Exploring Investments in Nigerian Real Estate from The Diaspora II

January 4, 2021by Regent Real Estate0

In the preceding article, we explained the growing interests of Nigeria’s diasporan market, the impact of the weakened value of the naira and the opportunities it presents to the diasporan market for investing in Nigeria’s Real Estate. In this article, we would explore practical use cases from our experience in the market as agents to this market segment.


The economic power of Nigeria’s diasporan investors primarily stemming from the impact of their remittances which is estimated at about 6% of Nigeria’s GDP, cannot be overemphasized. Investments in Real Estate has enjoyed attention in the past decade due to a number of factors including rapid urbanization, aging diasporan population, the emotional desire of diasporans, and the relatively lower cost of acquisition.


For this article, we would compare homeownership in the USA to ownership in Nigeria. According to the United Nations (UN), the United States is the highest-ranking destination for Nigerian emigrants accounting for 22.6% of the total emigrants from Nigeria in the diaspora. Remittances from the United States amounted to US$6.19 billion in 2017 and ranked highest among other countries, accounting for 9% of the total remittance outflows from the USA in the same period.


The diasporan relationship between the USA and Nigeria is evidently strong with recognisable impact on Nigeria’s investment landscape. According to the US Census Bureau, the annual median income of households led by someone of Nigerian ancestry was $68,658 in 2018, slightly higher than the median income of overall U.S. households at $61,937.


Zillow estimates the typical value of homes in the United States at $263,351 (₦125.5 million) compared to Nigeria where 4-bedroom duplexes in upper-middle-class neighborhoods is valued close to 2x less at about $150,000 (₦71.5 million). This goes on to prove that the route to owning a home in Nigeria perhaps to reside in or hold as an investment property is much shorter than your route abroad.


For diasporans on a pathway to owning homes to reside…

Lekki Phase 1 and Ikoyi have enjoyed attention in recent years and many diasporans have been inclined to overlook other suitable surrounding areas, as they have either been scared off by false reports or do not have reliable information to make an informed buying decision. This has led to issues in fulfilling requests in a timely manner, as they demand properties with higher levels of specifications at below-the-market pricing for that particular area. Whilst fulfilling such a sale is not impossible, it is however highly unlikely as such deals are rarely available and only so in small windows.


With that, we have identified a number of properties in other locations around Lekki Phase 1 such as Ikate Elegushi and Osapa London which are a 10 – 15 minutes drive from Lekki Phase 1 during off-peak traffic periods. These properties also come with affordable payment plans spanning 1-3 years. Customers who wish to speculate or with smaller budgets, also have the option of making purchases further along the expressway in areas such as Chevron and Sangotedo which are still built up and in a number of cases have very good amenities.


Another key fact to note in the requests we’ve had is that a large number of diasporans desire to live in “American-Styled” gated communities with low fences. These types of properties tend to be more prominent further down the Lekki-Epe Expressway as these areas are better planned and situated within gated communities. A notable example of this is the Ikota villa estate, which is a stone throw away from the illustrious Victoria Garden City (VGC).

A typical payment plan for these properties would involve interested buyers making a 50% – 70% outright payment upfront and spreading the balance in the coming months. These plans typically command a premium of about 3% – 5% when compared to making the full outright payment. We have also seen cases where private property developers make partnerships with mortgage lenders to provide long-term plans up to 20 years attracting interest rates typically starting from 15% over time.


Real Estate in Lekki as an investment vehicle for diasporans…

We compared the yields of properties in locations around Lekki Phase 1 and understood that these yields are quite similar to that of properties in Lekki Phase 1, even higher in some cases. The best performing investment properties were identified in Chevron largely due to the serene environment and better infrastructure. Have a look at the chart below to understand:

Regent Real Estate has built networks with a number of property developers to help you find the perfect home or investment property. Go over some of our featured properties here. We are very happy to help as you reach out.

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