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Retail Sector Overview: What is limiting retail’s expansion?

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On March 6, 2023, the Estate Intel Lagos Pipeline Report is expected to be published.

They examined the performance of the office, residential, healthcare, and retail sectors in it. Here are some predictions for the Lagos office market in 2023.

The retail sector’s current development pipeline

With 60% of the total stock, the retail sector had the largest development pipeline.

Despite this, just 30% of the pipeline is now under active construction, while over 58% of the projects are still on hold.

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This has primarily been linked to the challenge of obtaining sizable tracts of land for retail developments, the subpar return of retail investments over the past few years, and the area’s comparatively low spending power.

Additionally, the devaluation of the naira, a small pool of tenants, rising construction costs, and dwindling disposable incomes continue to be challenges for the Nigerian retail industry.

This occurs mostly in A and B-grade shopping centers, leading to significant exits of foreign retailers who serve as anchor tenants for these malls.

Due to the expanding number of local retail operators, market activity is concentrated on plazas and hypermarket-type facilities, which account for the majority of the stock under active construction.

As a result, Grade ‘A’ malls are likely to contribute to an increase in the market’s capital market activity as significant institutional investors look to unload their holdings.

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As a result, the forecast for the retail industry is bleak, with the lowest end of the market continuing to show promise.

The summary

The performance of the retail, hospitality, residential, healthcare, and office sectors in Lagos is examined in the Estate Intel 2023 Lagos Pipeline Report, which will be published on March 6, 2023.

The retail industry has the largest development pipeline, but 58% of the projects are still in the planning stages because of challenges getting land, subpar performance, and weak consumer demand.

With a bleak forecast for the retail industry as a whole, market activity is concentrated on plazas and hypermarket facilities, while Grade A malls are likely to experience increasing capital market activity.

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