In Lagos, cranes are rising nonstop: Who buys the glass towers?

In the exclusive enclaves of Lagos, notably Old Ikoyi, Banana Island, and Victory Island, the level of construction activity is frightening. Whether it is in Eko Atlantic City, on Kingsway Road, Ozumba Mbadiwe Street, or sundry Roads and Avenues in Ikoyi, the story is the same.

Cranes are rising and falling every day and everywhere, defying adverse macroeconomic conditions that have, in other locations, ambushed construction and sent contractors on compulsory holiday.

In Ikoyi, colonial-era bungalows with their weather-beaten roofs are giving way to glass towers, rising 20 to 30 floors with multi-million-dollar price tags that rather offend than appeal to market sensibilities.

Frequently, questions are asked about who the buyers of these overly expensive luxury homes are. Views are mixed here. While some people claim they are targeted at the ultra-rich and high-net-worth individuals, who represent a very small percentage of the population, others view diaspora investors and home buyers as the primary target.

At the end of these arguments are those who view these glass towers as homes for the proceeds of fraud, illicit, or unexplained wealth, chiefly associated with individuals commonly referred to as politically exposed persons (PEPs).

“Some of these buildings are just there; they are not looking for buyers or tenants. The owners don’t care how long they remain vacant. They are content with seeing the buildings standing there as part of their wealth they can see,” an analyst who pleaded anonymity observed.

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But, a recent Bloomberg report on ‘Million Dollar Homes Reshape Nigeria’s Skyline — and Raise Red Flags’ anchored by Ruth Olurounbi, offers some clarity. “Developers are racing to meet demand from Nigerians abroad, taking advantage of a weaker naira, and locals seeking to preserve wealth,” the report says.

About 135 homes are currently priced above $1 million, with nearly 1,400 more expected by 2029, the report notes, quoting a property intelligence firm, Estate Intel.

A close look at these market nodes shows that, alongside the flashy homes, an ecosystem of high-end hotels, restaurants, malls and international schools is also emerging. The luxury surge aligns with real estate’s transformation into one of the domestic economy’s three largest sectors, as revealed by the country’s GDP rebasing in 2024

This, however, contrasts sharply with both Nigeria’s housing deficit, estimated at over 20 million units, and its extreme poverty. The Bloomberg report explains that nearly a third of Nigeria’s 230 million people live on less than $2.15 a day, which is the World Bank’s threshold for penury.

“Even those who can afford homes face unreliable infrastructure: Generators supply much of the electricity due to frequent outages, and water tanks fed by private boreholes are commonplace,” the report points out.

The report reads in part: “Ultra-luxury homes in Lagos sell for 2.2 billion naira ($1.5 million) to 9 billion naira, while in Abuja, prices hover around 5 billion naira, according to brokers and developers Bloomberg spoke with. Public data on real estate transactions is limited, making precise market valuations difficult to verify.

Rental yields range from 4 percent to 7 percent, according to Estate Intel senior analyst Dapo Runsewe — comparable to global luxury hubs such as Los Angeles, New York and Dubai. Those yields, coupled with high returns on investment, are attracting buyers, said Contemporary’s Ifeadi, who added that a lot of what’s happening in Lagos is being driven by big-time entrepreneurs trying to cash in.

A younger cohort of buyers is also entering the market. Real estate agents in Abuja say many purchasers of multibillion-naira homes are younger professionals in government and tech. In Lagos, the younger crowd is also shifting away from Banana Island, the country’s most expensive enclave built on reclaimed swamp.

For instance, Alexander Avenue in Ikoyi, “is now populated mainly by buyers between 35 and 40,” said Ifeadi. “Many are IT entrepreneurs, buying both as homes and investments.”

Developers are also adjusting to broaden demand. According to Edith Otegbeye, head of operations for Arkland Properties and Investment, firms are introducing flexible payment plans aimed at salaried buyers.

Under these schemes, purchasers make an initial deposit during construction and spread the balance across the building period. “That allows them to plan their finances,” she said.

Some analysts warn of oversupply risks. A report by advisory firm, Northcourt, said demand for luxury homes in Lagos and Abuja is under pressure from high inflation, weaker purchasing power, and currency volatility.”