A Legal and Economic Analysis of the Importance of Real Estate Investment in Nigeria.
By Ezugwu Chijioke Simeon Royce, Esq
1.0 Introduction
Property investment in Nigeria is one of the best ways to build wealth in Africa’s largest country, thanks to rapid town and city growth, an ever-increasing population, and ongoing – albeit varying – economic success. Nigeria’s population is expected to reach 252 million in 2028, with an annual growth rate of around 2.3-2.4% over a period since 2024, and the country faces a housing shortage of approximately 31 million homes. This creates a huge demand for housing, businesses, and factories in major cities such as Lagos, Abuja, Port Harcourt, Kano, and Ibadan. Nigerian property sales have progressed from casual land transactions, which were mostly governed by local tradition, to a complex system of trade managed by comprehensive, official rules designed to protect owners’ rights, encourage investment, and ensure that towns and cities grow in a neat, planned manner. The Constitution of the Federal Republic of Nigeria 1999 (as amended) serves as the legal foundation for property investment in Nigeria, as it guarantees every Nigerian person the fundamental right to acquire and possess land and buildings anywhere in Nigeria, subject to the provisions of the law. This constitutional right is supported by the Land Use Act of 1978, which significantly altered land ownership by transferring all land in each state to the Governor to be kept for the benefit of all Nigerians, resulting in a single land management system rather than the fragmented one that existed prior to 1978. The Federal Capital Territory of Abuja operates under a very similar system, and the Minister of the Federal Capital Territory has land-related powers similar to those of state governors.
2.0 The Legal and Constitutional Basis for Property Investment
Section 43 of the Federal Republic of Nigeria’s Constitution (as amended) serves as the constitutional basis for property investment in Nigeria. Section 43 states that “subject to the provisions of the Constitution, every citizen of Nigeria shall have the right to acquire and own any type of immovable property anywhere in Nigeria.” Section 44(1) of the Nigerian Constitution further protects property rights by prohibiting the government from arbitrarily depriving citizens of them. Section 44(1) states that “no movable property or any interest in an immovable property shall be taken possession of compulsorily and no right over or interest in any such property shall be acquired compulsorily in any part of Nigeria except in the manner and for the purposes prescribed by a law that requires the payment of prompt compensation and gives to any person claiming such compensation a right of access to a court of law for the determination of his interest in the property.”
The Land Use Act of 1978, passed on March 29, 1978, resulted in a significant restructuring of Nigerian land ownership and administration. Section 1 of the Act specifically states that “subject to the provisions of this Act, all land comprised in the territory of each state in the Federation are hereby vested in the Governor of that state, and such land shall be held in trust and administered for the use and common benefit of all Nigerians in accordance with the provisions of this Act.” Section 55 of the Land Use Act grants similar authority to the Minister of the Federal Capital Territory, who represents the President in the administration and allocation of land in Abuja.
Investors’ rights to occupy land in Nigeria are limited because landowners only have an occupancy right from the state rather than owning the land outright. Occupancy rights can be statutory in urban areas and customary in rural areas. As a result, prior to entering into a sale or purchase agreement for any parcel of land, the investor must obtain the Government’s approval through a process known as “consent,” as outlined in sections 21 and 22 of the Land Use Act. Section 22 specifically states that holders of statutory rights of occupancy granted by the Governor may not alienate their right of occupancy, or any portion of it, without the Governor’s prior written consent. In Savannah Bank of Nigeria Ltd v. Ajilo (1989) 1 NWLR (pt. 97) 305, the Supreme Court of Nigeria clarified that any such transaction entered into by a holder of a statutory right of occupancy without the required Governor’s consent is null and void under Section 26 of the Land Use Act. Thus, investors must strictly comply with the statute’s consent requirements. However, the Supreme Court has recently relaxed this position, ruling that the consent requirement does not apply to parcels of land that are not subject to statutory rights of occupancy, and the alienation occurs between two private parties with no conflict of interest or public interest between them.
3.0 Economic Drivers for Real Estate Investments in Nigeria
Nigeria, Africa’s largest economy, provides numerous opportunities for real estate investment. Nigeria is rapidly urbanizing, with more than half of the population living in cities, resulting in a consistent demand for residential, commercial, retail, and industrial property. Major cities such as Lagos and Abuja have experienced rapid growth, with estimates putting Lagos’ population at over 16 million and Abuja growing from a planned city of 3 million to an estimated 3.5 million or more people. Urbanization is far from over, with rural-urban migration continuing due to improved job opportunities, education, and medical services.
Real estate offers investors several profit opportunities, including rental returns, capital gains, and development profits. The prime areas of Lagos, Abuja, and Port Harcourt provide investors with strong residential rental returns. Large multinational corporations, embassies, international organizations, and high-net-worth individuals all pay premium commercial rent, particularly in prime locations like Abuja’s Central Business District and Lagos’ Victoria Island. The Supreme Court case of Idundun v. Okumagba (1976) 9-10 SC 227 identified the five ways to prove land ownership in Nigeria, providing legal clarity for property investors on how ownership can be proven using traditional evidence, documentation, deeds, or actions of ownership, as well as long-term occupation or possession of neighboring land.
Government initiatives, such as the Federal Government’s Economic Recovery and Growth Plan, identify real estate and construction as critical sectors for reducing reliance on oil revenues. The National Housing Policy is one of several initiatives aimed at addressing Nigeria’s housing shortage. Tax breaks are provided to developers who build affordable homes, as well as government-sponsored programs to assist developers in obtaining mortgage financing through the Federal Mortgage Bank of Nigeria (FMBN) and the National Housing Fund (NHF), creating a favourable environment for real estate investment.
In Abuja, the Federal Capital Development Authority (FCDA) continues to allocate land for residential and commercial development, with a recent emphasis on satellite towns such as Gwagwalada, Kuje, Kwali, Abaji, and Bwari to relieve congestion in the city center and create new investment corridors.
4.0 Investment Vehicles and Opportunities in Nigeria’s Real Estate Market
The Nigerian real estate market offers a wide range of investment opportunities, including residential, commercial, industrial, and mixed-use developments. Residential properties range from affordable housing units for low and middle-income earners to luxury estates and serviced apartments for high-net-worth individuals and expats. Residential developments in Abuja’s districts of Maitama, Asokoro, Wuse II, Katampe, Guzape, Jahi, and Lifecamp command high prices due to their proximity to government offices, embassies, and superior infrastructure. The demand for residential properties in the FCT remains strong, thanks to the constant influx of civil servants, diplomatic personnel, and private sector professionals moving to the capital city.
Commercial real estate, which includes office buildings, retail spaces, shopping malls, and hospitality facilities, offers attractive investment opportunities. The Court of Appeal in Turaki v. Major Oil (Nig.) Ltd (2024) 6 NWLR (Pt. 1933) 75 reaffirmed that a claimant asserting ownership of land by purchase must prove it with cogent evidence such as purchase receipts, sale agreements, or any credible fact indicating that the transaction took place, and that the deed of assignment or sale agreement must be duly authenticated, thereby establishing the evidential requirements that protect commercial real estate investors from fraud. Grade A office buildings in Abuja’s Central Business District along Herbert Macaulay Way, Adetokunbo Ademola Crescent, and newer developments in Jabi Lake and Mabushi districts attract multinational corporations, oil and gas companies, telecommunications firms, and professional services organizations willing to pay high rents for quality space with modern amenities.
5.0 Legal Protections and Investor Safeguards
In Nigeria, investors in real estate are protected from a variety of threats and risks, including government expropriation, fraud, and misrepresentation, as well as disputes arising out of or relating to their investments through a range of laws, regulations and institutions.
The Nigerian constitution provides an important foundation for protecting property rights. Section 44(1) of the Constitution states that: “No moveable property or any interest in an immovable property shall be taken possession of compulsorily and no right over or interest in any such property shall be acquired compulsorily in any part of Nigeria except in the manner and for the purposes prescribed by a law, among other things.” Thus, while the State may compulsorily acquire property for a public purpose, it must do so in accordance with law, provide for just and fair compensation, and ensure that any compensation paid is done promptly. In Alhaji Tsoho Dan Amale v. Sokoto Local Government (2012), the Supreme Court of Nigeria held that the principles of compulsory acquisition of land are based upon the Constitution, which grants the right to private ownership of property and requires that no such property shall be compulsorily acquired except in the manner and for the purposes prescribed by law.
The principle of the duty of due diligence in respect of land purchases has also been established through judicial decisions. As recently stated in Edosa v. Ehimwenma (2022) 5 NWLR (Pt. 1823) 215, the Supreme Court of Nigeria reiterated the duty placed on those who intend to buy land to thoroughly investigate the vendor’s root of title and authority to sell prior to committing any funds. The Supreme Court ruled that one cannot legally transfer or sell something that you do not legally own, and therefore, any such sale is void ab initio. While this principle protects investors by allowing them to bring actions in court to challenge defective titles and to protect themselves from claims of fraud and misrepresentation, it places a burden of responsibility on the buyer to investigate whether the vendor has a valid and marketable title, and to confirm that all necessary regulatory approvals have been obtained. For these reasons, many experts believe that investors should seek professional legal advice when engaging in any aspect of real estate investment.
In addition to providing a framework for regulating land sales, the various states in Nigeria have passed legislation to prevent fraudulent activities in land transactions. For example, the Lagos State Properties Protection Law 2016 established the Special Task Force on Land Grabbers to deal with the problem of unauthorized takings of land, unlawful dispossession and false sales of lands owned by individuals.
The Task Force, which has received approximately 3,000 petitions since inception with about 1,000 resolved, uses mediation and alternative dispute resolution as primary tools while maintaining enforcement capacity against violent land grabbers. In the Federal Capital Territory, the FCT Administration has similarly intensified efforts to curb illegal land allocations and fraudulent documentation, with the Minister Nyesom Wike in 2025 approving regularization for 374 property owners in 15 streets to obtain fresh Statutory Rights of Occupancy and Certificates of Occupancy.
6.0 Foreign Investment Considerations in Nigerian Real Estate
The Nigerian real estate sector welcomes foreign investment, though subject to specific legal requirements and restrictions designed to balance openness with national interest. The legal framework for foreign investment provides protection for investors including the right to repatriate dividends, profits, loan servicing payments, technology transfer fees, and proceeds from the sale or liquidation of investments through authorized dealers in freely convertible currency.
The contentious issue of foreign land ownership has been addressed by the Supreme Court in Gerhard Huebner v. Aeronautical Industrial Engineering and Project Management Company Limited (2017), where the apex court held that foreigners cannot legally and validly own land in Nigeria based on its interpretation that the Land Use Act provides that all lands are to be held in trust by governors for the use and benefit of all Nigerians. However, this decision has been subject to scholarly criticism and practical circumvention. The Land Use Act Section 46(1) empowers the National Council of States to make regulations on the conditions applicable to the transfer of rights to persons who are not Nigerians, though no such regulations have been enacted. Various state laws including the Acquisition of Lands by Aliens Law in Lagos State require foreigners to obtain Governor’s approval before acquiring land, except for interests of less than one year.
In practice, foreign investors structure their investments through Nigerian companies incorporated under Nigerian company law, which are considered Nigerian citizens regardless of the nationality of their shareholders. Nigerian companies are recognized as separate legal entities with perpetual succession, capable of suing and being sued in their own name, and may hold and dispose of movable and immovable property. The Supreme Court has consistently recognized the separate legal personality of companies, as established in the landmark case of Salomon v. Salomon & Co Ltd (1897) AC 22, which though an English case remains highly persuasive in Nigerian jurisprudence. By incorporating a Nigerian company, foreign investors can acquire property rights and conduct real estate business while complying with legal requirements.
The Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) regulations impose compliance obligations on real estate transactions involving foreign investors. Financial institutions and designated non-financial businesses and professions, including real estate agents and developers, must conduct customer due diligence, maintain transaction records, and report suspicious transactions to relevant authorities. These requirements, while adding compliance costs, enhance the integrity of the real estate market and protect legitimate investors from association with illicit financial flows.
7.0 Challenges and Risk Mitigation Strategies
Despite the attractive opportunities, real estate investment in Nigeria faces challenges including bureaucratic delays in obtaining approvals, multiple and sometimes conflicting land claims, infrastructure deficits, and market volatility. The process of obtaining Governor’s consent can take several months or even years in some States, tying up capital and delaying project completion. In Abuja, the process of obtaining Certificate of Occupancy from the FCT Administration has been streamlined through digitalization initiatives, though challenges remain in expediting approvals for large-scale developments.
Title verification remains critical given the prevalence of fraudulent documentation and multiple sales of the same property. Investors must engage experienced legal practitioners to conduct comprehensive searches at the Land Registry, verify survey plans, confirm the identity and authority of vendors, and ensure that all requisite approvals have been obtained. The Supreme Court in Ogunleye v. Oni (1990) 2 NWLR (Pt. 135) 784 held that a Certificate of Occupancy is not conclusive evidence of title and cannot convert a weak or non-existent title into a valid one, emphasizing that where a Certificate of Occupancy is issued pursuant to a deemed grant under Section 34 of the Land Use Act, the grantee acquires no right or interest which he did not possess before issuance of the certificate.
Infrastructure deficits including inadequate road networks, unreliable power supply, and insufficient water provision affect property values and rental yields. Investors increasingly seek properties in well-planned estates with independent infrastructure including private roads, boreholes, generators or renewable energy systems, and security arrangements. In Abuja, newer districts such as Jahi, Lifecamp, Gwarinpa Extension, and Katampe Extension benefit from better infrastructure planning compared to older areas, commanding premium prices from investors who prioritize quality of amenities. Market volatility arising from macroeconomic fluctuations, foreign exchange rate movements, and changes in government policy requires diversification strategies. Investors should spread investments across different property types, geographic locations, and tenant categories to mitigate concentration risk. Professional property management ensures optimal occupancy rates, timely rent collection, proper maintenance, and tenant satisfaction, thereby protecting investment values and generating consistent cash flows.
8.0 Conclusion
Real estate investment in Nigeria offers compelling opportunities for wealth creation, portfolio diversification, and participation in the economic transformation of Africa’s most populous nation. The legal framework, anchored in constitutional guarantees and the Land Use Act, provides a structured regime for property acquisition, ownership, and transfer. The Federal Capital Territory, Abuja, presents particularly attractive prospects given its status as the seat of government, ongoing infrastructure development, and consistent demand from the public sector, diplomatic community, and growing private sector presence. The evolution of innovative investment vehicles such as Real Estate Investment Trusts regulated by the Securities and Exchange Commission expands access to the sector for investors of varying financial capacity while providing liquidity, transparency, and professional management.
Statutory Authorities Cited
- Constitution of the Federal Republic of Nigeria, 1999 (as amended), Sections 43, 44
- Land Use Act, Cap L5, Laws of the Federation of Nigeria, 2004, Sections 1, 5, 6, 21, 22, 26, 34, 39, 46, 55
Case Authorities Cited
- Savannah Bank of Nigeria Ltd v. Ajilo (1989) 1 NWLR (Pt. 97) 305 (Supreme Court)
- Idundun v. Okumagba (1976) 9-10 SC 227 (Supreme Court)
- Yakubu Ibrahim v. Simon Obaje (2017) (Supreme Court)
- Turaki v. Major Oil (Nig.) Ltd (2024) 6 NWLR (Pt. 1933) 75 (Court of Appeal)
- Edosa v. Ehimwenma (2022) 5 NWLR (Pt. 1823) 215 (Supreme Court)
- Alhaji Tsoho Dan Amale v. Sokoto Local Government (2012) (Supreme Court)
- Ogunleye v. Oni (1990) 2 NWLR (Pt. 135) 784 (Supreme Court)
- Gerhard Huebner v. Aeronautical Industrial Engineering and Project Management Company Limited (2017) (Supreme Court)
- Abioye v. Yakubu (1981) (Supreme Court)
- Union Bank of Nigeria Plc v. Ayodare & Sons (Nig) Ltd (2007) 13 NWLR (Pt. 1052) 567 (Supreme Court)
- Peenock Investments Ltd v. Hotel Presidential Ltd (1983) 4 NCLR 122
- Salomon v. Salomon & Co Ltd (1897) AC 22 (House of Lords, highly persuasive authority)
About the Author
Ezugwu Chijioke Simeon Royce, Esq can be reached via Chijiokeezugwu001@gmail.com; 08164258069
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