Knight Frank: Nigeria’s Purpose – built Warehousing Demand Estimated at 1million sqm

Nigeria has recorded the highest deficit of one million square metres (sqm) in purpose-built warehousing, Knight Frank’s Africa Logistics and Industrial Update has said. According to the report, the country’s immediate demand for prime warehousing stands at one million sqm across the South West region with supply currently estimated at 300,000 sqm.

The report noted that, occupier requirements were evolving from the traditional owner-occupied warehousing models to now demanding purpose-built better-quality space. “In addition, the agriculture, manufacturing and FMCG sectors have remained active and continue to underpin this demand.”

Partner, Occupier Services and Commercial Agency, Knight Frank, Charles Onyenze, said, “We are on the cusp of achieving a vibrant industrial market in Nigeria. A flight to quality continues to drive occupier requirements, but with stock being limited, developers have had to plug this gap. Still, access to land and low rents remain the key barriers to the growth of this sector.”

The Knight Frank update pointed out that , overall, across the 29 Africa cities it monitored, a huge disparity in rents continues to exist. “At USD 10 psm and USD 9.80, Kinshasa and Dakar, for example, rank as the most expensive cities for prime warehouses in Africa, while Blantyre (USD 2.50 psm) is the cheapest. Luanda, on the other hand, experienced the most substantial fall in average warehouse lease rates, which currently stand at USD 5.50 psm; down from USD 15 psm at the end of 2019. Furthermore, prime rents have remained stable in some of the cities such as Cairo, Algiers and Maputo. “

Industrial assets are also the best performing real estate sector across Africa commanding attractive yields of approximately 12% on average compared to 9% for both retail and offices and 6% for residential.

Senior Analyst- Africa, Knight Frank, Tilda Mwai, said, “Appetite for industrial stock across Africa remains strong, with investors attracted to the sector’s strong income profile and positive market fundamentals such as rising urbanization levels. With limited stock options, developers have had to act fast and plug this gap. Still markets like Nigeria present developers with an opportunity. With sectors such as agriculture and FMCG actively driving this demand, we expect to see a vibrant industrial sector in the near to medium term.”

Knight Frank has grown to become the world’s largest privately-owned global property agency and consultancy company and has a strong presence in Africa with offices in nine countries including Kenya, Uganda, Tanzania, Zambia, Zimbabwe, Malawi, Botswana, South Africa and Nigeria.

Knight Frank LLP is the leading independent global property consultancy. Headquartered in London, Knight Frank has more than 20,000 people operating from 488 offices across 57 territories. The Group advises clients ranging from individual owners and buyers to major developers, investors and corporate tenants.