The luxury real estate market in Lagos State is fast becoming a top destination for investors, as the latest State of Lagos Housing Market Report (Vol. 3) reveals average rental yields of 5.5 per cent per annum. The report, released by the Roland Igbinoba Real Foundation for Housing and Urban Development (RIRFHUD), estimates the market’s current value at N3.2 trillion ($7.5 billion), with an annual growth rate of between 6 to 8 per cent.
The report, which is based on extensive field surveys, property analytics, and satellite data, highlights the strong capital appreciation, surging demand for high-end residences, and a booming short-let market as key factors driving growth. Prominent areas like Ikoyi, Victoria Island, and Lekki Phase 1 are leading the trend, with both domestic and diaspora investors increasingly showing interest in Lagos’s premium properties.
According to RIRFHUD, luxury property prices in Lagos surged by 25 per cent in 2023 alone, indicating a significant transformation of the market over the past decade. What was once relatively affordable land has evolved into a highly competitive and premium investment hub.
This rapid growth is underpinned by Lagos’s increasing population, rapid urbanisation, a steady influx of high-net-worth individuals (HNWIs), diaspora interest, and the inflationary effects of Nigeria’s macroeconomic environment. However, the report identifies a paradox: despite commanding prices comparable to global cities like Dubai and London, many luxury estates in Lagos still suffer from poor public infrastructure. Residents often fund private water supply, electricity, and security, adding hidden costs to premium living.
The report also noted that residential property values in Lagos appreciate at an annual rate of 4 to 6 per cent, primarily due to continuous infrastructure development. The completion of new roads, bridges, and public amenities makes more neighbourhoods accessible and desirable, increasing demand and property values. The rental market remains particularly lucrative, with returns between 4.5 per cent and 6 per cent, enhancing Lagos’s appeal to investors.
Coastal locations like Ibeju-Lekki and Abijo are particularly sought after, with ocean-view properties commanding premiums of up to 25 per cent above their inland counterparts. These areas not only offer scenic views but also promise strong investment potential due to sustained demand and strategic positioning.
Dr Roland Igbinoba, Executive Vice Chairman of RIRFHUD, highlighted the Lagos State government’s ongoing efforts to digitise land administration through the e-GIS platform, aimed at streamlining approvals, permits, and land access processes across ministries, departments, and agencies.
He urged the government to complete and implement these reforms to create a more transparent and efficient land registry system. “Once the land issues are sorted, private sector actors must also find innovative and alternative ways to fund affordable housing development in the state,” Igbinoba said.
He recommended alternative financing models such as real estate crowdfunding, non-interest banking, and real estate tokenisation to bridge the housing gap. According to him, while the private sector naturally gravitates towards high-profit luxury projects, government policy should provide clear incentives for developers to invest in affordable housing.
“The solution to Nigeria’s housing challenges is not in rhetoric but in the hands-on execution of people-friendly land reforms, practical policy pathways, and a strong political will to drive the change,” he said. He also stressed that simplifying the land tenure system, which he described as currently complex, opaque, and expensive, would reduce the cost of development and attract more capital into the sector.
Igbinoba added that the Lagos State government must urgently foster access to serviceable and affordable land to support affordable housing development and ensure broader inclusivity in the real estate sector.
