5 things you need to know before buying a land in Nigeria

5 things you need to know before buying a land in Nigeria

5 things you need to know before buying a land in Nigeria

27th April, 2022

3 minutes, 54 seconds read

According to McKinsey & Company’s ‘Post-pandemic economy: 12 Insights’, ‘…the biggest driver of rising net worth is real estate’. Investments in real estate is becoming more accessible across income levels as new services are springing up to ease the large capital requirement through milestone payments, co-investment and crowd funding. New platforms are also making it easier to invest globally with just a few clicks of the button but due to many factors, uptake of these services is still in its infancy and people still do inspections and due diligence physically before deciding on investing in a property. As your trusted real estate partner, we have listed the first 5 due diligence steps to take if you want to buy a land in Nigeria.

 Plan your cash flow realistically 

When choosing your investment financing options, you need to plan and critically assess your cash flow. Usually, credit facilities for real estate investments are packaged with relatively long tenures to be repaid monthly, quarterly or annually terms. While making investment in real estate is a good store of value, what most people fail to consider carefully is ‘‘how much they can afford to pay per time’’ that will not impact their buying power adversely. It is important for you to scrutinise your financial standing to know how much you can afford to pay for a piece of property even before making a commitment. This may be tricky with staggered payment options especially as fluctuations in inflation and interest rates have an impact on time value of money causing a devaluation to the value of your future cash flows. Essentially, they key is to plan your cash flow realistically and determine what you can afford after living expenses and emergency funds have been allocated.  

 Understand the Size and dimension of the Land 

As a prospective buyer, this is most likely the first thing you want to know. The size or dimension of a parcel of land is a major determinant of the cost/price of that land. There are different measuring units but the most common UoM for land are plots, acres, and hectares. To appreciate the size of a land, you should understand the scale of these units of measurement and make comparisons. For some context, plots of land can come in either 500 square metre or 600 square metres. 6 Plots of land make 1 Acre and 6 Acres make 1 Hectare. It will also add more value to your understanding to consult further with a Land Surveyor for further clarification and or documents that give deeper information and context.

Access the location of the Land 

The geographical coordinates i.e. location of a property determines the integrity of the structure that can be erected on the land. To determine suitability, you need to consider purpose for acquiring a land. This will help you identify the right shape, geographical topology, proximity, infrastructure, road network, availability of anchor occupiers like banks, and other well established private and public institutions. These features play a huge role in driving property value. For example, if your reason for purchase is long term store of value, then you will most likely be purpose fit to buy a land outskirts of the city or urban areas. That gives you an opportunity to buy at a lower price per plot and then the land appreciates over time and as the locality develops. But if your purpose is to build a home or commercial structure then you need to consider thing a land with good access road, good drainage system, and proximity to commercial hub e.t.c. A plot of land in Lekki Phase 1 that now averages over ₦300million in sales value, once sold for ₦3m and less in 2001, refer to our previous article where-is-lagoss-next-lekki-phase-1. The increase in value was largely due to the location, and the presence of growth drivers within Lekki Phase 1. Before you buy into a project, it is important to assess the location and its growth potential to determine its fit for purpose.  

Create a checklist of documentation and regulatory approval requirement  

All over the world, land title is the most important component of any real estate transaction. This is because a Land title and other contractual documents are the evidence of ownership of the physical land. Outside ensuring that the land has a good title, you need understand the regulatory implications in terms of town planning to ensure the land is zoned for the use that you intend to put it to. You can check out our other articles to read more on this.

Discuss payment options extensively 

In the event you are employing credit to finance your purchase, it is critical that you do proper due diligence on the charges and all the terms and conditions. This will help you mitigate things like hidden charges and to also plan your payment calendar to avoid default. A good payment option should be considered because they help reduce the financial burden that comes with upfront payment when buying real estate. It allows you to spread the payment in a way that would not affect your other financial obligations. Where the development company or seller is willing to offer a payment plan, it is advisable to take the opportunity.

We would love to hear from you. Please send your comments and feedback to [email protected] and we will be in touch.

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9th May, 2022

1 minute, 30 seconds read

Lagos Building Collapse - Another tragedy at Ago Palace Way Despite Structural Integrity Measures

Barely a week after a three-story build collapse that killed over ten people in the Ebute Meta area of Lagos state, another building collapsed in the Ago Palace way area of the state sadly leaving behind nothing for the occupants.

The unfortunate incident happened on the 7th of May, 2022 at Chris Agadi Street off Ago Palace way opposite AP Fueling Station.

 

Despite the Lagos State Structural Integrity Test, this menace continues to rock Lagos State and this is worrisome.

 

At the time of this report, the head of the Lagos State Emergency Management Agency(LASEMA), Olufemi Oke-Osanyintolu confirmed in a statement that no casualty was recorded.

He said; “On arrival, information gathered from the residents revealed that the building gave signs several hours before the building collapsed. Fortunately, nobody was trapped as all the occupants evacuated the area when the signs began 2 hours before the collapse. A headcount of occupants was carried out to ensure no occupants were missing and the remains of the building were cordoned off. The operation was concluded at about 5:23 a.m.” The statement read.

 

Taking learnings from this incident, we believe some questions need to be answered especially in educating the public in managing similar situations. 

What should be done when a building gives signs of collapsing?

Who should be notified and what safety measures should be taken to avoid casualties?

 

The agency added that the site will be handed over to the Lagos State Building Control Agency (LASBCA) and the Ministry of Physical Planning for further investigation.


While the government and its agencies are making moves on this issue, the big question still looms, “Which building is next to collapse?” “Is this becoming a new normal that we should get used to?”


In addition to the intervention from the Aside the government, real estate practitioners must take lessons rapidly on ensuring and maintaining the structural integrity of buildings. Should there be a nationwide structural integrity certification drive? Do practitioners need to involve an extra layer of testing structural integrity? We must begin to answer these lingering questions.