Lagos land scarcity is pushing homes into the sky, Elara CEO

As Lagos continues to grow and available land becomes increasingly constrained, the way homes are developed across the city is also beginning to change.

In some of the state’s most sought-after locations, developers are looking upwards, creating high-rise residential communities that can accommodate more homes on increasingly expensive parcels of land.

The shift is also being reflected in the preferences of property buyers, including Nigerians living and working in central Lagos, members of the diaspora and investors seeking properties that can retain and appreciate in value.

For developers, however, meeting this demand comes with a growing list of challenges, from construction and financing costs to approvals, infrastructure and the need to deliver quality that justifies premium prices.

Ayodeji Johnson, Managing Director and Chief Executive Officer of Elara Development, is directly involved in this emerging model, with the company currently developing a 12-storey residential high-rise in Victoria Island comprising 47 premium residences on approximately 1,600 square metres of land.

In an exclusive interview with Nairametrics, Johnson discusses what is driving demand in Lagos’ high-end residential market, how buyer expectations are changing, the pressures confronting developers and why he believes the city’s future housing needs will require a greater embrace of high-rise development.

Nairametrics: What is driving demand for high-end residential property in Lagos despite rising property prices and pressure on purchasing power?

Ayodeji Johnson: Real estate ownership continues to be a primary vehicle for capital retention and investment diversification.

In prime locations across Lagos, high demand coupled with constrained supply of land and, consequently, housing, continues to support property values. Beyond capital appreciation, real estate provides investors with a tangible asset that can serve as a long-term store of wealth and, depending on the asset and strategy, generate rental income and other recurring returns.

We are also seeing increasing interest in well-located, professionally developed properties that offer strong fundamentals beyond simply owning land. Factors such as location, quality of construction, infrastructure, amenities, security and the overall experience of the development are becoming increasingly important to buyers and investors.

Strategically selected real estate in established and high-growth areas of Lagos can provide a compelling balance of capital preservation, appreciation and long-term investment value.

Nairametrics: How are the expectations and priorities of high-end property buyers changing, and how is this influencing the type of residential developments coming to the market?

Ayodeji Johnson: Today’s buyers are increasingly discerning and wary of the opacity long associated with the real estate sector, seeking greater assurance around project completion timelines.

They are conducting more thorough due diligence on development firms and their consultant teams, closely evaluating floor plans, and expecting higher standards across amenities, finishes and appliances, while favouring developments with a compelling narrative.

Furthermore, with rising land values in premier neighbourhoods and growing urban density, buyers are demanding enhanced value from individual units and an elevated overall apartment-living experience.

Nairametrics: With land, construction, financing and infrastructure costs rising in Lagos, which pressures are proving most difficult for developers to manage, and how are they affecting the commercial viability of residential projects?

Ayodeji Johnson: Financing costs and construction cost inflation have been the most difficult pressures to manage. Land and infrastructure costs are largely fixed once you have committed to a site, but financing costs and the prices of imported construction materials can move considerably during the delivery period.

The way we protect the commercial viability of our projects is through disciplined cost management, careful procurement and constant attention to the relationship between specification, quality and cost.

Ultimately, the objective is not simply to reduce costs, but to ensure that every naira spent contributes to the quality and long-term value of the development.

Nairametrics: What are the biggest practical challenges developers face when delivering residential projects in Lagos, particularly in areas such as approvals, infrastructure, procurement, financing and construction?

Ayodeji Johnson: One thing the experience has reinforced for me is that Lagos has made significant progress in its approvals and permitting processes, although there is still room for improvement.

I would like to see a more thorough but also more automated and transparent process, where builders and investors have a clear and predictable pathway to obtaining approvals. Certainty is extremely important in development because delays ultimately translate into additional costs.

Financing remains another major bottleneck for development companies, particularly given Nigeria’s double-digit interest rates. High financing costs discourage development and significantly reduce the pace at which projects can be delivered.

I believe our financial institutions and policymakers need to look more closely at how capital is made available to credible and diligent developers.

If we want to solve Nigeria’s housing and infrastructure deficits, we need to create an environment where responsible developers can access capital at rates that allow projects to remain commercially viable.

Nairametrics: With premium property prices rising while purchasing power remains under pressure, why are developers continuing to favour the high-end segment, and what would make lower- and middle-income housing more commercially viable?

Ayodeji Johnson: I don’t think the economics are pushing developers towards luxury housing purely by choice. In many cases, it is closer to necessity.

Land, financing and construction costs in Lagos are high enough that the margins on lower- and middle-income housing often do not work without some form of support.

What would change that is what I mentioned earlier: single-digit interest rates for developers building affordable housing, tax incentives tied to unit price caps, and a faster and more predictable approvals process that reduces the holding costs ultimately passed on to buyers.

Until financing costs come down and the economics of affordable housing improve, developers will continue to gravitate towards segments where the numbers make commercial sense.

If we genuinely want to address the housing deficit, however, we have to make it economically viable for credible private-sector developers to participate.

Nairametrics: With land becoming increasingly scarce and expensive in Lagos, how viable is vertical development as a model for meeting housing demand across the low- and middle-income segments?

Ayodeji Johnson: Lagos is one of the fastest-growing cities in West Africa and, arguably, across Africa. It is also Nigeria’s smallest state by land area, so the scarcity and cost of land make efficient land use increasingly important.

Going vertical has to be part of the solution to Lagos’ housing deficit. But for that model to work across the low- and middle-income segments, the government has an important role to play in creating the right enabling environment.

We need policies that encourage responsible developers to participate in solving the housing deficit through more efficient approvals, access to financing and incentives that make the development of affordable housing commercially viable.

The private sector has the capacity to deliver at scale. What we need is the right framework to allow development companies like Elara Development to do so sustainably.

Nairametrics: Looking ahead over the next five to 10 years, how do you expect the high-end residential market in Lagos to evolve, and where do you see the strongest opportunities?

Ayodeji Johnson: Looking ahead five to 10 years, as institutional investment grows, I anticipate developers will embrace bolder, more daring architectural concepts and design-led structures, alongside significantly taller residential and commercial high-rises.

The market must evolve beyond the conventional gated-compound aesthetic of the previous era towards more distinctive, design-focused projects.

Core Island hubs including Ikoyi, Victoria Island, Oniru and Lekki Phase 1 are likely to transition almost fully into high-rise districts.

Additionally, I would like to see significant investment in the Marina district, with skyscrapers that reinforce Lagos’ identity as a megacity.

Buyer receptiveness to vertical living is already expanding and should continue to gain traction over time.(Nairametrics)