major
West African commercial hub and the growth in the per capita income of Lagos indigenes.
There are signs that even the top end super luxury segment of the residential market broadly characterised by residential
apartments in Ikoyi priced at N160m (US$1m) and above is showing increased vibrancy with new benchmarks of sales
prices of US$2m and above for luxury penthouse apartments being set. Secondary sales of luxury apartments where buyers
have bought off plan for speculation and rental of such apartments is also showing increased activity. The increased
vibrancy in the super luxury segment is a good sign as this segment of the market is usually the last to come out of a slump
and vibrancy in this segment is a pointer to vibrancy across the wider market.
Mid range properties priced in a range of N25m – N50m (US$161K – US$323K) are also doing well with smaller well
positioned, well priced and well finished estates selling quickly from off-plan sales. Poorly positioned/secondary location
estates however continue to sell slowly and the mantra location, location, location is matched with a new mantra for the
Nigerian market - quality, quality, quality. These two characteristics continue to be the watch words for any developer
seeking to sell his product quickly and at a profit.
Low income housing continues to remain the elusive Holy Grail of the real estate residential market. The Nigerian mortgage
market continues to remain at the bottom of indices across Africa for mortgage penetration with the attendant loss in
associated economic benefits that would have been derived from a vibrant mortgage market. Federal and State
Governments aware that this is the segment of the market with the greatest need and the greatest potential positive impact
on social improvement indices have now stepped in with mortgage support plans that could provide a spark to kick-start
growth in the market. We continue to watch closely plans being put in place by the Federal and Lagos State Governments
and finance institutions including the Ministry of Finance and the Central Bank of Nigeria with support from the World Bank.
Meanwhile, developers continue to play their part by seeking to implement rapid build technology to bring down housing
development costs.
3.5 THE COMMERCIAL OFFICE MARKET
Prime commercial office rents in Lagos continue to remain among the highest in Africa, second only to Angola. Victoria
Island and Ikoyi remain the most prestigious office destinations in Lagos with average rents priced at over $500 per m2.
Victoria Island in particular continues to grow as the Central Business District with landmark class 'A' commercial office
developments including Churchgate Towers, Eko Towers and Millennium Towers. During the difficult economic period of the
last 2 years, premium office rents fell from US$1,000 per m2 to US$800 per m2. Rents are now recovering with prime rents
now back at US$1000 per m2 and new developments aiming to let above the US$1,000 per m2 mark. The availability of
good quality space is gradually improving, with several Class 'A' schemes under construction especially along the Alfred
Rewane / Kingsway Road Ikoyi corridor.
The development of Eko Atlantic City continues to move forward as a prime new destination for commercial office and
residential development. The new ‘City’ will still take many years to mature and develop a range of leasing options beyond
super prime. Our opinion is that the ongoing development of Eko Atlantic City will not have an effect on the Victoria Island
CBD for quite a few years to come.
3.6 THE RETAIL MARKET
The retail market still remains the darling of the real estate sector supported by the growing middle class with cash to spend.
The sector is currently characterised by attractive returns coupled with high financing barriers to entry for the development
of modern shopping malls hence attracting institutional funds who seek large projects to absorb dollar denominated funds
that have been sitting on the side lines waiting for the right opportunities.
Actis an international fund was the trailblazer in the development of modern shopping malls in Nigeria initially developing
The Palms, Lekki in partnership with the Persianas Group and more recently developing the Ikeja City Mall in Ikeja. There is
however considerable room for smaller malls requiring less financing and local players such as the Artee Group are seeking
to roll out a smaller mall concept across Nigeria. UACN Property Development Company has also entered into the retail
shopping mall sector with plans and early stage development of the Festival Mall at Festac on the Lagos Mainland and
Victoria Mall in Victoria Island.

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The fundamentals of the growing middle class do fortunately provide retail opportunities along the entire spectrum of the
retail experience from the traditional market format as found in the re-vamped Tejuosho Market to the new enclosed modern
malls that provide a much enhanced shopping experience. There is also room for much smaller shopping malls with fewer
shops. What differentiates all these new formats from the old is the willingness to offer an improved shopping experience in
an innovative setting.
4. INVESTMENT OPPORTUNITIES
MCO Real Estate is seeking expressions of interest from funders and investors for the following schemes:
Sector : Retail Shopping Mall
Description : Modern enclosed shopping mall in the heart of Lagos Mainland. Gross Build Area of
16,666m2 on 18,478m2 of land. Land currently used as commercial warehouse space
Location : Lagos Mainland
Funding Requirement : US$10,000,000
Sector : Residential Housing Estate
Description : Construction and sales of affordable housing estate consisting of 2 and 3 bedroom flats
with 1 bed staff room on an approx. 12Ha site in Abuja. Financial sourcing and
discussions starting immediately for a planned site start: Q4 2013. Phased development
of site with overall three (3) years to completion
Location : Abuja
Debt Requirement : US$9,000,000
Equity Requirement : US$9,000,000
Sector : Luxury Residential Apartment Block
Description : Development of 18 luxury apartments in four blocks of three storeys each on a 5,123m2
site
Location : Ikeja, Lagos
Debt Requirement : US$3,000,000
5. ABOUT US
MCO Real Estate ('MCORE') is an Africa focused real estate & infrastructure investment & financial advisory firm that
provides financing, strategic investment advice and operational know-how to develop large scale investment opportunities
across the real estate and infrastructure sectors. We evaluate early stage opportunities and package them to make them
‘investment ready’ prior to sourcing for equity and debt financing on behalf of corporate entities, financial institutions,
governments, high net-worth individuals and other public and private entities to enable them develop, acquire and/or invest
in projects. MCORE is focused on two main areas;

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(A) Acting as an intermediary to sources financing for those seeking funding to develop real estate projects
(B) Introducing investment opportunities to equity investors and lenders seeking viable real estate projects to fund or
invest in.
We believe that by partnering with MCORE, we will afford you a level of expertise and experience that will avail you a much
greater probability of achieving success. You can contact us via email at info@MCORealEstate.com or via our website at
www.MCORealEstate.com for further information.
6. Contact Us
Munachi C Okoye
Managing Director
MCO Real Estate Limited
5th Floor Mulliner Towers,
39 Alfred Rewane Road
Ikoyi, Lagos, Nigeria
Tel: +234(0)806 924 5688
Email: info@MCORealEstate.com
Web: www.MCORealEstate.com
Important Risk Warnings and Disclaimers
This document is based on information obtained from sources which MCO Real Estate Limited (‘MCORE’) believes to be
credible but which it has not independently confirmed. MCORE, its advisors, directors or employees do not make any
assurances, guarantees, representations or warranties as to its accuracy, reasonableness or completeness and neither
MCORE nor its advisors, directors or employees accepts any liability whatsoever (in negligence or otherwise) for any loss
howsoever arising from the use of this document or its contents or otherwise arising in connection with this document. The
opinions presented in this note may be changed without prior notice or cannot be depended upon if used in the place of the
investor’s independent judgement.