More than 40 per cent of residential properties in Lagos are currently owned by investors, highlighting a growing trend in real estate speculation, a report by the State of Lagos Housing Market, Volume 3, has revealed.

It stated, “More than 40 per cent of residential properties in Lagos are held by investors rather than by the occupants themselves. The real estate market in this vibrant city teems with investor activity, particularly in illustrious locales such as Ikoyi, Victoria Island, Lekki, and Ikeja. These distinguished neighbourhoods have become veritable magnets for developers and investors alike, emblematic of a robust trend towards investment-driven property ownership.”

In a country where affordability remains a formidable challenge indeed, the Central Bank of Nigeria reports that only about 10 per cent of Nigerians can afford to purchase homes; the disparity in ownership is stark. This imbalance underscores the fact that a substantial portion of residential properties is controlled by investors rather than the residents who ultimately inhabit them.

“Investors frequently employ instruments such as real estate investment trusts and real estate investment groups to acquire rental properties, thereby circumventing the onerous demands of direct management. Such sophisticated investment mechanisms further illustrate the dominance of investors within the residential property market.

“Additionally, the allure of Lagos’s rental market is enhanced by attractive yields, typically ranging from 4.5 per cent to six per cent annually. This promising rate of return serves as a compelling financial incentive, drawing further investment into residential properties and reinforcing the trend of investor-centric ownership,” the report stated.

It further noted that in Lagos, ocean-view properties commanded a premium, often priced up to 25 per cent higher than their inland counterparts.

It added, “Consider, for instance, areas such as Ibeju naturally enhance real estate values. Residing in the areas of Lekki and Abijo, renowned for their coastal positions by the ocean, not only affords residents the luxury of mesmerising vistas but also grants access to a lifestyle imbued with an undeniable allure.”

“This elevated pricing is inherent in these coastal areas. Over the years, a persistent further propelled by the substantial investment potential increase in demand for properties situated in these strategic locations has driven property values upward, signalling that discerning buyers are indeed prepared to invest more for the promise of lucrative returns.

“Although the precise figure of a 25 per cent premium may not be explicitly corroborated by all sources, it is indisputable that the distinctive features and enviable settings of ocean-view properties invariably command superior market prices. Residential properties in Lagos are observed to appreciate at an estimated rate of four to six per cent per annum.

“Continuous advancements in infrastructure primarily contribute to this steady ascent in value. As new roads, bridges, and public facilities emerge, neighbourhoods become increasingly accessible and desirable, thereby fuelling heightened demand and consequently driving up property values.”

The report further noted that Lagos, a veritable metropolis teeming with life and characterised by a burgeoning population, consistently maintains a robust demand for housing.

“The city magnetically attracts individuals in pursuit of improved employment opportunities and enhanced living conditions, a phenomenon that inherently exerts upward pressure on property values. Even in localities where new developments have yet to be established, the persistent demand serves to uphold a commendable rate of appreciation.

“In certain rapidly developing sectors of Lagos, property values may experience an appreciation of up to 10 per cent annually. Conversely, in more established and stable areas, the appreciation rate generally resides within the narrower band of three to five per cent, thus contributing to the overall estimated average,” it stated.

The State of Lagos Housing Market, 3rd Edition, is published by the Roland Igbinoba Real Foundation for Housing and Urban Development. The first and second editions were published in 2009 and 2016, respectively.