Quality Properties - Mostly Vacant

1. Vacancy Factor up to 172
Quality Properties
Mostly Vacant

2. VFIX up 4.2% from 165 in March to 172 in June 2016
A lagging indicator – yet to respond to policy changes
Lekki has the highest vacancy rate at 65%
The Ikoyi bridge a major catalyst
Leading to excess development
Residential index rose by 6.8% q-o-q, commercial index remained flat at 148
Reflects a slowed but continued deterioration in the real estate market
VFIX up to 172 in Q2 2016

3. VFIX up to 172 in Q2 2016
0
20
40
60
80
100
120
140
160
180
200
Jan'15
Feb'15
Mar'15
Apr'15
May'15
Jun'15
July'15
Aug'15
Sep'15
Oct'15
Nov'15
Dec'15
Jan'16
Feb'16
Mar'16
Apr'16
May'16
June'16
Source: FDC Think
• Gradually rising in Q2’16

5. VFIX up to 172 in Q2 2016
Month/Year VFIX Residential
Index
Commercial
Index
Jan 2015 100 100 100
Jan 2016 160.2 169.2 148
Mar 2016 165.3 176.9 148
Apr 2016 165.9 180.8 143
May 2016 170.5 188.5 143
June 2016 172.2 188.5 148

6. Macro-economic Challenges Drive IncreasedVacancy
• Nigeria in recession means high vacancy rates
• Carrying cost of properties is excruciating
• Headline inflation at 16.5% is negative for real estate
• After devaluation, property values appreciate
• Replacement cost far in excess of market value

8. Macro-economic Challenges drive IncreasedVacancy
• Cement price up 10% from N1500 to N1650
• Building material prices sharply higher
• Rents will spike after wage review
• Real estate a perfect hedge against inflation

9. Outlook
• Declining purchasing power to dampen housing demand
• Expect a move from prime areas to the suburbs
• Expect an increase in new developments
• Market recovery expected in 2017