Authored by the expert who managed and guided the team behind the Nigeria Property Pack
Yes, the analysis of Lagos' property market is included in our pack
The naira's dramatic weakening against the US dollar over the past year has fundamentally reshaped Lagos property investment dynamics.
Foreign investors now find Lagos real estate significantly cheaper in dollar terms, while local buyers face unprecedented affordability challenges as property prices surge in naira terms but remain flat or declining when measured in hard currency.
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The naira has lost over 50% of its value against the US dollar in 12 months, making Lagos property cheaper for foreign buyers but more expensive for locals.
Property prices have risen 39.5% in naira terms but remain stagnant or declining in dollar terms, creating a complex investment landscape.
| Investment Factor | Current Status (September 2025) | Impact on Investors |
|---|---|---|
| Naira-USD Exchange Rate | ₦1,520 per USD (from ₦900-1,000) | 50%+ devaluation benefits foreign buyers |
| Property Price Growth | +39.5% in naira, flat/negative in USD | Mixed: locals priced out, foreigners see bargains |
| Rental Yields | 6-8% gross (up to 10% in emerging areas) | Nominal gains offset by inflation and currency risk |
| Foreign Buyer Demand | Robust, especially diaspora investors | Strong interest in prime and growth corridors |
| Construction Costs | +20-30% due to inflation | Delays and margin pressure on new developments |
| Financing Costs | Elevated mortgage rates | Limited access to affordable local financing |
| Repatriation Ease | Restricted due to FX controls | Challenges converting naira gains to hard currency |
How much has the naira lost against the US dollar over the past year, and what does this mean for foreign property investors?
The naira has experienced a devastating decline against the US dollar, losing over 50% of its value in just 12 months.
As of September 2025, one US dollar exchanges for approximately ₦1,520, compared to ₦900-1,000 just a year ago. This represents one of the most significant currency devaluations in Nigeria's recent history, fundamentally altering the Lagos property investment landscape.
For foreign investors, this devaluation creates a unique opportunity where Lagos real estate has become substantially cheaper in dollar terms. A property that cost $100,000 equivalent in naira twelve months ago would now cost approximately $65,000-70,000 at current exchange rates, assuming property prices remained constant in naira terms.
However, the reality is more complex because property prices have simultaneously risen in naira terms. The net effect is that foreign buyers can still find attractive entry points, particularly in prime areas where prices have remained relatively stable in dollar terms while offering the same quality and location benefits.
It's something we develop in our Nigeria property pack.
How are Lagos property prices responding to naira devaluation in local versus dollar terms?
Lagos property prices show a stark divergence when measured in naira versus US dollars, creating different investment realities for local and foreign buyers.
In naira terms, Lagos residential and commercial properties have surged by 39.5% in 2024, with projections indicating another 5-15% increase through 2025. This dramatic price inflation reflects sellers' attempts to hedge against currency devaluation and broader economic uncertainty.
However, when converted to US dollars, the same properties show flat or declining values. Prime luxury developments in Ikoyi, Banana Island, and Victoria Island that might have appreciated 20-30% in naira terms show zero or negative growth in dollar terms over the same period.
Commercial real estate follows similar patterns, with office spaces and retail properties in Lagos Island and Victoria Island maintaining naira price growth but struggling to hold dollar values. The average residential property price across Lagos now sits around ₦50 million, but this represents no real appreciation when adjusted for currency depreciation.
Growth corridors like Ibeju-Lekki, Lekki-Epe Expressway, and emerging areas such as Epe show the strongest performance, occasionally outpacing naira depreciation due to infrastructure development and increasing demand from both local and diaspora buyers.
Are rental yields in Lagos improving when adjusted for inflation and currency depreciation?
Lagos rental yields present a complex picture where nominal returns appear attractive but real returns face significant erosion from inflation and currency depreciation.
Gross rental yields across Lagos currently range from 6-8%, with emerging areas occasionally reaching 10% and short-term rental properties in prime locations like Ikoyi, Lekki, and Victoria Island achieving yields up to 30% higher than traditional long-term leases.
Rental prices have increased dramatically, rising 44-47% year-over-year as landlords attempt to keep pace with inflation and currency devaluation. This nominal increase initially suggests improving returns for property investors.
However, when adjusted for Nigeria's inflation rate of approximately 25-30% and the naira's 50%+ depreciation against major currencies, real returns for foreign investors become flat or negative. A foreign investor earning ₦2 million monthly rent today receives roughly the same dollar amount as ₦1.4 million rent a year ago due to currency depreciation.
Local landlords face additional pressure as tenant affordability decreases due to stagnant wages and rising living costs, potentially limiting future rent increases and creating vacancy risks in mid-market properties.
What is current foreign buyer demand like compared to last year?
Foreign buyer demand in Lagos property remains remarkably robust despite currency volatility, driven primarily by diaspora investors and international corporations seeking Nigerian market exposure.
Diaspora remittances hit record highs in 2024, with significant portions flowing into Lagos real estate as overseas Nigerians view property investment as a hedge against further currency devaluation. This demand concentrates heavily in prime areas and growth corridors where infrastructure development supports long-term value appreciation.
International corporate buyers show particular interest in commercial properties and luxury residential developments, especially those priced in dollars or offering dollar-linked rental agreements. These buyers benefit from the currency arbitrage while securing assets in Africa's largest economy.
However, foreign demand patterns have shifted toward more strategic, long-term investments rather than speculative purchases. Buyers increasingly focus on properties with strong rental potential, preferably in areas with reliable infrastructure and security.
Growth areas like Ibeju-Lekki see the strongest foreign interest due to ongoing Dangote Refinery operations and planned deep seaport development, while traditional luxury areas maintain steady but more selective foreign buying activity.
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How is the weaker naira affecting local Nigerian buyers' purchasing power?
Local Nigerian buyers face unprecedented challenges as the naira's weakness combines with inflation to dramatically reduce property affordability across Lagos.
Average Nigerian wages have failed to keep pace with property price inflation, creating a growing affordability gap. While properties have increased 39.5% in naira terms, typical salary increases lag significantly behind, estimated at 10-15% annually for most professionals.
Middle-class buyers who could previously afford properties in areas like Surulere, Yaba, or mainland Lagos now find themselves priced out, with many turning to peripheral areas like Badagry, Agbado, and Ojo for affordable options.
The situation particularly affects first-time buyers, as deposit requirements have effectively doubled in real terms while lending rates have increased substantially. A property requiring ₦10 million down payment last year now demands ₦14-15 million for equivalent properties.
Local buyers increasingly rely on family support, extended payment plans, or joint ownership arrangements to access property markets. Some developers respond by offering flexible installment schemes, though these often include currency hedging mechanisms that maintain affordability challenges.
What financing options exist in Lagos now, and how have borrowing costs changed?
Lagos property financing has become significantly more expensive and restrictive following naira devaluation, with limited options for both local and foreign buyers.
| Financing Type | Current Rates/Terms | Availability & Conditions |
|---|---|---|
| Local Naira Mortgages | 25-35% annual interest rates | Strictly regulated, requires substantial collateral |
| Developer Financing | Varies, often dollar-indexed | Limited to premium projects, flexible payment plans |
| Dollar Loans | 8-12% but with FX restrictions | Extremely limited, requires offshore income proof |
| Bank Bridge Loans | 30-40% annual rates | Short-term only, heavy collateral requirements |
| Diaspora Financing | Competitive rates in home countries | Growing option for overseas Nigerians |
Traditional Nigerian banks have tightened lending criteria substantially, requiring higher down payments (typically 30-50%) and comprehensive income verification. Mortgage rates far exceed inflation, making borrowing economically challenging for most buyers.
Dollar-denominated loans remain extremely scarce due to Central Bank of Nigeria foreign exchange restrictions, forcing most transactions into naira-based financing with currency risk borne by borrowers.
It's something we develop in our Nigeria property pack.
How difficult is it for international investors to repatriate rental income and capital gains?
International investors face significant challenges repatriating rental income and capital gains from Lagos real estate due to Nigeria's foreign exchange controls and dollar liquidity constraints.
The Central Bank of Nigeria maintains strict foreign exchange allocation policies, prioritizing essential imports and limiting access to dollars for real estate profit repatriation. This creates substantial delays and uncertainties for foreign investors seeking to convert naira earnings to hard currency.
Many international investors now structure investments through offshore vehicles or dollar-denominated lease agreements to minimize repatriation risks. However, these arrangements often require specialized legal structuring and may not be available for all property types.
Some investors resort to parallel market exchanges or cryptocurrency conversions, though these methods carry legal risks and unfavorable exchange rates compared to official channels.
The situation varies significantly based on investment size and investor status, with larger institutional investors often receiving preferential treatment for foreign exchange access compared to individual property owners.
What are Lagos government's latest property investment policies and tax changes?
Lagos State government has intensified building code enforcement and permit requirements throughout 2024-2025 while maintaining existing tax structures that become more expensive in real terms due to rising property values.
New regulations focus primarily on compliance and safety rather than investment incentives, with stricter enforcement of building permits, environmental clearances, and infrastructure contribution requirements for new developments.
Property taxes remain calculated on property values, meaning tax obligations have increased substantially in naira terms as property values rise, though these remain relatively modest compared to international standards.
Stamp duties and registration fees have not changed in percentage terms but represent higher absolute costs due to increased property values. A property transaction that attracted ₦500,000 in fees last year might now incur ₦700,000-800,000 for equivalent properties.
The government has not introduced new investment incentives specifically addressing currency devaluation impacts, maintaining focus on infrastructure development and regulatory compliance rather than direct investor subsidies.
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How is inflation affecting construction costs and new Lagos developments?
Inflation has dramatically increased construction costs across Lagos, creating significant challenges for new property developments and affecting overall market supply.
Cement and steel prices have risen over 20% year-on-year, while overall project costs have increased by at least 7% and potentially 20-30% for developments requiring significant imported materials. These increases far exceed typical developer margin buffers, forcing project delays and cost restructuring.
Energy costs have surged due to fuel subsidy removal and currency devaluation affecting imported equipment, adding substantial expense to construction operations. Many developers now factor backup power generation costs into project budgets, increasing final property prices.
Labor costs have increased as construction workers demand wage adjustments to cope with inflation, though these increases lag behind material cost inflation. Skilled labor shortages in certain trades have emerged as workers seek opportunities in other sectors offering better inflation protection.
The combination of these factors has led many developers to delay project launches, reduce project scope, or increase selling prices significantly. Affordable housing projects face particular pressure, as cost increases make achieving target price points increasingly difficult.
Which Lagos neighborhoods show dollar-term price growth despite naira weakness?
Specific Lagos neighborhoods demonstrate resilience in dollar terms, primarily driven by infrastructure development, economic activity, and strategic location advantages.
- Ibeju-Lekki corridor: Benefits from Dangote Refinery operations and planned Lekki Deep Sea Port, driving price appreciation that occasionally outpaces naira depreciation
- Lekki-Epe Expressway zone: Infrastructure improvements and commercial development support sustained value growth in hard currency terms
- Victoria Island business district: Prime commercial properties maintain dollar stability due to multinational tenant demand and limited supply
- Banana Island luxury sector: Ultra-high-end properties show resilience due to limited supply and international buyer interest
- Yaba tech hub area: Emerging technology sector demand supports price stability, particularly for modern office and residential developments
Conversely, areas showing decline or stagnation in dollar terms include older mainland neighborhoods without infrastructure upgrades, peripheral residential areas lacking connectivity, and some traditional commercial districts facing competition from newer developments.
It's something we develop in our Nigeria property pack.
How are property developers adjusting their strategies to currency challenges?
Lagos property developers have implemented significant strategy shifts to manage currency volatility and maintain project viability amid challenging economic conditions.
Dollar pricing has become increasingly common for premium projects, with developers offering purchase agreements denominated in US dollars or including foreign exchange adjustment clauses to protect against further naira depreciation.
Flexible payment plans have expanded dramatically, with many developers offering extended installment periods, milestone-based payments, and even cryptocurrency payment options to attract buyers facing financing challenges.
Project phasing has become more conservative, with developers launching smaller phases to test market demand and adjust pricing based on currency movements rather than committing to large-scale developments with fixed pricing.
There's increased focus on short-term rental and serviced apartment developments to maximize rental income and provide flexibility for currency conversion, particularly in areas like Victoria Island and Lekki where international business travelers create dollar-earning potential.
Some developers have delayed projects entirely, waiting for greater currency stability or securing dollar-based financing before proceeding with construction, leading to reduced new supply in certain market segments.
What do current projections suggest about naira direction and investment timing?
Current economic projections from major financial institutions and analysts suggest continued naira weakness over the next 12-24 months, with important implications for Lagos property investment timing.
The International Monetary Fund and major Nigerian banks forecast the naira reaching ₦1,550-₦1,600 per US dollar by mid to late 2026, representing continued gradual depreciation from current levels around ₦1,520.
No immediate rebound is expected due to ongoing structural challenges including oil production issues, foreign exchange earning constraints, and continued import dependency for key economic inputs.
For investment timing, these projections suggest foreign buyers should prioritize immediate entry over waiting for currency stabilization, as further depreciation will likely reduce property costs in dollar terms while Nigerian economic fundamentals support long-term property demand.
Investors should focus on dollar-priced assets where available, prime location properties with strong rental potential, and growth corridor developments that benefit from ongoing infrastructure investment regardless of currency fluctuations.
The optimal strategy involves purchasing properties that can generate dollar or dollar-linked rental income while minimizing exposure to naira-denominated returns that face continued depreciation pressure.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
The naira devaluation has created a dual-market scenario in Lagos real estate where foreign investors find attractive entry points while local buyers face unprecedented affordability challenges.
Success in this environment requires careful attention to currency risk management, strategic location selection, and realistic expectations about repatriation challenges for international investors.
Sources
- Wise Currency Converter - USD to NGN Historical Rates
- Trading Economics - Nigeria Currency
- The African Investor - Lagos Nigeria Property Analysis
- The African Investor - Lagos Price Forecasts
- LinkedIn - 2025 Lagos Real Estate Market Opportunities
- ZEX PR Wire - Investing in Nigeria's Real Estate 2025
- Nigeria Real Estate Blog - Inflation Impacts 2025
- France24 - Lagos Rent Increases Due to Inflation
- Guardian Nigeria - Construction Costs and Economic Uncertainty
- Dutum Group - Building Costs in Nigeria