Nigerian city of Lagos is facing a construction slump and a case in point is Eko Atlantic dubbed the largest real estate project in Africa where construction activities have slowed down significantly.
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Christened the “Dubai of Africa,” the so-called city within a city is being built more than 10 square kilometers (four square miles) on tons of sand dredged from the Atlantic Ocean off the coast.
Just last year, it was a sign of the promise of Lagos, when Nigeria was still the continent’s number one economy.
Today it is typically an vastness of sand, interrupted by two forlorn contemporary skyscrapers and a couple of roads lined with young palm trees.
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It is a modest beginning. In the long term, the island is projected to house almost 500,000 inhabitants and see 300,000 others visit every day when it is completed in the next 15 to 20 years.
“The business persists but there is no reason to go too fast in the perspective of a general delay,” said Pierre Edde, Development Director at South Energyx, a subsidiary of developers, the Chagoury group.
The first stage of the billion-dollar project is ongoing, with the construction of a dam to follow.
Edde said some 80 percent of the plots for sale had already been acquired but investors were still guarded and “waiting for optimistic indication to get started” on building construction, he said.
Declining universal oil prices and recurring attacks on crude infrastructure in Nigeria’s south ruthlessly hit the nation’s economy in 2016, thrashing the naira currency against the dollar.
Nigeria, which gets more than 70 percent of its revenue from oil, is now suffering from a devastating shortage of foreign exchange, hitting imports and overseas investment.
The extent of the construction freeze is difficult to assess in the absence of official figures.
But Dapo Abe, who runs an engineering consulting firm in Lagos, anticipated that some 60 percent of key construction projects — both public and private — are at this time shut down.
“No bank desires to loan money, rent revenues no longer make it likely to reimburse construction costs, and there is no return on investment,” he added.
Now the real estate market is left in a mock situation: Landlords of high-class office blocks and apartments are stressed to find tenants in the well-to-do suburbs of Lagos.
Yet at the same time, there is insufficient housing stock for the city’s projected 20 million-strong populace.
According to the Federal Mortgage Bank of Nigeria, 16 million citizens presently need a home in Lagos.
According to Marshall, it is doubtful that the Nigerian economy will rouse the “appetite” of foreign investors in the next two year. In Eko Atlantic, a project with a broader horizon, nevertheless, the outlook is more positive.