BusinessDay 07 Nov 2017

34 BUSINESS DAY
C002D5556
Tuesday 07 November 2017
NEWS
Banks shun real estate as lending rates...
Continued from page 1
the high percentage of nonperforming
loans (NPLs) within
the banking system that have
left the banks with considerable
quantities of property that were
used as collateral to secure a lot
of the historical borrowing that
took place prior to the recession,”
Okoye said.
Okoye says banks are now seeking
to off-load these distressed
assets which will worsen the situation
in a market struggling with
falling prices and rising number
of empty properties.
In the commercial office space
market, the new prime Ikoyi and
Victoria Island space commands
rent as high as $750 p sqm, but
rents for Class B space formerly
classified as A space have fallen
from a high of up to $900 per
square metres a couple of years
ago to as low of $450 p sqm in order
Rail freight traffic down 49% in...
Continued from page 1
C&I Leasing, Fidson, May & Baker lead NSE...
Continued from page 1
ies Plc achieved 144.3 percent
gain ytd to N45.2; while Dangote
Sugar Refinery Plc recorded 151.2
percent growth to N15.30.
As at September 30, analysis
of transactions on the Nigerian
bourse shows a record high of
N1.65 trillion with foreign investors
accounting for N783.34 billion
or 47.4 percent.
While the market rallies Pension
fund administrators (PFAs)
in the country are largely underweight
in exposure following the
allocation of just 8.7 percent of
their assets to listed stocks at the
end of September.
A new National Pension Commission
(PenCom) regulation prescribing
a new multi-fund structure
to remain competitive, representing
about 50 percent drop in rental
values.
David Mbah, Sales Consultant
at Fine and Country, recalls that
“in 2015, the asking rent at the big
shopping malls was between $900
and $1,200 per square metre; in
2016, it dropped to between $700
and $800 per square metre; now,
it is as low as $600-$750 per square
metre,” predicting that this may go
down further as more spaces may
be coming to the market in the
short term.
The retail sector is not spared
as asking rents have also dropped
significantly.
Besides the big malls which
have seen upwards of 40 percent
vacancy rates, Apapa Mall, Circle
Mall and Silverbird Mall have also
taken a hit with vacancy rates at 35
percent, 27 percent and 31 percent
respectively.
But The Palms has continued
corresponding period, the actual
freight traffic dropped by 33.25 percent
from 24,209 in Q2, 2016.
Ayodeji Ebo, managing director,
Afrinvest Securities limited, attributed
this to the volatility of foreign
exchange experience during the
period before the introduction
of exporter and investors forex
window.
He told BusinessDay by phone
that although there has been an
improvement in FX availability,
it may not translate to immediate
resolution of business.
The NBS report revealed that
Fertiliser led the freight traffic as
the volume stood at 7,059 tons in
second quarter 2017, an increase of
179.78 percent compared to 2,523
tons in the corresponding period of
2016. It increased by 96.08 percent
from 3,600 in the preceding period
(Q1 2017).
This was followed by cement as
actual ton freight traffic for cement
stood at 5,400 in second quarter of
2017 from 5,320 tons in first quarter
of 2017. There was no figure for
corresponding period of 2016. In
actual trip freight traffic, cement
led by 8 trips in second quarter of
2017 from 7 trips in the preceding
period.
Johnson Chukwu, managing
director/CEO, Cowry Asset Management
limited told BusinessDay
by phone that Nigeria still has a
grossly inefficient rail system, adding
that the only reliable corridor is
the Abuja – Kaduna gate.
Chukwu said for the country
to reduce cost of business and
improve competiveness it needs
multi-modal transport system. He
said the government should consider
public private partnership
and identify commercially viable
corridor as option to improve the
transport system.
The number of passengers who
travelled via the rail system stood at
L-R: Nwamaka Onyemelukwe, Nigerian franchise public affairs and communications manager, Coca-Cola Nigeria; Kola
Garuba, executive director, sales and marketing, BusinessDay; Clem Ugorji, public affairs and communications director,
West Africa business unit, Coca-Cola Nigeria; Adeola Ajewole, advert manager, BusinessDay; Oghenevwoke Ighure,
executive director, digital services, BusinessDay, and Linda Okondo, communications manager, business unit Coca-Cola
West Africa, during BusinessDay team visit to the company’s head office in Lagos.
Pic by Pius Okeosisi
for Retirement Savings Account that
encourages greater equity exposure
allows a maximum of 30 percent
exposure to equities for Fund I, up
from a 25 percent cap under the old
structure.
Pension Funds had gross assets
of N7.16 trillion as at September
2017. In 2007, when equity prices
were rising rapidly, about 30 percent
of pension fund assets were
in equities.
The fall in equity markets in late
2008 and into 2009 caused a rotation
from stocks to bonds as PFAs
became extremely risk averse.
“Unlike pension fund managers
in other emerging markets,
Nigerian PFAs’ allocation to equities
remains very shy at less than
10 percent which suggests that
pension assets may have missed
596,792 in second quarter of 2017.
This show a 22.30 decrease compared
to 768,093 in first quarter,
according to data from the NBS.
When compared with the corresponding
period of second quarter
2016, it dropped by 19.66 percent
from 742,826 (Q2 2016) passengers.
The Lagos Mass Transit Train
service from Iddo/Apapa to Ijoko
recorded the highest number
with 427,760 passengers while the
Minna to Kaduna Train Service
recorded the least with 573 passengers.
Similarly, a total of 1,866 trips
the 37 percent year to date rally in
the equities market. Tier-1 bank
stocks like UBA, Zenith and GTB
have seen stronger growth in price
appreciation. The shy allocation
to equities perhaps explains why
the average return on pension
assets has been in early teens of
14 percent despite the sterling
performance of the market and
relatively high yield environment,”
said Abiola Rasaq, head investor
relations, the United Bank for
Africa (UBA).
In the third-quarter (Q3) to
September 30, 2017, the Nigerian
Stock Exchange (NSE) achieved
about 130.33 percent increase
in average daily value of stocks
traded on its platform.
This was valued at N5.72billion
($18.71) million compared to
N2.48 billion in the corresponding
period of 2016, according to the
its 0 percent vacancy streak with a
client-friendly pricing. It has also
welcomed global clothiers, Tommy
Hilfiger, which has given shoppers
more variety.
Okoye noted that demand for
prime land did not change in the
third quarter of the year, pointing
out that prices have remained
stable over the last year, showing a
growth rate of only one per cent in
both Naira and USD terms.
At the moment, prime land
average sales prices in Eko Atlantic
City is N524,000 / $1,700 per square
metre, Banana Island, N385,000 /
$1,261 per square metre, Victoria
Island, N380,000 / $1,250 per
square metre, Ikoyi, N369,000
/ $1,210 per square metre, Lekki
Phase 1, N195,000/ $640 per
square metre, and Oniru, N168,000
/ $550 per square metre.
Eko Atlantic remains the most
expensive of the locations with a
37 per cent premium above neighbouring
Victoria Island.
“Many properties remain unoccupied
and vacancy factor has
gone up 4.7 percent to 174 in
the third quarter of this year, up
from 172 in Q2’17,”said Bismarck
Rewane, CEO, Financial Derivatives
Company in his monthly
economic review.
Vacancy factor index (VFIX) is
an indicator of the state of the real
estate markets in the upper class
neighbourhoods such as Lekki,
Victoria Island and Ikoyi in Lagos
which are close to the central business
districts (CBD) or downtown
areas of the metropolis. VFIX is
used to show the rate of increase
in the number of vacant properties
based on the housing stock in
a given area.
Though Rewane expects demand
for prime properties to pick
up as inflation gradually declines,
and also expects a significant
turnaround in the market at the
end of the first quarter of 2018,
the developers still have the challenge
of declining lending to the
construction and real estate sector.
were embarked on via the rail
system in Q2 2017 as against 1,755
trips recorded in Q1 2017 and 1,588
in Q2 2016 respectively. The Lagos
Mass Transit Train service from
Iddo/Apapa to Ijoko recorded the
highest number with 1,002 trips
while the Port Harcourt to Kano
Train Service recorded the least
with 2 trips.
Rail transportation actual passenger
from Kaduna (Rigasa) to
Abuja (Idu) Train Service was
76,820 in second quarter of 2017,
reflecting a decline from 86,966 in
first quarter 2017.
NSE Q3 fact sheet. In the 52-week
period to September 2017, the
average daily transactions at 3,999
rose by 13.43percent against 3,525
in Q3’16.
Gains in the equity market
saw the NSE All Share Index (ASI)
reach a three-year high, while
the total market capitalisation
climbed to N19.62 trillion ($64.16
billion), representing an 18.73 percent
increase from N16.52 trillion
($54.04 billion) in Q3 2016.
The equities market witnessed
increased inflows as investors
took position in value stocks
ahead of the third-quarter (Q3)
earnings releases as well as end
of the month rebalancing of portfolios
by fund managers.
Third-quarter earnings season
brought some strong results from
leading banks and non-banks.
Also, United Capital analysts
Saudi turmoil drives...
Continued from page 4
US dollar at the newly created Investors’
and Exporters’ window
on Monday, while it continue to
tared tightly at N306 per dollar
at the CBN window.
The country’s external reserves
currently sit at a twoyear
high of $33 billion, according
to CBN data.
At a Nov. 30 gathering, Saudi
Arabia, Iraq and other major
suppliers are expected to make
the case for extending the limits
beyond their March expiration.
The purge in Saudi Arabia
(under the guise of an anticorruption
push) eliminated
potential rivals to Crown Prince
Mohammed bin Salman and
included a member of the royal
council overseeing state oil
producer Saudi Aramco and
one of its directors.
The arrests of princes, government
ministers and billionaires
may cast a shadow
over the Nov. 30 OPEC meeting,
analysts say.
Meanwhile, the minister
for Nigeria’s oil-producing
Delta region said on Monday
the government was ready to
meet militants days after they
called off a year-long ceasefire
on Friday.
Usani Uguru Usani asked the
Niger Delta Avengers to be patient
and said the government
was pushing through development
schemes in the southern
territory where rights groups
have long complained about
poverty and pollution.
Nigeria pumped some 1.861
million barrels of crude oil per
day in August, according to
most recent data from OPEC, as
production recovers from militant
attacks last year. That’s 8
percent higher than it pumped
in July and 20 percent higher
than the 1.557 million barrels
daily pumped in 2016.
“I wouldn’t expect a change
of strategy for Saudi Arabia” in
terms of production and OPEC
policy, Rupert Harrison, chief
macro strategist at BlackRock
International Ltd., said in a
Bloomberg television interview
monitored by Businessday.
“But clearly the risk is always
from disruption, and that’s the
uncertainty that hangs over this
and is always very hard to call.”
expect the equity market to stay
upbeat “as economic fundamentals
continue to improve on the
backdrop of the recent oil rally.”
While the equity market is
poised to sustain the recent rally,
analysts have called for a better
understanding of the investment
environment so that pension contributors
could get more value on
their savings.
“Even as PFAs’ conservative appetite
which is aimed at preserving
value for contributors is appreciated,
return on assets may become a
major benchmark for competition
as contributors seek real positive
return on their pension savings to
accommodate the inflationary environment.
And should the transfer
window eventually happen, pressure
may mount on PFAs to deliver
competitive return on investment,”
Rasaq added.