Fourth mainland bridge and Lagos real estate market
Infrastructure plays a critical part of a country’s development. Its role in real estate development cannot be overemphasized. As a matter of fact, infrastructure facilities contribute immensely to demographic movement and population growth, and accounts for why economic growth is faster in some cities and economies than others. In other words, infrastructure is a top factor in driving real estate investment and development and it will continue to be an important pillar in discharging good governance to the people by the government.
When determining where real estate investments are made, infrastructure quality is always rated the top consideration. Improving the quality of roads, bridges, pedestrian infrastructure and public transit is among the highest priorities of both the federal and state governments in Nigeria. It is not surprising to see government intensifying efforts towards road construction and rehabilitation across the country and even entering into partnership with the Private sector for infrastructure development.
Infrastructure is not only a top factor in driving where real estate development happens, its upgrades is a strong priority for future investments while offering opportunities for real estate investors to participate in the positive dynamics that follow such investment cycles.
An insight into the economies of the Asian countries, particularly China reveals that several opportunities for real estate market and development arise from infrastructure development. China boast of some of the largest infrastructure projects in the world such as the high-speed railway system and the hydroelectric three gorges dam, simply because the country has been investing heavily in infrastructure over several years.
Other emerging Asian economies are following suit and are rapidly increasing infrastructure investments with the aim of catching up with the more developed world, and to make their economies more competitive and efficient. These countries massive investments in infrastructure over the years has translated into long-term benefit as seen in increase property development, productivity, improve jobs, income levels and several other benefits.
Like I stated earlier, good and efficient infrastructure is a key influencer of where real estate investment goes and where real estate investors focuses. And because real estate significantly drives the economy, government’s efforts are geared towards provision of power, rail, road and bridges construction and rehabilitation with utmost intensity.
The proposed construction of the 4th Mainland Bridge by the Lagos State government is fixated within the above perspectives. Estimated to cost $2.5 billion, when completed, the proposed 38 km long bridge connecting Lagos Island from Lekki, Langbasa, Baiyeku towns across Lagos Lagoon to Itamaga in Ikorodu would in conjunction with existing road networks establish a primary ring road around the state, provide alternative traffic routes and relieve the Third Mainland Bridge particularly of its present traffic congestion and overstretched capacity.
What would this project which would allow direct and unhindered access from Ikorodu and its large suburb to the Island and the Lekki Free Trade Zone area translate into for the real estate market in Lagos?
A major determinant of property value is infrastructure, the presence of which leads to appreciation in property values. Worldwide, property value is an essential aspect of property markets, determined and affected by a number of factors of which infrastructure is very significant. Let’s take Dubai as example. The country regards infrastructure construction as the basis of economic and social development; hence it attaches great importance to infrastructure construction. Since the 70s, the United Arab Emirate government has been investing heavily in infrastructures so as to create a favourable environment for local and foreign investment. Today, the economy of Dubai is the second largest in the United Arab Emirate with real estate investment providing one of the highest Return On Investment for investors who prefer to invest in real estate. No doubt, consistent investment in road, rail and other infrastructures over the years contributed immeasurably to the emergence of Dubai as the most attractive destination for investment, especially in the real estate sector.
One would not be wrong to assert therefore that the construction of the Fourth Mainland Bridge would definitely ensure that businesses, including real estate development and transactions are conducted more efficiently. Businesses are conducted more seamlessly when hiccups in communication and transportation are removed or substantially and significantly removed. Under the improved business environment, people would live healthier and contribute better to the society.
Just like the construction of the Third Mainland Bridge opened up Gbagada, Anthony, Ogudu and Ketu for real estate development and improved rental values, movement and relocation of people to Langbasa, Baiyeku towns, Itamaga, Ikorodu and its suburbs upon the completion of the Fourth Mainland Bridge would increase the population of the areas, and this would subsequently lead to increase in demand for commercial and residential accommodations, increase in property development and property or estate developers. Rental values of residential properties would improve, land prices will skyrocket along the axis, and real estate development along the corridor shall spring up in a manner that would be as if real estate is being reinvented or redefined, all because real estate investors and developers would shift attention to the axis. Real estate investment would be allocated effectively for a long-term positive impact on GDP. As the state economy becomes wealthier, real estate prices would rise and will boost the economy of the state.
In a nutshell, the Fourth Mainland Bridge would have a major impact on businesses and real estate in the Ibeju-Lekki/Ikorodu axis in particular, and the entire state of Lagos in general. The construction shall thus affect the real estate market and asset on a broad basis, an effect which would be mainly associated with the improvement of transportation infrastructure.
Akinyemi is a Partner in Osas & Oseji, a firm of Estate Surveyors and Valuers.