When you think about the most expensive offices space in the world,
cities like New York and London,with their reputations as global
financial centers, spring to mind. However, when it comes to pricing,
Lagos, the commercial capital of Africa’s largest economy has managed to
find a comfortable spot among them.
Rentals for prime office space in Lagos (Ikoyi)
is up to $90 per sq. ft per annum this year, above those seen in Midtown
Manhattan in New York where rents are closer to $76 per sq. ft per
annum, according to new data by CBRE, Broll and JLL, real estate firms.
They are also trailing the $96 per sq. ft rents seen in the City of
London and more than four times higher than prime office rents in
For yield-seeking real estate investors, the
Lagos opportunity might appear attractive at first glance. But the
factors behind the numbers are worth digging into.
Gross inadequacy of real estate supply has acted
as a major driver to high rents in the past decade. Less than 650,000
sq. ft. (60,000 sq. meters) of prime office space in fewer than 10
high-rise office buildings in Victoria Island and Ikoyi existed in Lagos
prior to 2010. Other office towers did exist in the old Central
Business District, but their glory days laid in the late ‘80s and ‘90s.
As age and congestion began to set in and
landlords refused to refurbish, corporates relocated to residential
office conversions in Victoria Island.
Consequently, demand began to
outstrip supply, allowing the few owners of prime office space get away
with seemingly ridiculous rentals.
Even though there is currently up to 1.9m sq. ft.
(180,000 sq. meters) of office space to be completed over 24 months,
investors are still checking to see if there’s room for more....continue reading...http://qz.com/422003/why-office-space-in-lagos-is-more-expensive-than-new-york/