Vincent Ezenagu
Analyst and real estate expert has said that smart money is increasingly reshaping Nigeria’s real estate market, with investors redirecting capital toward infrastructure-linked locations and income-generating assets as they seek to reprice risk in favor of cash flow, according to Ayo Baru, chief investment officer at Panterra.
Speaking in a television interview with CNBC, Baru said the market is navigating tough macroeconomic conditions, but that capital is still finding its way into segments where returns are clearer, more immediate and better protected from currency and occupancy pressures.
In Panterra’s view, that has created a more selective market in which infrastructure, affordable and mid-market housing, logistics, industrial development and certain hospitality plays are attracting the strongest interest, while large premium office assets remain under strain.
Baru said Panterra approached the Nigerian property market this year through the lens of urban economic theory, including the bid-rent framework developed by William Alonso in 1964. In practical terms, he said, rising land and rental values in city centers are pushing both people and investment toward the outskirts, where new infrastructure can unlock fresh value and support development.
That dynamic, he argued, is now visible in some of the country’s most closely watched projects. He pointed to the Lagos-Calabar coastal road as one example of how large transport infrastructure is already driving a repricing of surrounding land and residential assets. He also cited the Enyimba Industrial City, saying that despite legal issues, the project has been able to aggregate infrastructure and attract further investment.
“What we’re seeing from January till date is infrastructure is leading the way,” Baru said.
According to Baru, the investment case is especially compelling for early movers. As roads, industrial corridors and supporting utilities come into view, land values and development prospects can adjust quickly, rewarding investors who position themselves before pricing fully catches up. By year-end, he suggested, some of the best entry points may already be gone.
Across residential real estate, Baru said a significant amount of investor “firepower” is still going into luxury housing, largely because it offers a relatively predictable development and exit path. That segment continues to rise, he said, particularly in Lagos and Abuja and, to a lesser extent, Port Harcourt. At the same time, he indicated that Ogun State could emerge as a stronger supply story over the next few years, potentially rivaling Port Harcourt in new residential stock.
Still, Baru made clear that his preference is tilted toward affordable, social and mid-market housing, arguing that expanding supply in those categories would have broader economic benefits. That aligns with a wider shift among investors toward assets that can generate steady occupancy and recurring income rather than relying solely on appreciation or niche buyer demand.
The contrast is sharpest in the commercial office market. Grade A offices, particularly those priced in U.S. dollars, are facing sustained pressure as many tenants generate revenue in naira and struggle with the cost of converting local earnings into hard currency for rent and service charges. Baru said this mismatch has hurt third-party developers most acutely, even as owner-occupiers continue to build for their own use.
He cited developments such as Dangote’s head office in Ikoyi as an example of owner-occupier demand that can still justify high-end office construction. But for independent developers who built premium office stock expecting third-party leases, the market has become significantly more difficult.
Baru said the aftereffects of the Covid-19 pandemic and the now more durable shift toward remote and flexible work have compounded the challenge. Demand has moved away from traditional long-term office configurations toward shorter-term, more flexible workspace models. While some landlords have attempted to convert office properties into hospitality, temporary office suites or meeting-room concepts, he said those strategies have had limited success because conversion costs are high and economics are often unfavorable.
By contrast, the mid-market commercial segment is holding up better. Baru said naira-denominated mid-market retail and office properties are proving more resilient because they are smaller, more affordable to operate and better matched to what occupiers can realistically pay. In retail in particular, he said investors and operators have refined the format, with the optimal size for a mid-market neighborhood retail center now shifting lower than previous estimates.
Where Panterra had once identified 10,000 to 12,000 square meters as an ideal range, Baru said anything above roughly 8,000 square meters in Lagos is increasingly harder to justify. Smaller centers benefit from lower power and operating costs, while their neighborhood focus reduces transport burdens for consumers and creates more flexibility to incorporate entertainment and hospitality-style uses.
That strategy is also helping rental collections, he said. Because rents are denominated in naira, delays can be managed and recovered more easily over time. The same cannot be said for dollar-denominated leases, where currency depreciation can significantly widen the payment gap for tenants.
On foreign capital, Baru said activity remains notable, especially in high-end residential. Diaspora buyers, in particular, are playing an important role in supporting luxury and upper-tier housing projects. Their access to foreign currency, he said, helps projects withstand swings in exchange-rate policy and broader macro volatility.
Even with inflation, currency instability and pressure on consumer and corporate balance sheets, Baru described Nigeria’s property market as dynamic and profitable for investors who choose the right subsegments. He said hospitality and industrial assets remain especially attractive, though he did not expand in detail before the interview ended.
The broader message from Panterra is that Nigeria’s real estate cycle is not rewarding every asset class equally. Instead, capital is becoming more discriminating, chasing infrastructure-led growth corridors and property types with visible demand, manageable operating costs and reliable cash flow. In that sense, risk in the market is not disappearing, but it is being repriced — and increasingly in favor of investors who can align with how Nigerians live, work and spend today.