Dangote Refinery and Lekki Deep Sea Port: Setting the Stage for Lekki’s Commercial Takeover
The Lekki Deep Sea Port and Dangote refinery are two of the more significant infrastructural mega-projects currently under construction in the Lagos Free Trade Zone area.
The Lekki Deep Sea Port, which is set to be the largest port in Nigeria, is projected to generate at least 110,000 jobs and is expected to be a major trading point for the import and export of goods in the region.
The $2 billion port, constructed by the Chinese Harbour Engineering Company (CHEC) on behalf of Tolaram group, will have the capacity to handle up to 4 million TEUs (twenty-foot equivalent unit) of cargo per year and will be equipped with state-of-the-art facilities including container, roll-on/roll-off, and multi-purpose terminals.
Unlike the Onne port, the LSP is also expected to have a deep water quay that can accommodate large shipping vessels, including the more modern post-Panamax ships.
The commissioning of the LSP is projected to improve trade efficiency in the state by reducing the reliance on typically congested ports in other parts of Lagos, like Apapa. If, as expected, the LSP improves on sales efficiency in the state, we can expect to see a higher demand for commercial real estate in the Lekki environs.
Additionally, it also creates new opportunities for businesses involved in logistics, transport and warehousing; first, because it reduces the cost of transporting goods across the region. Further, it allows for a wider range of goods at competitive prices, making Lekki and its environs instantly more attractive for retailers to set up shop.
This will drive higher demand, which in turn drives higher occupancy rates and higher rental income for property owners in the area.
In a similar vein, the Dangote refinery is also expected to have an outsized impact on commerce in Lagos. The refinery built by Dangote Group is the largest in Africa and reportedly has a capacity of 650,000 barrels a day.
Its purpose is to process crude oil into a range of refined products, including gasoline, diesel, jet fuel, petrochemical feedstock, and a significant amount of gas and steam, which can be channeled to power neighbouring industries and improve energy security.
The refinery will not only reduce Nigeria’s dependence on imported refined products but will also create new opportunities for workers and businesses involved in the downstream oil and gas sector.
Furthermore, the development of related industries like logistics, engineering and transportation services around the refinery is expected to impact commercial real-estate demand in Lekki. A study by the Nigerian Institute of Estate Surveyors (NIESV) predicts that the completion of the Dangote refinery will increase the value of commercial real estate in the region by 10-15%.
Additionally, the study predicts that the demand for commercial real estate in Lekki is expected to rise by 15-20% in the first five years after completion.
The construction of these two major projects has led to an increased demand for commercial real estate in the Lekki area.
Data from the Nigerian Bureau of Statistics (NBS), indicates that there has been a 45% increase in the number of commercial real estate transactions and a 25% increase in the average price per square meter within the last two years.
And because all that capital needs to be stored somewhere, banks are also getting in on the act, with the Central bank (CBN) even announcing plans for an offshore banking branch in the area.
Naturally, there have been some trepidation over potential traffic congestion, but the Lagos state government allayed fears by announcing plans for the expansion of the seaport access road.