Before purchasing a property in Lagos, there are factors you need to consider.
Lagos is among the hottest real estate markets in the country. For new investors who want a piece of the action, buying a property in Lagos represents an exciting opportunity with the potential for significant returns.
Yet, no matter how eager you are to invest in the city’s real estate market, we believe there is some crucial information you need to process first.
For instance, the recent demolitions at several areas tend to send property prices crashing down, creating a ripple effect in the surrounding areas.
Additionally, dodging property scams in Lagos can be a grueling task. From fraudulent sellers to dubious land titles, the risks are real and can significantly affect your investment.
Of course, it’s possible to get genuine properties in Lagos; many have done it already. To help you, we’ve listed everything you should know before buying properties here.
Everything You Need to Know Before Purchasing a Property Anywhere in Lagos
Here are some key factors to consider before purchasing property in Lagos.
1. Understand the Lagos real estate market dynamics
The real estate market in Lagos is not for the faint-hearted. With a population exceeding 16,000,000, Lagos is Nigeria’s largest city and its economic hub.
The demand for housing is high, but so is the competition and the potential for pitfalls. The recent demolitions, for example, has sent property prices in the area plummeting.
Such events can disrupt market stability and affect your investment’s value. In this regard, it’s important to keep in mind that the real estate market in Lagos is as complex as it is vibrant.
2. Consider recent trends and developments
To make a well-informed purchase, it’s essential to be aware of recent market trends and statistics and keep an eye on these trends for as long as possible.
As expected, property prices in Lagos can be volatile, influenced by factors such as government policies, economic conditions, and urban development projects.
For instance, the ongoing development of the Lekki Free Trade Zone is expected to boost property values in the surrounding areas. Timing your purchase to coincide with market dips can also maximize your investment returns.
In a similar way, a recent report indicated that property prices in prime locations like Ikoyi have increased by 115% over the past two years.
Also, cases of demolition happens from time to time, sending prices of properties in adjacent areas crashing down. A case in hand is the demolition at Mende estate and some parts of Arowojobe in Maryland.
This situation highlights a significant risk factor: government policies and actions can dramatically affect property values.
So bear in mind that demolitions, rezoning, and infrastructure projects can either inflate or deflate property prices, sometimes overnight.
Also Read: Harness the Potential of Lagos Real Estate: A Guide to Tenancy and Lease Agreement
3. Avoiding property scams
Dodging property scams in Lagos requires a lot of carefulness. And the prevalence of fraud in the Lagos real estate market is a well-known issue.
Fake agents, counterfeit documents, and double sales of properties are common scams that could cost you both time and money.
Oftentimes, investors have reported their encounter with fraudulent property deals pushed by con artists who masquerade as legitimate agents.
To reduce this risk, always engage with reputable real estate agents and ensure that all transactions are thoroughly vetted by a competent lawyer.
4. Consider the legal aspects
Before purchasing any property in Lagos, understand the legal process involved. Here are some key points to consider:
- Land Use Act of 1978: This act regulates land ownership and use in Nigeria. It vests all land in a state in the hands of the state governor, who holds it in trust for the people. Therefore, obtaining a Certificate of Occupancy (C of O) is essential as it certifies your ownership.
- Title Verification: You will always need to verify the title of a choice property to ensure it’s not subject to any disputes or encumbrances. Engaging a reputable lawyer or real estate agent can help in this process.
- Building Approval: You’ll need to ensure that any existing structures on the property have the necessary approvals from the Lagos State Physical Planning Permit Authority (LASPPPA). Unauthorized buildings are at risk of demolition.
5. Financial preparedness is non-negotiable
Investing in Lagos real estate requires substantial financial commitment.
Beyond the purchase price, you need to budget for additional costs such as legal fees, agency fees, survey fees, and possible renovation costs.
It’s also wise to have a contingency fund for unexpected expenses. If you can, using mortgage options can ease the financial burden.
Thankfully, several banks in Nigeria offer mortgage plans, but interest rates can be high, typically ranging from 15% to 25%.
Ensure you understand the terms and choose a plan that fits your financial situation.
6. You need to choose the right location
Location is paramount when buying property in Lagos. Lagos is divided into two main regions: the Island and the Mainland. Each has its unique characteristics and caters to different lifestyles and budgets.
Areas like Ikoyi, Victoria Island, and Lekki are prime locations, known for their high-end properties and amenities are all in the Lagos Island.
For proper context, Lagos Island is the hub of business, entertainment, and high-end living.
For this reason, properties here are more expensive but offer a higher return on investment due to their prime locations. As expected, these areas also come with a hefty price tag.
In contrast, places like Yaba, Surulere, and Ikeja in the Lagos Mainland offer more affordable options while still providing good returns on investment.
These areas are more affordable and are popular with middle-class families and young professionals.
Research and visit different neighborhoods to determine which one best suits your investment goals and budget.
Also Read: Basic Guide To Buying Land In Lagos And Nigeria
7. Work on identifying genuine properties
Of course, it’s possible to purchase genuine properties in Lagos—many have done it before. However, to be able to identify and secure a legitimate property, you need to be well-informed. Here are some tips:
- Do Your Research: Understanding the area you’re interested in is pertinent. Research property values, upcoming developments, and neighborhood safety. Look for websites that offer listings and market insights and read from them daily.
- Check Documentation: Ensure the property has a Certificate of Occupancy (C of O) or Governor’s Consent. These documents prove legal ownership and compliance with state regulations.
- Hire Professionals: Engage a lawyer who specializes in real estate to verify the property’s legal status. Working with a certified real estate agent can also reduce the risk of falling victim to fraud.
8. Think of infrastructure and amenities
When purchasing a property, consider the availability of essential amenities and infrastructure.
Proximity to schools, hospitals, shopping centers, and transportation hubs can significantly enhance the property’s value and your quality of life.
Fortunately, Lagos State Government has been making strides in improving its infrastructure, with projects like the Eko Atlantic City and the expansion of the Lekki-Epe Expressway.
These developments aim to ease congestion and improve connectivity, which can positively impact property values.
9. Be aware of security concerns
Security is a major consideration for any property purchase in Lagos. While some areas are relatively safe, others are prone to higher crime rates.
On a closer look, you’ll notice that gated communities and estates often provide better security with controlled access, patrols, and surveillance systems.
For this reason, investing in such properties may offer peace of mind and can be a selling point if you decide to rent or sell the property later.
10. You will go through a buying process
After all is said and done and you eventually find a property that matches your taste and budget, you’ll have to go through a legal buying process.
It’s important at this stage to hire a professional to conduct thorough due diligence, including title verification, and confirm the property’s legal status.
Afterwards you will need to get your lawyer to draft and review the sale agreement. Once all parties are satisfied, sign the contract and make payment.
Finally, register the property with the Land Registry and obtain a Certificate of Occupancy or Governor’s Consent to make the land your legal property.
Also Read: 6 Costly Mistakes Real Estate Investors Make And How To Avoid Them
Handle Lagos Property Purchase With Ease
Investing in Lagos real estate offers great potential but requires careful consideration and due diligence.
From understanding market trends to managing the legal aspects, each step of the process is important to ensuring a successful investment.
In the end, you’ll need to admit that Lagos is a city of immense opportunities. Beyond that, you would understand that with the right approach, you can make a sound and profitable property investment.
Do you need legal advice or support in purchasing a property or setting up a business in Nigeria? Call us today on +2348067579491.