LAGOS, Nigeria (AFP) — With frozen cranes, deserted construction sites and empty buildings, Lagos is suffering a hangover from a construction binge as Nigeria wrestles to overcome a damaging recession.

Look no further than Eko Atlantic, billed as the largest real estate project in Africa, where frenetic construction has slowed to a snail’s pace.

Dubbed the “Dubai of Africa”, the so-called city within a city is being built over 10 square kilometres (four square miles) on tonnes of sand dredged from the Atlantic Ocean off the coast.

Just one year ago, it was a symbol of the promise of Lagos, when Nigeria was still the continent’s number one economy.

But today it is mostly an expanse of sand, interrupted by two lonely ultra-modern skyscrapers and a couple of roads lined with young palm trees.

It’s a humble start. In the long term, the island is expected to house nearly 500,000 people and see 300,000 others visit daily when it is finished in the next 15 to 20 years.

“The business continues but there is no point in going too fast in the context of a general slowdown,” said Pierre Edde, development director at South Energyx, a subsidiary of developers, the Chagoury group.

The first phase of the billion-US dollar project is underway, with the construction of a dam to follow.

Edde said some 80 per cent of the plots for sale had already been bought but investors were still wary and “waiting for positive signals to get started” on building construction, he told AFP.

CONSTRUCTION FREEZE

Falling global oil prices and repeated attacks on crude infrastructure in Nigeria’s south severely hit the country’s economy in 2016, hammering the naira currency against the US dollar.

Nigeria, which gets over 70 per cent of its revenue from oil, is now suffering from a debilitating shortage of foreign exchange, hitting imports and overseas investment.

“Perhaps the greatest constraint for businesses operating in Nigeria at the moment has been the inability to access foreign currency, notably for importation of goods, and repatriation of profits,” said Roddy Barclay, an analyst at the Africa Practice research firm, in a November report.

The extent of the construction freeze is difficult to assess in the absence of official figures.

But Dapo Abe, who heads an engineering consulting firm in Lagos, estimated that some 60 per cent of major construction projects — both public and private — are currently shut down.

“No bank wants to lend money, rent revenues no longer make it possible to repay construction costs, and there is no return on investment,” he added.

Now the real estate market is left in an ironic situation: landlords of upmarket office blocks and apartments are struggling to find occupants in the wealthy suburbs of Lagos.

Yet at the same time, there is not enough housing stock for the city’s estimated 20 million-strong population.

According to the Federal Mortgage Bank of Nigeria, 16 million people currently need a house in Lagos.

DIMINISHED APPETITE

In the past, Nigeria’s booming growth attracted real estate developers who scrambled to build high-rise condominiums and modern office blocks catered to the executive class in Lagos.

Rich Nigerians and expatriates flocked to the neighbourhoods of Victoria Island and Ikoyi — two islands of wealth separated from poorer Lagosians living on the mainland by an 11-km bridge.

Yet today many of those buildings have “to rent” spray-painted in a red scrawl on the outside walls in a desperate bid to attract tenants.

“Companies have reduced their activities and many expatriates have left,” says Ade Kunle, a real estate agent.

It’s unclear when they — and the construction projects — will come back.

“The Nigerian banking sector will remain under pressure in 2017 and as a result will look to limit higher-risk lending such as that to construction projects,” said Richard Marshall, an analyst at BMI Research, a market research firm.

According to Marshall, it is unlikely that the Nigerian economy will whet the “appetite” of foreign investors over the next two years.

In Eko Atlantic, a project with a longer horizon, however, the attitude is more optimistic.

“The potential remains immense,” said Edde. “Despite the crisis there is still a lot of money. Nigeria is the land of miracles.”