Have you ever felt that buying property in Lagos is like you’re paying for the city’s hype rather than its value?  

 

Okay, have you ever browsed through Lagos property listings, checked out the prices, then squinted your eyes just to be sure the multiple zeros you were seeing were not a mistake? 

 

You are not alone! 

 

This is what most buyers feel each time they buy a property in Lagos. 

 

Today, a 2-bedroom apartment in places like Lekki can fetch you up to 150 million Naira. The same 2-bedroom apartment can sell for up to 250 million Naira in locations like Victoria Island or Ikoyi. Properties in places like Banana Island and Ikoyi are known to sell for up to 2 Million Dollars!  

 

All these happenings have often led to an inevitable question: Are Lagos Properties Overpriced? 

 

In this blog post, we will discuss why properties in Lagos are often overpriced and what factors contribute to this. 

 

Why Lagos Properties Are Often Overpriced? 

 

In his 2022 REDA ( Real Estate Awards & Discussions) keynote speech, Steve Haswell— an international real estate expert and Director at Turner & Townsend—described Lagos as the most expensive real estate market in Africa, with property prices surpassing even the priciest neighbourhoods in cities like Nairobi, Cairo, and Pretoria. Globally, Lagos ranked 56th out of 88 cities surveyed, meaning it’s more expensive than many other cities worldwide. 

 

He further cited the following as  reasons why Lagos real estate seems overpriced: 

1. Escalating Construction Costs

Construction costs in Lagos have surged dramatically over the past few years. This is driven by several global and local factors:

• Global inflation has made raw materials more expensive.
• Supply chain disruptions have led to material shortages and delivery delays.
• High interest rates have increased the cost of borrowing for developers.
• Labour scarcity means skilled workers are in short supply and demand higher wages.

These rising input costs are ultimately passed on to property buyers, leading to more expensive homes and commercial properties.

2. Macroeconomic Conditions

Nigeria’s broader economic environment significantly influences real estate pricing:

• Inflation remains high, with figures around 23.71% today, thus eroding purchasing power and increasing the cost of living.
• Interest rates are elevated, recently around 14%, making financing more expensive for both developers and buyers.
• Government policies such as foreign exchange restrictions and import bans raise the cost of importing building materials.

All of these conditions add pressure to development budgets, which reflect in the final sale prices of properties.

 

Related: How Rising Inflation is Affecting Nigerian Property Investments: Challenges and Opportunities

 

3. Currency Volatility and FX Challenges

The naira’s volatility and limited access to foreign exchange make it difficult for developers to plan long-term or import materials at stable costs. With FX restrictions in place, many turn to parallel markets where exchange rates are much higher, further inflating costs.

4. High Land Acquisition Costs

Lagos faces a serious land scarcity issue, especially when measured against its fast-growing population. Lagos is running out of space! 

This problem has made land, especially in high-demand areas like Ikoyi, Victoria Island, and Lekki, extremely expensive. Limited availability, complex land titles, and high demand from both individuals and institutions contribute to soaring land prices, which, again, impact the final cost of properties.

5. Investment and Financing Dynamics

Because of policy uncertainty and economic instability, developers often struggle to attract affordable financing. Investors, especially foreign ones, remain cautious, pushing developers to seek alternative funding at higher interest rates. These financing challenges are also reflected in the property prices.

6. Infrastructure as a Premium Service

One of the most significant factors contributing to high property prices in Lagos is the cost of basic infrastructure.

In many parts of Nigeria, reliable electricity, clean water, and good roads are luxury amenities rather than basic utilities. Properties in areas like Ikoyi, Victoria Island, and parts of Lekki command premium prices partly because they offer 24/7 electricity, treated water supply, and well-maintained roads.

Developers must factor in the cost of providing these amenities when pricing their properties. Installing backup generators, water treatment systems, and maintaining private roads adds substantial costs that are ultimately passed on to buyers.

 In essence, Lagos property buyers are paying for the infrastructure that should ideally be provided by the government.

 

What This Means for Buyers and Investors

 

The high cost of real estate in Lagos carries significant implications for both homebuyers and investors:

1. High Risk of Overpaying
   With property prices inflated by rising construction costs, limited land availability, and macroeconomic pressures, buyers run the risk of paying far more than the intrinsic value of a property. This overvaluation can reduce long-term returns and make it difficult to resell at a profit.
2. Longer Time to See Returns
   Real estate is traditionally a long-term investment, but in Lagos, the timeline for return on investment can stretch even further. High entry prices and economic volatility mean investors may have to wait years before seeing meaningful capital appreciation or rental yield.
3. Growing Housing Affordability Crisis
   As prices rise faster than income levels, more people are priced out of home ownership. This widening affordability gap creates long-term challenges for both the housing market and the economy at large, limiting demand and making the market less inclusive.

 

How Buyers and Investors Can Navigate the Market

Despite the challenges, Lagos remains a high-demand real estate market. Here are some strategies to help buyers and investors make smarter decisions:

1. Prioritise Location Over Hype
   Focus on emerging neighbourhoods with strong growth potential and upcoming infrastructure developments. These areas often offer better value and higher upside than overpriced hotspots.
2. Work With Experienced Professionals
   Engage reputable real estate agents, property lawyers, and valuation experts to ensure you’re not overpaying or falling into speculative traps. Local market insight is key to making informed decisions.
3. Consider Long-Term Value, Not Just Current Trends
   Instead of chasing short-term price surges, assess long-term growth indicators like planned transport networks, new commercial hubs, and population inflows.
4. Explore Joint Ventures or Real Estate Investment Platforms
   For those priced out of traditional investments, real estate cooperatives or fractional ownership platforms can offer more affordable entry points into the market.
5. Diversify Within the Sector
   Instead of only buying residential property, explore options like commercial spaces, student housing, or rental apartments that may offer better and quicker returns. 

 

The Verdict: Expensive but Explainable

Now, back to the question: Are Lagos properties overpriced? 

The answer depends on your perspective and circumstances. For residents earning in naira, prices can indeed seem excessive.

However, when considering the unique challenges of the Lagos market, the infrastructure costs, international demand, and the premium for living in Nigeria’s commercial capital, current prices have logical explanations.

 

Looking for fairly priced properties in Lagos?

At Thinkmint Nigeria,  we believe quality shouldn’t come with a ridiculous price tag. Our listings are thoroughly vetted, competitively priced, and meet modern standards. No inflated costs, no surprises!

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