Lagos and Abuja’s low-cost land won’t fix their housing crisis. Even if developers move to the outskirts, infrastructure costs, construction expenses, and financing squeeze profit margins—leaving little room for affordable pricing. That’s the core challenge facing private developers, according to Michael Onyeachor, co-founder of Besitz Group Limited. He emphasized that the economics of affordable housing have become increasingly difficult, particularly in Lagos and Abuja, where land values and development costs have risen sharply while purchasing power remains weak. The combination of high land prices, rising construction costs, expensive financing, and inadequate infrastructure creates a perfect storm that makes it difficult to deliver homes at prices affordable to the majority of Nigerians.
Land prices in emerging areas like Kuje, Idu, or Lekki-Epe may be cheaper than prime locations, but the savings evaporate quickly. Roads, drainage, electricity, water, and other infrastructure must be built or upgraded before these areas become viable. Onyeachor noted that developers often absorb these costs, pushing up final home prices. In Lagos, land in established locations remains prohibitively expensive, but even peripheral sites require significant investment to function as livable neighborhoods. Beyond basic infrastructure, emerging areas also lack critical amenities like schools, healthcare facilities, and reliable transport links, which further increase the cost of development. Without these, developers risk creating isolated communities that fail to attract buyers or retain residents over time.
This isn’t just a Lagos problem. Abuja’s high demand and land scarcity create the same pressure. Developers in both cities face a Catch-22: move to cheaper land, and they risk losing money on infrastructure; stay in established areas, and they price out most buyers. The result? Private developers increasingly favor luxury and upper-middle-income housing, where higher sale prices justify the costs of land, construction, and financing.
Onyeachor highlighted that investors are now assessing locations based on their potential over the next five to 10 years rather than their current demand. In Abuja, areas like Kuje, Idu, Apo-Tafyi, Kabusa, and Karsana are attracting interest, while Lagos investors are focusing on the Lekki-Epe axis and other expanding corridors. However, he cautioned that without follow-through on infrastructure and economic activity, even cheap land can remain undeveloped or become a ghost town.
Why developers abandon affordable housing
Ayodeji Johnson, CEO of Elara Development, said high land and financing costs were making lower- and middle-income projects more difficult to deliver profitably. He added that developers are not necessarily choosing luxury housing purely because of demand, but because expensive land and financing make higher-value projects easier to justify.
In Lagos, only 31% of residents own homes, compared to 61% in Nairobi and 50% in Dakar. The rest rent—partly because affordability hinges on more than land cost. Without government support, developers have little incentive to take risks on unproven areas. Onyeachor suggested solutions like concessionary land, tax breaks, or public-private partnerships could help, but so far, private developers have steered clear of projects that don’t promise quick returns. He also emphasized the need for cheaper long-term financing and infrastructure support to make affordable housing projects more viable.
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Financing risks turn lenders away
Even when developers target emerging areas, they’re betting on long-term growth. Kuje in Abuja or Lekki-Epe in Lagos might attract interest now, but without roads, schools, or reliable power, the land could stay undeveloped—or worse, become a ghost town. Temitope Runsewe, managing director of Sage Grey Group, observed that high-end projects in Ikoyi or Victoria Island are easier to finance because buyers can afford them. Middle-income housing, by contrast, requires deeper pockets from both developers and lenders.
Financing is another hurdle. The lack of reliable infrastructure in emerging areas also increases the risk for lenders, making it harder for developers to secure financing for projects targeting lower-income buyers.
Lagos’ homeownership rate—31%—is a symptom of this cycle. Even if land on the outskirts were free, the cost of making it habitable would swallow any savings. The city’s 51% rental rate reflects how few Nigerians can afford to buy. The high cost of land in prime areas is further exacerbated by the need for developers to invest in infrastructure and amenities to make the properties attractive to buyers.
Policy gaps block affordable housing progress
The solution isn’t just cheaper land, it’s a mix of policy, investment, and patience. Without government intervention to share infrastructure costs or provide long-term financing, private developers will keep building for the affluent. The market won’t fix itself by moving outward; it needs a push inward, toward smarter land use, better financing, and infrastructure that follows development, not the other way around. Onyeachor stressed that government support through concessionary land, tax incentives, and public-private partnerships is essential to making affordable housing projects financially viable.
For now, Lagos and Abuja’s housing gap persists. Land prices may dip at the edges, but the real cost of building a home, roads, power, water, schools, and healthcare, doesn’t. Until those costs come down, affordability will remain out of reach for most. The challenge extends beyond land prices to the broader economic and policy environment, which must evolve to support the development of truly affordable housing for Nigeria’s low- and middle-income earners.