High borrowing costs are severely impacting the development of affordable housing in Nigeria. According to Bamidele Adewole, a seasoned real estate leader and economist, the cost of borrowing can reach 28% to 30%, making it challenging for developers to deliver affordable housing. Cheaper financing is essential to expanding supply, but current interest rates make it difficult for developers to build homes that reflect the purchasing power of ordinary Nigerians.
The mismatch between housing demand and supply in urban centers like Lagos is particularly evident. Research by GTI indicates that properties priced below N15m account for less than 5% of available housing supply but approximately 55% of estimated demand. This imbalance is driven by the faster growth of property development costs relative to household incomes. As a result, houses previously available for N15m or less have become increasingly difficult to find, even in less developed parts of the country.
To alleviate these pressures, the government must address the structural costs of property development. This includes providing cheaper titled land in satellite communities, simplifying the process of obtaining land titles and planning approvals, and improving oversight of essential building materials manufacturers. Such interventions would reduce development costs and make it easier to build affordable homes. Additionally, the government could provide land and facilitate access to financing, while private developers deploy technical expertise, construction resources, and project management capabilities.
Bamidele Adewole proposes that greater government participation in mass housing delivery through public-private partnerships is necessary to close the severe supply-demand gap. Under this arrangement, the government could provide land and facilitate access to financing, while private developers deploy technical expertise, construction resources, and project management capabilities. Escrow accounts and effective project monitoring would help strengthen accountability and protect public investment.
The Lekki-Ajah-Sangotedo corridor is one of the most attractive emerging investment destinations in Lagos, supported by ongoing road infrastructure projects. Developments like the Lekki-Epe Expressway expansion and the Lagos-Calabar Coastal Highway will reshape the area's investment outlook. However, roads alone are not sufficient; drainage infrastructure, street lighting, CCTV installations, and other security measures are vital to creating a safe and comfortable living environment.
Attracting institutional investors, pension funds, and private equity firms remains difficult due to concerns about regulatory weaknesses and investment risks. Building collapses, disputed land titles, project delays, and cases of developers disappearing with investors' funds have weakened confidence. Strengthening regulation, enforcing construction standards, improving transparency, and establishing credible oversight mechanisms are necessary to attract more institutional capital.
Prospective buyers should engage registered land surveyors and property lawyers before committing funds. Surveyors establish geographical coordinates, verify boundaries, and identify encroachments. Lawyers investigate title status at the Lands Registry, while town planners verify zoning compliance. Investors should also examine developers' previous projects, visit completed estates, and speak with existing residents to ensure a safe and secure investment.
Key points
- The government must address structural costs of property development to alleviate pressures on affordable housing.
- Public-private partnerships are necessary to close the severe supply-demand gap in mass housing delivery.
- Strengthening regulation and enforcing construction standards are necessary to attract more institutional capital.
