Nigeria Real Estate Investment Guide

Nigeria is located in West Africa and is the most populous country on the African continent. It has a rich cultural heritage. Nigeria is known for its diverse ethnic groups, languages, and religions.

According to Statista, Nigeria had an estimated population of 223.8 million as of 2023. Most of the population comprises various ethnic groups, including the Hausa, Yoruba, and Igbo. The official language is English, but over 525 native languages are spoken nationwide. Nigeria is predominantly religious, with most of the population either Muslim or Christian.

Geography and Location

Nigeria is situated on the Gulf of Guinea and shares borders with Benin, Niger, Chad, and Cameroon. The country covers an area of 923,768 square kilometers and is made up of diverse ecosystems, including forests, grasslands, and savannas. The Niger River, one of the largest rivers in Africa, flows through the country and provides a vital source of water for the people.

Other Statistics:

Nigeria is classified as a lower-middle-income country by the World Bank. Its economy is largely driven by the oil and gas sector, which accounts for the majority of the country’s export revenue. The country also has a significant agricultural sector, with cocoa, cassava, and palm oil as their main crops. The life expectancy in Nigeria is 55.75 years in 2023, and the literacy rate is 48.9%. The capital city is Abuja, and the largest city is Lagos.

Nigeria is a resource-rich country with a large agricultural sector. It is the world’s largest cocoa producer and Africa’s second-largest oil producer. Nigeria is also a prominent producer of natural gas, gold, and iron ore. It is a developing country with a high rate of poverty. Most of the population lives in rural areas and relies on agriculture.

Despite its challenges, Nigeria is a country with great potential. It has a young population, a large and diverse economy, and a rich cultural heritage. Nigeria is a country to watch in the years to come.

Population, People and Language

Nigeria is a country in West Africa, with over 223.8 million people. It is the most populous country in Africa and the seventh most populous country globally. Nigeria is a federal republic with three major ethnic groups: the Hausa, the Yoruba, and the Igbo. The Hausa are the largest ethnic group, followed by the Yoruba and the Igbo. Nigeria is also a multi-religious country, with most of the population being Muslim (52%) and the remainder Christian (48%).

The urban population is 54.3 % of the total population (120,696,717). The urbanization rate is 3.84%, according to CAHF in 2023. Hausa, Yoruba, and Igbo are the primary languages spoken by over three-quarters of the population. There are over 525 languages spoken in Nigeria, with English as the official language.

Nigeria Real Estate and Investing.

Nigeria’s real estate market is diverse, ranging from residential to commercial, retail, and industrial properties. Major cities like Lagos, Abuja, and Port Harcourt are hubs for real estate activity. Due to rapid urbanization, population growth, and a growing middle class, there has been an increase in the demand for housing and commercial spaces.

However, there’s often a gap between supply and demand, leading to housing shortages and high property prices in certain areas. This creates more opportunities for those who want to invest in the real estate sector in Nigeria.

According to Statista, the Nigeria residential real estate market is expected to reach a value of US$1.93tn by 2024, evidence of significant growth in the country’s real estate sector.

Rental Yields

Rental yields in Nigeria vary significantly depending on the location and type of property. In Lagos, rental yields range from about 3% to 5.3%, with high-end areas like Ikoyi and Victoria Island typically on the lower end of this range due to higher property prices. In contrast, Abuja generally offers higher rental yields, often reaching up to 8%​. However, the average rental yields are 6% to 10% as of 2023.

Taxation in Nigeria

• Capital Gains Tax (CGT) – 10% charge levied on companies
• Companies Income Tax (CIT) – 30% charge on the total profits made by legally registered corporate organizations
• National Information Technology Development Levy (NITDL) – mainly applies to specific companies operating in the Information and Technology industry
• Personal Income Tax (PIT) – 7% to 24% charge imposed on individuals and typically covers wages, salaries and similar earnings
• Petroleum Profits Tax (PPT) – 50% and 85% of chargeable profit as taxes apply to upstream petroleum organizations
• Stamp Duties (SD) – levied on electronic transfers of above ₦10,000 through banks
• Tertiary Education Tax (EDT) – 2% levy imposed on all companies registered in Nigeria
• Value Added Tax (VAT) – 7.5% consumption levy that final consumers in Nigeria pay directly to service providers when purchasing a good or paying for a service

Nigeria Economy

Nigeria has one of the largest economies in Africa, driven primarily by its abundant natural resources, particularly oil. It should be noted that Nigeria’s economy grows steadily as oil output rises.

According to the National Bureau of Statistics, full-year growth for 2023 stood at 2.74%. The performance of the GDP in the fourth quarter of 2023 was driven mainly by the services sector, which recorded a growth of 3.98% and contributed 56.55% to the aggregate.

GDP

The official estimate for Nigeria’s GDP was $1.116 trillion in purchasing power at the end of 2023. This grew by 2.74% as compared to that of 2022.

Economic Sectors in Nigeria

Nigeria’s economy is diversified, with various sectors contributing to its GDP such as oil and Gas. Here’s an overview of the key economic sectors:

• Oil and Gas: Nigeria is one of the largest oil producers in Africa and a major player in the global oil market. The oil and gas sector accounts for significant government revenue and export earnings.
• Agriculture: This is another vital sector in Nigeria, employing a large portion of the population, particularly in rural areas. Major crops include cocoa, cassava, yams, maize, rice, and various fruits and vegetables.
• Manufacturing: Nigeria has a nascent manufacturing sector, with industries producing goods such as cement, textiles, food and beverages, chemicals, and automobiles.
• Construction and Real Estate: Infrastructure development and real estate activities have been growing, driven by urbanization, population growth, and government investments in transportation, housing, and utilities.
• Mining Sector: Nigeria has substantial mineral resources, including coal, gold, iron ore, limestone, and tin.

Emerging Sectors in Nigeria

The IT sector is one of the emerging sectors, with startups and tech hubs emerging in cities like Lagos and Abuja. Additionally, with a large youth population and a growing demand for quality education, EdTech startups are emerging to address challenges in the education sector.

Waste and renewable energy are other promising sectors. With increasing urbanization comes the challenge of managing waste effectively. This has led to a growing interest in waste management and recycling initiatives. Recycling plants, waste-to-energy projects, and sustainable waste management solutions present investment opportunities.

Key Projects in Nigeria

The Lagos Urban Transport Project

The Lagos Urban Transport Project is one of the key projects in Nigeria, providing more than 500,000 jobs to Nigerians. It is a public-private partnership approved in 2010, receiving its funding from the Nigerian Government and the International Development Association. Its goal is to improve the transport sector in the Lagos metropolitan area and improve the efficiency of the public transport network.

The 4th Mainland Bridge

The 4th Mainland Bridge in Lagos is a highly anticipated infrastructure project aimed at significantly improving transportation within the city and easing traffic congestion. The project aims to provide an alternative route to the existing three mainland bridges (Eko, Carter, and Third Mainland Bridge), thereby reducing traffic congestion and improving connectivity between Lagos Island and the mainland.

The 1,350 MW Gwagwalada Power Project

The Gwagwalada project is a key part of the Nigerian National Petroleum Company’s (NNPC) plan to increase power generation in Nigeria. It’s a combined cycle gas-fired power plant that will be built in three phases on a 547-hectare site in Abuja, the capital of Nigeria.

The project will generate 1.35 GW of power, but combined with the 900MW Kaduna and 1.3GW Kano power projects, it will add 3.6 GW of capacity to the national grid. This is part of a larger initiative by the NNPC to develop power plants along the Ajaokuta-Kaduna-Kano gas pipeline corridor.

Final Thoughts

Nigerian real estate offers lucrative opportunities; it requires careful planning, risk management, and a deep understanding of the local market dynamics. Overall, there is great potential in the Nigerian real estate market, considering the high urbanisation rate and looming population growth.