Wednesday, July 3, 2013

Gilbert Chagoury poised to build city for the elite in Nigeria

Africa's cities are running out of land, prompting a real-estate developer here to erect what might be Africa's ritziest district on a beach long known as a haven for day laborers and beer tipplers.

The shacks that crowded the shoreline called Bar Beach are gone, replaced by construction tents. Families who squatted here were evicted. For the past four years, a Lebanese-Nigerian property developer has hosed sand into the ocean, creating new land for planned jogging paths, yacht jetties and condominiums with helipads for 250,000 opulent Nigerians.

The new Eko Atlantic township is emblematic of a booming business in Africa in which developers build walled-off cities for the very rich on a continent that is still the world's poorest.
Developer Gilbert Chagoury, founder of Nigeria's Chagoury Group, is the epitome of Africa's moneyed class: Aside from a friendship with Bill Clinton, whose 1996 presidential campaign he helped fund, Mr. Chagoury boasts an ambassadorship from St. Lucia to the Vatican and a gallery in the Louvre named after him and his wife, both contributors.

Flush with funding from French banks that are enticed by Africa's rapid growth, the 67-year-old Mr. Chagoury is aiming to cap his career with the most colossal real-estate project in West Africa.

"This is going to be the equivalent of Champs Élysées in Paris or Fifth Avenue in New York," says David Frame, managing director of South EnergX, a construction unit of Chagoury Group. He was standing on a gravel road that will be paved into an eight-lane boulevard, ending at a gated exit into the rest of Lagos.
Africa has the world's fastest-growing cities, according to the United Nations. Its current urban population of 450 million is expected to triple in the next four decades.
As vacant land vanishes in African cities, foreign investors are responding with the creation of new cities out of forests, grasslands and landfill. Investors expect to wring big profits from offering Africa's wealthy places to live, work and shop away from the crumbling infrastructure and squalor of old cities.

But those projects have come under fire from critics who point out that they will in no way alleviate the housing crisis hitting the majority of the population. In Lagos, few will be able to afford Eko Atlantic's glass tower condos.

Meanwhile, some of these gargantuan projects are struggling. Renaissance Capital Financial Holdings Ltd. of Moscow plans to build a city for 62,000 people on a coffee farm outside Nairobi, Kenya, and a similar-size project on a pepper field near Ghana's capital of Accra.
The coffee farm in Kenya is still just that, as Renaissance works out a dispute with shareholders. The project in Ghana is mired in a disagreement between local chiefs over who owns the pepper field.

China International Trust and Investment Corp. built a $3.5 billion city for 500,000 people near Angola's capital, Luanda. The suburb opened in 2011 but remains a ghost town, as the government strains to sell the $200,000 condos to a population whose per-capita income is $6,000 a year.

Mr. Chagoury hopes that Eko Atlantic will be different. Project executives point to Lagos's population of oil-rich elites, which is both larger than that of Luanda's and readier to pay top dollar for clean streets and modern infrastructure. They decline to say how much Eko Atlantic will cost, other to say it will be "in the billions" of dollars.

Their city, Lagos, is crowded and chaotic. Its population grows by nine people every 10 minutes, according to the U.N., which estimates that Lagos has 11 million people and is the world's fastest-growing megacity. The Nigerian government puts the city's total population at 21 million.
Even in posh neighborhoods, sewage bubbles up from open ditches. For want of office towers, hundreds of companies squeeze their headquarters into moldy midcentury ranch houses. At lunch, many companies turn off their lights to rest chugging electric generators. To escape choking traffic, many elites commute by helicopter or yacht.

What little housing there is for Nigeria's growing middle class is pricey. Average rent on a three-bedroom apartment in downtown Lagos is $3,624 a month, according to Dubai-based research firm Reidin. Landlords usually expect two years of rent in advance, preferably paid in U.S. dollars. It is a challenge for Nigeria's middle class, whose income averages about $600 a month, according to Renaissance Capital.

Buying is just as tough. City records on land ownership are a mess, stockpiled or missing. Swindles involving forged titles and the fraudulent sale of villas are common.
Home loans come with double-digit interest rates. In a country of 167 million people, there are only 20,000 mortgages, according to Nigeria's finance minister, Ngozi Okonjo-Iweala.

To keep pace, construction activity expands by 13% a year, according to government statistics. Architect Ade Laoye estimates that Lagos needs at least needs 10,000 additional houses a year.
"We don't have the architects, electricians, bricklayers, engineers, the builders," Mr. Laoye says.
One person who does have resources is Mr. Chagoury, a Nigerian-born construction magnate. He got his first taste of city-making in the 1990s, when the government hired him to construct a small banana-shaped peninsula now dotted with million-dollar homes.

In 2003, Lagos's government approached Mr. Chagoury with a problem. Waves were crashing over Bar Beach, washing away some of the drug scene, but also flooding shore-side avenues and wetting the lobbies of important Nigerian companies.
He returned with an offer to build a sea wall without charge. In return, Lagos's government allowed his company to dredge sand from the bottom of the Atlantic Ocean—and shoot it out of a hose to create 3.9 square miles of beach.

The square mile poured so far is a panorama of sand, resembling the Sahara. Manhole covers pop up several feet above the dunes as the skeletal beginnings of a drainage system. Near the ocean, cranes drop X-shaped blocks to make a sea wall.
Mr. Chagoury declined requests for an interview. But project executives say that they already have sold all but two of the several dozen building sites on the sandlot. Buyers plan an international school, high-rise condos, spas, headquarters for several oil companies, a conference center shaped like the sails of a boat and a U-shaped office tower called Unity.

Lower-end developers worry such endeavors will inflate the cost of building materials for years to come. An already stretched supply of bricklayers and cement mixers will leave to work here.
Developers like Michel El Chemor are unapologetic about catering to the top end of Nigeria's property market. He bought a plot from Mr. Chagoury for the site's first skyscraper: a $50 million, 24-story condo called Eko Pearl. It will peer out over a marina—and the smog and skyline of Lagos.

"I'm sorry to say, but it's chaos in Lagos," he says. "They're going to need to destroy what they had before and rebuild it, which will take a long time."

Wall Street Journal

Related story: Nigeria's growing middle class

No comments:

Post a Comment