Gbenga Ibitoye: The Hard Truth About the Rising Cost of Property in Nigeria

As debates over skyrocketing housing costs dominate conversations in urban Nigeria, especially in Lagos and Abuja, Gbenga Ibitoye, Co-founder and Director of Business Development at Riparo Nigeria Limited, has offered a comprehensive perspective that challenges the prevailing public opinion on the issue.

In a conversation with Ilorin Commerce Chronicle, Ibitoye responded to recent criticism against real estate developers and landlords over what some Nigerians call “unjustified pricing” in the country’s housing market. He believes much of this outrage is rooted in ignorance and a lack of understanding of the forces that shape real estate value in Nigeria.

“There is this latest trend of clampdown on real estate companies about overpriced properties and exorbitant rent by landlords in Nigeria, especially in Lagos and Abuja,” Ibitoye observed. “This narrative, I believe, is becoming increasingly popular due to ignorance of the general public and lack of proper awareness about the factors that drive property value and pricing in Nigeria.”

To illustrate the problem, Ibitoye shared a common comparison. “A certain Richard feels it’s unfair and unjustifiable to pay $300,000 to buy a 3-bedroom duplex in Lekki, because according to him, there is another property of the same quality and features in Cape Town that is listed for $200,000,” he recounted. “Why the price disparity? ‘Properties in Lagos are overpriced!’ he exclaimed.”

But according to Ibitoye, the Nigerian real estate market is one of the most dynamic on the continent, shaped by a multitude of economic and social factors. These include inflation, unstable exchange rates, interest rates, demand and supply gaps, and local market sentiment.

He explained that economic instability has been especially brutal for developers in recent years. “In recent times, the impact of economic factors such as unstable exchange rate, inflation, and interest rates has not been favorable to developers. This has a direct impact on the cost of building materials, which are mostly imported,” he noted.

Offering a practical example, he said: “A developer quotes N2 billion for the construction of 10 units of 2-bedroom duplex in January 2023 when the exchange rate was $1/N745 with the project completion date of December 2024. By December 2024, the exchange rate was at $1/N1,500 – that’s over 100% increase in cost of building.”

As a result, some developers in prime locations now quote their property prices in U.S. dollars to hedge against exchange rate volatility.

Another major factor influencing property prices, he said, is the imbalance between supply and demand, especially in Lagos. “While some may argue that the price of properties in Lagos when compared to other major cities in Africa is unreasonably high,” Ibitoye said, “the truth is, the population growth in Lagos outpaces housing supply.”

He described Lagos as the smallest state in Nigeria by landmass, but with an estimated population of about 22 million people. “The housing deficit is well over 5 million, according to national reports. High demand for properties against limited supply will inevitably drive rental prices and the cost of owning properties higher.”

In addition to these economic and demographic realities, Ibitoye pointed out that the desirability of certain locations by Nigeria’s elite also drives prices up.

“Local market sentiments, such as location desirability by the high and mighty, also play a crucial role in pricing,” he explained. “Places like Ikoyi and Banana Island are affluent neighborhoods for wealthy people in Lagos, which guarantees a certain level of prestige and exclusivity.”

According to him, Bourdillon Road in Ikoyi—home to influential figures like President Bola Tinubu—is arguably the most expensive street in Nigeria. “Of course, renting or owning a property in such neighborhood will cost a fortune,” he added.

Despite the challenges, Ibitoye remains optimistic about the Nigerian real estate sector. He believes the market offers tremendous opportunities for long-term investors, particularly Nigerians in the diaspora.

“While it’s true that Nigeria’s real estate market has its own challenges, it also offers tremendous opportunities for growth and returns on investment,” he said. “For Nigerians at home and in the diaspora, investing in Nigeria’s real estate market can be a profitable and strategic move, providing diversification options.”

With proper awareness and a long-term view, he argued, investors can unlock the enormous potential of the market while contributing to economic development.

Gbenga Ibitoye is the Co-founder and Director of Business Development at Riparo Nigeria Limited.