Real estate is one of the most profitable ways you can make money in Nigeria. But to make money out of real estate in Nigeria, you must know how it works.
In real estate in Nigeria, you can be a developer, an investor, a retailer, or an agent, depending on what you want to focus on.
For instance, as an investor, you can invest in real estate through direct and indirect means. You can invest directly in real estate by buying a house, rental, or other properties. You can invest indirectly in real estate in Nigeria through REIT – Real Estate Investment Trust. We will discuss more on this later in this article.
But for now, let’s start your investment journey by diving into how real estate works in Nigeria.
Real estate is all about property. This can be in the form of buildings and lands. Real estate usually doesn’t involve any personal properties that are movable, such as cars, furniture, and any other movable things.
When you are thinking about real estate, you can always think about real property. This consists of land, the building, and all its immovable properties. The immovable properties include natural resources and any permanent artificial properties.
An important aspect you should know about real estate is that you can own it yourself. You don’t have to buy others’ properties before becoming a real estate investor in Nigeria. All you need is to know the full scope of real estate, from the types to how you can make profits by investing.
.jpg)
There are five types of real estate in Nigeria that you should know. They include:
Residential real estate deals with using a real property for the benefit of residential living for an individual or more. This type of real estate is the most common and one that most people are familiar with. Examples of residential real estate include condominiums, single-family homes, townhouses, duplexes, apartments, and other housing arrangements.
Commercial real estate deals with using real property to carry out business operations. Examples of commercial real estate include office buildings, parking lots, malls, grocery stores, gas stations, theaters, and other business facilities.
Industrial real estate deals with using a real property for industrial businesses. Industrial business operations involve manufacturing, research and development, warehousing, transportation, mechanical productions, and logistics.
Bare land involves farmland, vacant land, and other undeveloped lands. This is usually flexible for use and less expensive than developed land property. This can be developed to anything by the developer to make money through it.
Special purpose real estate refers to real property used by the general public. This can include schools, government buildings, libraries, worship places, cemeteries, and parks. Special purpose real estate has a limited and special use. This can also be classified under commercial property sometimes.
.jpg)
In Nigeria, many factors affect real estate from one state to another. These factors can determine your profit and loss when investing in real estate. Let’s consider the following factors to guide your real estate investment:
Location is a crucial part of determining the success of your real estate investment. In Nigeria, there are many states and different settings to the location. Real property in an urban area will influence higher prices than in rural ones. So, pay attention to the location if you want to profit from real estate.
The population of people in a location mostly determines the price of a property. When there is a high demand for property by the people, there will be a higher price. This is why one of the best locations you can start real estate in Nigeria is Lagos due to the high inflow of people.
The higher the population, the higher the scarcity rate of landed property in the location. The scarcity rate leads to more income for investors in that same location.
Another basic thing that affects real estate in any state in Nigeria is infrastructure and property development.
Infrastructural development in a location includes good power supply, road development, the number of companies, and other major infrastructure. For example, real estate in Lagos, Nigeria, will experience more growth due to the different infrastructural development compared to other states in Nigeria.
Again, an area might not be so developed yet but might show good promise for development in the nearest future. This would shift the prices up significantly when any property in the area is placed on the market. A very good example is Land in Epe, Lagos. Buying Land in Epe is a smart move because the area shows very good signs of development in the near future.
Furthermore, the property development level will determine the real estate profit rate. A developed real property will cost higher than an undeveloped real property in any state in Nigeria. So, to maximize profit, you can develop your real property before selling or leasing.
Local real estate laws/policies differ from one location to another in Nigeria. Before investing in real estate in Nigeria, it is best that you meet with legal real estate professionals for guidance.
Also, policy changes by the government to invest in a location can also affect real estate in Nigeria.
The inflation rate in a location can affect the cost price of everything in that location. High product and service costs in a location will also affect the price of real estate in that location. Inflation always benefits real estate developers and agents.
Available or upcoming amenities are another major factor affecting real estate in Nigeria. This has served as one of the major leverages for real estate in Lagos, Nigeria over the years.
For example, there will be a huge development in any location where any major economic contributor of Nigeria plans to start a new project.
You can earn more profit in real estate in Nigeria by doing some simple renovations to an existing real property. Some of the renovations include landscaping, screening, and painting. An aged real property can find its way into the real estate market when you renovate it and give it a new shape.
Renovation is a major factor that influences real property value in any location.
This is the last factor affecting Nigeria's real estate on this list. The type and style of real property will determine how people will bid for it. Building a relaxation center near a beach will cost more than building a gas station or office. So, the type and style are important based on the location.
The age of your real property also affects its value. A new building will cost higher than an older building because the physical properties of buildings depreciate over time. Building designs and quality are other things that buyers pay attention to.
Pay attention to the above factors because they will guide you to know how real estate works in Lagos and other locations in Nigeria.
.jpg)
Another part you must know about how real estate works in Nigeria is the different aspects of real estate. As mentioned earlier, you don’t have to be an investor to start a real estate business in Nigeria. You can invest your time and resources in any of the aspects.
Below is a brief explanation of the different aspects of real estate in Nigeria.
This is a common aspect of real estate in Nigeria that many people know about. Investors deal with real estate investment. Investors put their resources into purchasing properties for profit when the properties appreciate in the future.
It’s easier to be an investor when you have a lot of resources at your disposal. The quality of the investment is dependent on how much resources are put together in the investment.
Real estate agents are the intermediary between potential buyers and sellers. Real estate Agents are popular in Nigeria, and the good thing about being a real estate agent is that you don’t need any capital to start. You just need a good network of people, integrity, and good follow-up skills. As a Real Estate Agent, you can make from 10 - 30% commission on every sold property.
The major work of a real estate developer is to buy an undeveloped real property and develop it for selling for profit. Another thing a developer can do is to put the property on lease after developing it.
Real estate developers use others to develop a property to what they want at a fixed price before selling or leasing it.
You need to know the various examples of real estate we have in Nigeria if you want to understand how real estate works in Nigeria. This will guide you to know what to and not to buy when investing in real estate.
The following are examples of real estate in Nigeria:
1. Condominium (Condo)
2. Portable house
3. Hut
4. Apartment
5. Single-family dwelling
6. Attached
7. Detached house
8. Multi-family dwelling
9. Villa
10. Multi-family house
11. Mobile home
If you are considering how to invest in real estate in Nigeria, you don’t have to worry so much. The most important thing you have to consider is the factors listed above. A real estate agent can help you make your desired choice. So, contact a reliable real estate agent to invest in real estate.
Making money in real estate in Nigeria is quite easy. Know how real estate works in Nigeria, and you won’t find it hard to find your way in the real estate industry.
Real estate investing is buying, managing, selling, or leasing real estate/property for profit. Anyone involved in this process is known as a real estate investor or entrepreneur.
Real estate development involves building or renovating an existing property to a better state for selling or leasing. Real estate development is the process involved in making an undeveloped property grow into a developed one.
Property value can decrease because of wars, emigration, and natural disasters in a particular location.
You can finance your real estate investment with cash. However, you can also finance it with a mortgage through a commercial or private lender.
Get the latest gist and land updates!
