Why Should You Invest in Lagos?
Lagos consumes more than half of the country’s energy, accounts for more than 90% of Nigeria’s foreign trade flow, and handles 80% of all Nigerian imports. According to market research, Lagos State has the highest property values and the most active real estate market in Nigeria.
Lagos, despite having the smallest landmass of 1,171.28 km.sq, is the most populous city in Nigeria, with a population of about 22 million people.
AN EXPANDING MIDDLE-CLASS POPULATION
Lagos’s thriving economy has resulted in a growing middle-class population with money to spend on luxuries and decent housing. Despite the economic headwinds experienced by every other sector of the Nigerian economy, the middle segment of the housing market remained robust, which has been attributed to strong demand from the middle class. When other segments of the real estate sector in Nigeria declined, prices in the Lekki axis, which is primarily a middle-class neighborhood, increased by an average of 2.8 percent. Lagos has the highest proportion of working-age residents in Africa, with over 15.2 million of the estimated 22 million residents aged 15 to 64.
STRONG RENTAL MARKET
Rising property and rental prices are a reflection of the huge supply-demand gap of affordable housing in Lagos. There are more renters than owners in Lagos property market due to the high cost of homeownership coupled with a very underdeveloped mortgage market. The mortgage market is very small and unaffordable with rates ranging from 16 – 30% and tenors between 1 – 15 years. Study shows that over 75% of property seekers are looking for rental accommodation. Some of the factors that we also need to mention that influence Lagos real estate include: The Dangote refinery which would be of advantage to many investors coming. Another valid point is the advantage of Seaview in most of the estates in Lagos. The likes of Banana Island estate, Atlantic city attract more investors because of this factor.
Without a doubt, population growth is a major growth driver for the real estate sector; Lagos is Nigeria’s smallest but most populous state. Lagos has grown from 1.4 million people in 1970 to approximately 22 million people today. Lagos has a population density of about 5000 people per square kilometer, making it one of Africa’s most densely populated cities. It is estimated that approximately 86 people migrate to Lagos every hour, amounting to more than 2000 people per day and close to a million people per year. This is obviously a significant benefit to the real estate industry.
According to real estate experts, the housing deficit in Lagos State in 2016 was approximately 2.5 million houses, which accounted for 14.7 percent of the country’s total housing deficit, according to the National Bureau of Statistics (NBS).
FAST URBAN DEVELOPMENT AND GROWTH
Lagos is one of the world’s fastest-growing megacities, with a 16 percent urbanization rate. Lagos has achieved megacity status, which means that the ‘bush’ you are purchasing today will become a ‘city’ faster than you can imagine.
NIGERIA’S ECONOMIC AND INDUSTRIAL HUB
Abuja may have displaced Lagos as Nigeria’s administrative capital, but Lagos remains the country’s commercial capital.
Lagos is Nigeria’s richest state, with a GDP of approximately US$33.67 billion, accounting for approximately 25% of Nigeria’s total GDP. It is Africa’s fifth largest economy, with over 2000 manufacturing companies, 200 financial institutions, and one of the largest clusters of small and medium-sized enterprises in the continent. Lagos consumes more than half of the country’s energy, accounts for more than 90% of Nigeria’s foreign trade flow, and handles 80% of all Nigerian imports.
According to market research, Lagos State has the highest property values and the most active real estate market in Nigeria.
QUICKLY APPRECIATING REAL ESTATE PRICES
Because of the high rate of return on investment, Lagos is a dream destination for real estate investors. According to the Lagos State Market Analysis, the state has one of the highest property values in Nigeria. When property prices in states across the country took a hit from the recent economic recession, the Lagos property market, particularly the mid-market segments, remained buoyant. A plot of land purchased in Lekki for 5 million naira in 2006 was sold for 40 million naira nine years later, a seven-fold (700 percent) increase, and this is not an isolated case.
A SAFE POLITICAL ENVIRONMENT
When compared to other states in Nigeria, Lagos has the most stable political environment. Since the restoration of democracy in 1999, Lagos has been governed by the same political party, ensuring continuity in governance. This is beneficial to the real estate market because projects and developments are carried out in accordance with the masterplan. It also means that critical projects that drive growth are not sacrificed on the altar of politics.
VIBRANT RENTAL MARKET
Rising property and rental prices reflect Lagos’s massive supply-demand gap for affordable housing. Because of the high cost of homeownership combined with a very underdeveloped mortgage market, there are more renters than owners in the Lagos property market. The mortgage market is small and unaffordable, with rates ranging from 16 to 30 percent and terms ranging from 1 to 15 years. According to one study, more than 75% of property seekers are looking for rental housing. Some of the other factors that influence Lagos real estate are as follows: The Dangote refinery, which would be beneficial to many incoming investors. Another valid point is the benefit of having a sea view in most Lagos estates. Because of this factor, properties such as Banana Island estate in Atlantic City attract more investors.
FAST URBAN GROWTH AND DEVELOPMENT
With a 16 percent urbanization rate, Lagos is one of the fastest-growing megacities in the world. Lagos has attained the megacity status, that means that the ‘bush’ you are buying today will become ‘city’ faster than you imagine.
YOU CAN ALSO READ 19 MAJOR REAL ESTATE MISTAKES NIGERIAN INVESTORS SHOULD AVOID
FAST APPRECIATING PROPERTY PRICES
Lagos is a dream destination for real estate investments because of the high rate of returns on investments. The Market Analysis for Lagos State shows one of the highest property values in Nigeria. The Lagos property market especially the mid-market segments remained buoyant when property prices in states across the country took a haircut from the recent economic recession. A piece of land that was purchased around 2006 in Lekki for 5 million was sold for 40 million naira nine years later, that is a seven-fold (700%) increase and it is not an isolated case.
STABLE POLITICAL ENVIRONMENT
Lagos has the most stable political environment when compared to other states in Nigeria. Since the return of democracy in 1999 Lagos has been under the control of the same political party and this ensures a continuum in governance, this is good for the real estate market because projects and developments are implemented according to the masterplan. It also means that important projects that drive growth are not sacrificed on the altar of politics.
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