Follow Us on Google Discover
Rising property prices, high financing costs and shifting buyer preferences are reshaping investment decisions in Lagos’ real estate market. Investors and prospective homeowners are increasingly weighing acquisition costs against rental income, potential appreciation and the expenses of maintaining properties.
The market also presents different opportunities across established and emerging locations, with infrastructure development, access to jobs, documentation and affordability influencing demand.
For investors, choosing between land banking, rental property and buying to resell requires an understanding of the risks, holding periods and returns associated with each strategy.
In this exclusive interview with Nairametrics, Temidayo Ademosu, Founder and CEO of Arrowhead Homes and Properties, a real estate company operating in Lagos, Ogun and other parts of the South-West, shares his assessment of the market. Drawing on his experience in residential sales and property management, he discusses the factors driving property values, achievable rental returns, investment risks and emerging opportunities in Lagos.
Also Read
Nairametrics: Land banking is one of the ways investors seek to benefit from real estate appreciation. What factors determine the investment potential of land in Lagos, how do you identify locations with prospects for appreciation, and what should investors consider when deciding how long to hold a property before selling?
Temidayo Ademosu: From my experience in land banking in Lagos and its surroundings, the strategy works because the city grows faster than its infrastructure. The right land in the right corridor can appreciate threefold to fivefold in three to seven years.
Title and documentation are the first considerations. Every investment must be carefully vetted. No title, no investment. Ensure the land has at least a Certificate of Occupancy (C of O), Governor’s Consent and a registered Deed of Assignment, and confirm it is free from government acquisition.
Location is equally important, particularly access to major roads such as the Lekki-Epe, Lagos-Ibadan and Badagry expressways, and Ikorodu Road. Investors should also consider the Lagos State Development Plan, with Ibeju-Lekki emerging as an industrial hub and Epe developing as a residential destination.
Topography, flood risk, and zoning also matter. Dry, elevated land with good drainage is more attractive, while waterlogged areas require additional sand-filling costs. Commercial land along an expressway will also generally command a higher value than interior residential plots.
Investors should monitor major developments such as the Dangote Refinery, Lekki Deep Sea Port, Free Trade Zone, Alaro City, proposed Fourth Mainland Bridge and the planned airport in Epe, as these could influence surrounding property values.
Infrastructure is another key factor. Prices tend to rise when projects enter construction rather than at the announcement stage. Road expansion, power supply, estate infrastructure and developments such as universities, hospitals and factories can also drive appreciation.
These factors must be carefully assessed to avoid losses in land banking.
Nairametrics: What is shaping property sales in Lagos currently? What factors influence buyers’ decisions, the types of properties they seek and the time it takes to complete transactions? How are pricing, financing options and buyers’ purchasing power affecting the market?
Temidayo Ademosu: Four major forces are shaping the market: diaspora capital, infrastructure, the housing deficit and buyers’ growing focus on protecting their investments.
Diaspora capital is a dominant force, with many high-value purchases funded by foreign currency. Nigerians abroad buy in dollars, driving prices in Ikoyi, Victoria Island and Lekki Phase 1.
Infrastructure is also becoming a price setter. Buyers consider not just location but also building quality, often paying more for well-finished apartments than properties requiring major renovation.
The housing deficit is another factor. Lagos had approximately 17.1 million people in 2025 and a deficit of 3.4 million housing units. This sustains demand despite economic pressures, pushing up prices and rents as homeownership becomes less affordable.
Buyers are also particular about protecting their investments. Title is non-negotiable, with many demanding a C of O, Governor’s Consent and a survey confirming the property is free from government acquisition. Flood risk, road access, drainage and the developer’s track record also influence decisions.
Diaspora and high-end buyers generally seek off-plan two- to three-bedroom apartments valued at N250 million to over N1 billion in Eko Atlantic, Ikoyi and Victoria Island, targeting appreciation of 10% to 18%. Middle-income buyers prefer one- to two-bedroom homes in Yaba, Surulere, Ikorodu and Mowe. Investors are also drawn to Epe and Ibeju-Lekki, where plots that sold for N3.5 million to N6 million in 2023 now cost N8 million to N18 million.
An outright purchase with clean title can take two to three weeks, while off-plan purchases paid for in instalments can take six to 12 months. Buyers increasingly request escrow arrangements or bank guarantees because of low trust in the market.
The market has become two-speed: premium prices continue to rise on diaspora demand, while mid-market prices remain stagnant or are discounted due to weak local purchasing power. Mortgage rates of 27% to 32% also put home loans beyond the reach of many buyers. Consequently, about 80% of Lagos property transactions rely on outright cash, developer instalments and diaspora dollar inflows.
Nairametrics: For investors looking to generate income from residential properties in Lagos, what determines a property’s rental potential, and how should they assess expected returns against acquisition costs, maintenance, vacancies and other operating expenses? What rental yields are currently achievable?
Temidayo Ademosu: Location and job opportunities are important. Investors should look beyond Lekki to areas where people work and can commute within 60 minutes. This is why Yaba, Surulere, Ikeja and Gbagada attract tenants faster than interior Sangotedo.
Livability also influences rental demand. Tenants consider water supply, alternative power, flood risk, drainage, security, prepaid meters and whether the landlord lives on the premises. These factors affect how attractive a property is and the rent it can command.
From my experience, the fastest-moving properties are one- and two-bedroom apartments for young professionals, self-contained studios with prepaid meters, and three-bedroom apartments for small families, particularly those close to schools. Large four- and five-bedroom duplexes generally take longer to rent, except when they attract corporate tenants.
When assessing returns, I look beyond gross rent and calculate the net yield after deducting operating expenses. These include the cost of one month of vacancy, service charges, maintenance, agency fees, land use charges, diesel and repairs. I also factor in acquisition expenses such as agency fees, legal costs and renovation.
For example, an investor who buys a two-bedroom apartment in Yaba for N70 million, including associated purchase costs, and rents it out for N5.5 million annually should deduct about N458,000 for one month of vacancy, N550,000 for maintenance, N600,000 for service charges, N550,000 in agency fees and N100,000 in taxes. This leaves approximately N3.2 million in net annual income, representing a yield of about 4.6%. The same apartment could generate between 9% and 11% as a short-let.
If the net yield on a long-let property is below 5%, I would negotiate a lower purchase price or consider short-let or corporate letting.
In 2026, properties in Ikoyi and Victoria Island offer net long-let yields of about 3% to 5%, while short-lets can generate between 7% and 10%. Lekki Phase 1 and Pinnock offer around 4% to 6%, while Yaba, Surulere, Ikeja and Gbagada can deliver 6% to 9%. Mainland mass-housing locations and the Epe corridor may offer 7% to 10% if acquired early, although vacancy risks can be higher.
Investors can lose returns through prolonged vacancies, diesel expenses and property damage, particularly where tenants do not provide caution deposits. I insist on prepaid meters and setting aside a 10% annual capital expenditure reserve.
Ultimately, residential long-lets in Lagos can deliver net yields of 5% to 10%, while short-lets can generate higher returns but require additional investment. Investors should prioritise locations with access to jobs and transport links. Akute, Mowe and Ogba are also underrated areas with potential for good returns.
Nairametrics: Property management goes beyond collecting rent from tenants. What does effective property management entail in Lagos, and how does professional management affect occupancy, tenant relations, maintenance costs and the overall financial performance of a property? What should landlords look for when choosing a property management company?
Temidayo Ademosu: Property management in Lagos goes beyond collecting rent; it involves a strategic approach to ensuring an investment delivers its intended returns.
Effective management covers tenant screening, tenancy agreements in line with Lagos Tenancy Law, timely rent and service charge collection, and renewals. It also involves marketing properties before tenants move out to reduce vacancies and carrying out preventive maintenance on plumbing, pumping machines, roofs and generators.
Professional managers provide monthly statements of income and expenses, giving landlords a clear picture of their property’s performance. They also serve as a buffer between landlords and tenants, ensuring complaints are addressed quickly and helping retain good tenants.
Preventive maintenance can save 30% to 40% annually by addressing minor issues before they become expensive repairs. Combined with better occupancy and lower maintenance costs, this improves rental income and property value.
I therefore advise landlords to engage professional property managers to protect their investments and improve returns.
Nairametrics: Investors entering the Lagos property market can pursue different strategies, including land banking, rental investments or buying for resale. How do these options compare in terms of capital, investment periods, risks and potential returns, and what should guide an investor’s choice?
Temidayo Ademosu: There are three main strategies in Lagos, and the choice depends largely on your capital and patience.
Land banking involves buying land in developing areas and holding it for appreciation. A half plot costs about N3.5 million to N15 million in Ketu-Epe, Agbowa-Ikosi and Ikorodu-Imota, while land in Akute can cost around N20 million. Investors typically hold for two to three years, with potential returns of 100% to 300%. Key risks include title issues, waterlogged land and government acquisition.
Rental investment involves buying land and building self-contained apartments, mini-flats or two-bedroom homes. It requires about N20 million to N35 million, with a payback period of four to six years and potential annual income of N2.5 million to N4 million. Investors must, however, consider maintenance, tenant issues and vacancies. Ikorodu, Mowe-Ofada, Yaba, Surulere and Akute offer opportunities because of rental demand.
Flipping involves buying distressed properties or undervalued land, adding value and reselling within three to 12 months. It requires N5 million to N30 million and can deliver 20% to 50% profit per deal. Success depends on buying at the right price, understanding the market and having access to potential buyers.
Ultimately, land banking suits patient investors, rental properties favour those seeking regular income, while flipping is better suited to investors with available cash, market knowledge and a strong buyer network. These are my recommendations based on experience.
Nairametrics: Looking ahead over the next two to three years, what opportunities do you see emerging in Lagos real estate? Which locations and property categories should investors watch, and what developments could shape the market?
Temidayo Ademosu: Over the next two to three years, opportunities in Lagos real estate will increasingly extend beyond the Island to areas benefiting from infrastructure development and rising housing demand.
The Lekki-Epe corridor is one to watch, with the expressway expansion, Dangote Refinery, Lekki Deep Sea Port, proposed Fourth Mainland Bridge and Lekki-Epe International Airport shaping its prospects. Red and Blue Line rail expansion could also improve connectivity.
Rising Island rents, where a two-bedroom apartment can cost N5 million to N6 million annually, are pushing middle-income earners towards emerging areas. Population growth and demand for affordable homes close to workplaces will further support rental demand.
Epe and Ketu-Epe offer land banking opportunities, with plots selling for N5 million to N8 million. Ibeju-Lekki, Eleko and Akodo could attract rental demand from workers around the refinery, port and Alaro City. Ikorodu, Imota and Agbowa offer opportunities for self-contained apartments and mini-flats, while Mowe-Ofada, Ifo, Akute and Alagbole could appeal to salary earners seeking affordable homes within commuting distance of Lagos.
Self-contained apartments and mini-flats remain attractive to young professionals, while short-lets in Ikeja GRA, Yaba and Ikate could serve business travellers. Investors with N2 million to N10 million can consider land in Epe, Agbowa and Imota, while those with N10 million to N60 million could explore rental developments in Ikorodu and Mowe.
My guiding principle is the 30-minute rule: buy within 30 minutes of major developments rather than directly inside them. As businesses expand, the workers they attract will need somewhere to live.
