With Lagos remaining the silent capital city of Nigeria, in terms of the state with the largest economy and population, it is no surprise that it is already home to some of the most highly-priced real estate in Africa, at around 1,000 US dollars to 1,200 US dollars per square metre.
According to PearlMutual Consulting Ltd, there is a growing interest in the Nigerian real estate market as the huge demand is sustained by shifts in the shopping culture, and an increase in the expanding middle class thus, resulting in the construction of several shopping malls.
Soji Adewumi, principal partner at Bam Associates, believes that if luxury properties could be provided at a reasonable cost, it would be a viable investment opportunity, and renting out such properties will make for good investment.
“Luxury properties, provide much more than the basic needs or features of housing. They cater for the high-end in the society providing serenity of neighbourhood, security, exquisite finishing and extra comfort with features such as swimming pool, gymnasiums, uninterrupted power supply, cleaners and gardeners,” Adewumi told ABN Digital.
Neighbourhoods such as Ikoyi and Victoria Island have a number of luxury properties.
Victoria Island is one of the country’s most affluent places to live in. The cost of renting a luxurious apartment in this area ranges from 40,000 to 80,000 US dollars per annum. Ikoyi is believed to have some of the most expensive properties on the African continent.
The rent for a luxury three-bedroom apartment in Ikoyi is between 45,000 and 80,000 US dollars annually. Five years ago, it was between 10,000 and 30,000 US dollars per annum.
“Ikoyi and Victoria Island of Lagos have the majority of the luxury properties in Nigeria, with some also located in some areas of Ikeja, and in other commercial or political hubs of the country such as Port-Harcourt, River State, and some areas of the federal capital territory Abuja,” said Adewumi.
Over the past years as the demand for expatriates housing have increased significantly, there have been high levels of construction in Lagos and Abuja. Foreign oil companies in Nigeria sub-let housing from Nigerian real estate companies mostly in Victoria Island, Ikoyi and Lekki. The houses are usually apartments and in gated communities as a result of the insecurity and power shortage issues in the country.
Although the average Nigerian can only dream of owning one of these luscious properties, affluent Nigerians generally own more than one.
“It cannot be said that there is sufficient investment in that area, because a lot of people who would otherwise have wanted to have one of such properties cannot afford them, even when they could have been able to buy such in other parts of the world. Therefore, you find a bulk of such properties being on sale for long without effective buyers,” Adewumi said.
Nonetheless, the luxury market still seems to be soaring since nearly every plot on Banana Island has been sold even though barely 50 buildings have been completed. Forbes Africa termed the land, in this new development on regained land near Ikoyi, one of the most expensive places to acquire a property in Africa.
A three-bedroom flat on this island costs as much as 1.5million US dollars while a four-bedroom flat can go for as much as 21.6 million US dollars. Though the Nigerian market is highly attractive, as there are numerous opportunities, it is still very much in need of more investors.
Many of the owners of these properties don’t live in the country and buy the properties from outside the country. The criminally wealthy Nigerians need a place to ‘hold’ their ill-gotten wealth and are turning to the luxury property market.
“In fact, most of these properties are priced and transacted in U.S. dollars. Also, the ‘capitalist’ nature of the Nigerian nation ensures a steady injection of luxury properties into its property market.
"A number of investors in this category are viewed by some as players who just see this sector as a good place to ‘hide’ wealth without really expecting much returns. So, we can somewhat observe a steady supply without a corresponding effective demand,” he said.
Adewumi believes that as long as the influx of expatriates into the country continues, the future of luxury properties is bright.
“This sector has created employment and investment opportunities in the country, with one of its active indigenous player’s quoted and very active on the Nigerian Stock Exchange. This sector has positively impacted the Nigerian economy,” Adewumi said.
The luxury property sector in Nigeria is quite active with a large number of such properties springing up irrespective of the very high rent and sale prices.
There is a large engagement of local and foreign construction companies, many of the foreign ones being Chinese. This has brought about a high influx of both skilled and semi-skilled expatriates who find the country lucrative.
“The future of luxury properties in Nigeria is quite certain because a large percentage of them service the affluent oil companies and senior expatriate executives, and these categories of participants are here to stay.”