A new light rail mass transit (LRMT) system in Lagos is set to have an impact on property prices in Nigeria’s commercial capital.[hidepost=9][/hidepost]
Lagos has over 18 million inhabitants and by 2015, the population is projected to reach about 25 million people, a figure that will make it the third largest mega city in the world. This huge population has been largely responsible for the increase in the intensity of traffic congestion and by extension, environmental degradation. For this reason, the Lagos Metropolitan Area Transport Authority (LAMATA) has developed a network of seven rail lines. However, two of the lines would be developed as a matter of priority.
The Blue line will run 27 kilometres from Okokomaiko to Marina, one of the most densely travelled corridors in Lagos. The rail infrastructure is being developed in conjunction with the Badagry Expressway project, a proposed toll road running from Lagos to Badagry. The Red line will run from Agbado to Marina with a link to the domestic and international wings of the Murtala Muhammed Airport in Ikeja.
According to LAMATA, the LRMT would be implemented as a joint public private partnership (PPP). The defined basis of the PPP would be that the infrastructure would be provided by LAMATA under a design/build contract and the actual railway operations would be funded and managed by the private sector under a concession agreement. Vanguard newspaper last month reported that work has started on the Blue line.
Impact on property values
In a recent research article, Lagos-based Alitheia Capital says that the LRMT system is likely to have a significant impact on urban planning and real estate values.
Alitheia Capital says that a survey conducted from 1990 to 2001 on 12 rail transits in different cities around the United States demonstrates that depending on land use and the efficiency of service on transit routes, commercial and office space located 0.80 kilometres from LRT stations charged rents up to 50% higher than similar spaces only a kilometre away. This survey concluded that in most cases, access to rail transit increases the value of properties.
“The Lagos LRMT’s Blue and Red lines will open up the city, connecting far flung industrial estates to middle income residential neighbourhoods. As the state government extends the LRT into other parts of the city, increased access and larger market penetration may further enhance property values close to the rail alignments especially when rail stations are placed at walking distances to current and planned employment, cultural and retail centres,” says the article.
Alitheia Capital, however, warns that for residential buildings located closer rail station areas, noise and increased traffic can reduce potential property value impacts.