Investors in Lagos real estate remain optimistic as opportunities expand across land reclamation, estate development, and building-materials merchandising. That’s according to PAC Research Latest Housing report. However, the high cost of ownership, limited access to <a href="https://absafricatv.com/air-seychelles-eyes-long/” title=”Air Seychelles eyes long”>long-term financing, and declining purchasing power are pushing many residents toward rentals, now consuming 40–60 per cent of household income, well above global affordability standards. Chinonso Nweke, Investment Research Analys at PAC Research joins CNBC Africa to unpack the report.
Wed, 22 Jul 2026 15:32:48 GMT
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Key Points:
- Lagos real estate investors remain optimistic about land reclamation, estate development and building-materials merchandising opportunities, according to PAC Research.
- PAC Research said corridors such as Ibeju-Lekki, Badagry, Ikorodu and the Lekki-Epe axis offer investment value depending on target market and time horizon.
- The firm estimates Lagos faces a housing deficit of about 3.5 million to 3.8 million units, with population growth still outpacing new supply.
- High ownership costs, poor access to long-term financing and weaker purchasing power are pushing more residents into rentals that consume about 40% to 60% of household income.
- PAC Research said digital land administration reforms are improving confidence, but stronger implementation and continuity in government policy are still needed.
Topics
Lagos real estateNigeria property marketPAC Researchhousing deficitland reclamationIbeju-LekkiLekki-Epe corridoraffordable housingrental marketland administration reform
- Lagos real estate investors remain optimistic about opportunities in land reclamation, estate development and building-materials merchandising, according to PAC Research’s latest Houser report.
- PAC Research said emerging investment corridors including Ibeju-Lekki, Badagry, Ikorodu and the Lekki-Epe axis continue to offer value, although returns depend on an investor’s target market and time horizon.
- The report highlighted a Lagos housing deficit of about 3.5 million to 3.8 million units, with population growth outpacing housing delivery.
- Rising ownership costs, weak access to long-term financing and declining purchasing power are pushing more residents into rentals that consume roughly 40% to 60% of household income, well above global affordability benchmarks.
Lagos real estate investors are staying optimistic about opportunities in land reclamation, estate development and building-materials merchandising, even as affordability pressures deepen and housing delivery lags far behind population growth, according to comments Wednesday from Chinunso Sowe, investment research analyst at PAC Research, discussing the firm’s latest Houser report.
Sowe told CNBC Africa that emerging investment locations such as Ibeju-Lekki, Badagry, Ikorodu and the Lekki-Epe corridor each present long-term value, but said returns depend heavily on the type of development an investor is pursuing and the income bracket of the intended tenant or buyer.
“The first question you ask is, who am I building it for? What is my target market?” Sowe said on CNBC Africa. He said some investors are targeting corporates and business travelers, while others are focused on middle-income earners.
He added that no single corridor can be described as the outright winner across all strategies because each market has distinct characteristics. “All the areas you mentioned, Ibeju-Lekki, Lagos Island, and the likes, they have their unique characteristics, and they offer value to their investors,” Sowe said.
That view comes as Lagos continues to face a severe housing shortage. According to PAC Research, the state currently has a housing deficit of about 3.5 million to 3.8 million units, underscoring the scale of unmet demand in Nigeria’s commercial capital.
Sowe said the current pace of housing delivery is nowhere near enough to close that gap. He pointed to continued inflows into Lagos and said the state’s population, which he put at 17.2 million, could rise to 18 million next year and exceed 22 million by 2025.
“The pace at which we are building is so low compared to the population coming into Lagos,” he said. He added that while the government has launched housing initiatives across the state, the deficit remains too wide for public efforts alone to resolve.
The weakness is becoming more visible in the rental market. PAC Research said high ownership costs, constrained mortgage access and weaker household purchasing power are pushing many Lagos residents away from home ownership and toward renting instead.
Those rental costs are absorbing roughly 40% to 60% of household income, according to the report’s findings cited in the interview, compared with global affordability standards that typically imply a far lower share of income should go to housing. The interviewer said some renters are spending as much as 50% to 70% of income on rent.
Sowe said the affordability squeeze is hitting the middle class particularly hard. “Most of the middle-income earners are now working for their landlords,” he said, arguing that the burden has become unsustainable for many households.
He said the private sector cannot shoulder the affordability challenge alone, especially in a high-interest-rate environment that makes long-term project financing more difficult and shifts developers toward higher-income segments where returns are easier to secure.
“For the private sector, you really cannot fully blame them because they are here to do business,” Sowe said. “And unfortunately, the interest rate environment we have in the country is not so favorable to them. So their target is mostly those who earn higher than the average income.”
That leaves a larger role for the state in boosting affordable housing supply. Sowe said government-backed initiatives are likely to be the main channel through which middle-income earners get relief, particularly if authorities can expand housing programs and improve financing conditions over time.
Beyond housing supply, Sowe said reforms in land administration are helping improve sentiment among investors. He pointed to digital initiatives including electronic certificates of occupancy and digital mapping as positive steps for a market where title clarity and documentation have long been major concerns.
“The government has done so well in digitalizing these whole processes, and we give kudos to them,” he said. “They’re really, really, it’s impressive.”
Still, he said the benefits of new rules and digital systems will depend on enforcement. Despite reforms and property protection laws, land disputes remain a concern in Lagos, raising questions over implementation and investor protection.
“The whole point of lawmaking is implementation,” Sowe said. “Without adequate implementation, whatever law we make is as good as nothing.”
He said stronger enforcement would help reassure investors that their capital is protected over the long term, particularly in projects with multiyear development cycles. Confidence, he added, also depends on continuity in government policy, so that investors can commit funds with greater certainty over returns in two to 20 years.
The Lagos property market has increasingly drawn attention from developers and investors looking to capitalize on urbanization, infrastructure expansion and demand for residential and mixed-use projects. But the same market continues to wrestle with structural constraints, including high construction costs, financing bottlenecks and a mismatch between new supply and the income profile of most residents.
For now, PAC Research’s view suggests investor appetite remains intact in selected corridors, especially where land reclamation and new estate development are expanding the frontier of available property. The next test for the market will be whether reforms to land administration, together with public-private efforts on housing supply, can translate that optimism into broader affordability and more sustainable long-term growth.
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