Photo Credit: Moha Sheikh
A fast-growing technology ecosystem, good interstate infrastructural linkage, and high academic activity have positioned Yaba to become Lagos’ next major business district. These, alongside the region’s proximity to Lagos’ core CBDs, are already driving rapid real estate growth. Our analysts project that over the next five years, Yaba will become close comparable to Lekki Phase 1 in property values. In this article, we will be unpacking what we expect to be the value drivers, with insights on how investors can bridle the existing market challenges and position to tap into the opportunities ahead. But before we dive in, take some time to read our previous article on “Where is Lagos’ next Lekki Phase 1” to catch up on this discussion.
A fast-growing tech ecosystem and a strong tech entrepreneurial presence are fuelling pent-up demand for residential apartments in Yaba.
It’s no doubt that Yaba has become Nigeria’s if not Africa’s silicon valley. We estimate that over 50% of Nigeria’s technology startups have at some point in their startup, sought core technology or support infrastructure in Yaba. Apart from being a tech startup hub, Yaba has also hosted CEOs of the world’s largest tech giants. This includes Mark Zuckerberg of Facebook who visited in 2016, and Jack Dorsey, the former CEO of Twitter who visited in 2019. It is not the private sector that is seeing the tech potential of the region.
The government is also making heavy investments in providing necessary support infrastructure for the region. For instance, last year, the Lagos State government announced plans to develop what will be the largest technology hub in West Africa. The project will occupy 22,000 square metres of land providing 3,000 square metres of cubic optic cable in Yaba. Governor Sanwo-Olu who commissioned the project mentioned that it is a collaborative effort between the State government and two of the world’s largest technology firms – Facebook and Google.
Although most of the companies that started from Yaba have grown and expanded into other regions, the neighbourhood still houses a good number of tech entrepreneurs and their employees. This also includes engineers who are working remotely for foreign companies, who typically have higher disposable income than their contemporaries in other industries. Our interaction with agents shows that there’s been an increased demand for smaller-sized, but well-built serviced apartments in Yaba. This trend has been noted since the pandemic broke out in early 2020, and we do not expect to see the demand slowing down at least in the short to medium term.
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The Lagos-Ibadan railway infrastructure has the capacity to attract over 1,200 people into Yaba every day.
Outside the strong residential demand from tech professionals, the completion of the Mobolaji Rail station in Yaba has also increased the economic impetus of the region. The $1.5Bn project has the capacity of bringing over 588 people to and fro Yaba per trip, with 2 trips running per day and an average travel time of 2 to 3 hours.
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With this train station functioning optimally, our hunch is that a number of Lagos residents who have businesses in Ibadan or Abeokuta will start considering commuting to work from Lagos, and Yaba will become the most preferred residential location due to its closeness to the Mobolaji train station. Additionally, the construction of new bridges alongside the multiple road rehabilitation projects within the Teju-osho/Jibowu and Oyingbo area is creating easier access to other business hubs. Upon completion, these projects will also allow for the parallel running of both vehicular and rail movement around Yaba and will drive property prices higher.
As of today, there are over 9 tertiary institutions, attracting over one hundred thousand students to Yaba annually.
Even before Yaba became the Nigerian Tech hub, it already had over 9 tertiary institutions residents. These institutions were the major attraction for startups as they provided them access to young tech skills, who were mostly students at the University of Lagos and Yaba College of Technology.
The residential demand dynamics in Yaba have changed over the past few years. In the past decade, much of the residential properties in Yaba were family houses of more than 4 bedrooms. Today, there is more demand for smaller-sized units, but acquiring large parcels within Yaba has become extremely difficult.
Joint Ventures are becoming increasingly popular among developers as outright purchases have become very difficult to negotiate in Yaba.
According to Tokunbo Akinhanmi, a leading agent in Yaba, ‘‘Seeing the opportunities that Yaba presents, existing property owners have become very difficult to convince to sell off their lands. Those who are willing to sell, are mostly landlords who have small portions of land that are usually overvalued.’’
For developers, succeeding in Yaba will depend largely on your ability to navigate this tough acquisition terrain. From our experience with market players, well-structured Joint Ventures and acquiring existing properties are some of the approaches that have worked. In our next article, we will be digging deeper into land acquisition and will be sharing more on how new investors can take action in acquiring properties across Lagos’ emerging locations.
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© 2022 Nairametrics
© 2022 Nairametrics