Luxury property’s final frontier

The skylines of west Africa’s coastal cities are being reshaped by a surge in luxury property development.

IN THE LAGOS edition of Monopoly, a board game, the priciest neighbourhood up for grabs in Nigeria’s commercial capital is Banana Island. The sand-filled annex in Ikoyi, a rich part of town, was created just two decades ago. It has since become some of Nigeria’s hottest property. To enter the enclave, non-residents need special security codes that change every hour. There are curfews for domestic staff and rules on loitering. Banana Island was supposed to have more reliable power than the rest of Lagos, too, though in practice it has not quite worked out that way . No matter. These days one square metre of land goes for almost $2,000, about the same price as in Camps Bay, a fancy suburb of Cape Town in South Africa. Despite a cost-of-living crisis, plots are selling fast.

Banana Island. Photo Credit: Business NG, Website.(Business NG, Website)

The skylines of west Africa’s coastal cities are being reshaped by a surge in luxury property development. The changes offer an insight into how wealthy Africans are spending their money. They also show that the property sector is beginning to play a more important role in African economies, becoming a source of much-needed dollars.

Lagos is a particularly obvious case, perhaps because it sits on a small, densely populated peninsula where there is little choice but to build upwards. One property developer reckons that at least 600 flats that are worth $1m or more each are currently being built there, even though GDP per person is still just $800. Property contributed more than 16trn naira ($10bn) to Nigeria’s GDP in 2024, or 5.8%. That is almost as much as crude oil and natural-gas extraction, which accounted for 17trn naira ($10.7bn), or 6.2%, a remarkable feat in an economy that is still largely dependent on oil.

But the trend is not limited to Nigeria. Arrivals at Ghana’s main airport in Accra, the capital, are greeted by agents selling flats in at least half a dozen plush developments. Many units are sold before they are completed. Abidjan, the commercial centre of Ivory Coast, is being transformed by luxury developments, too. Land prices there have been rising by around 10% a year for more than a decade.

One reason for the building boom is the changing nature of Africa’s diaspora. Larger and wealthier than in the past, its members are spending more time and money on the continent. Marieme Ngom, a Senegalese property developer, says those of her clients who want luxury options already have second homes in other countries, both in Africa and in the West. They value staying in style when they come to see family or do business. Their ranks have been swelled by industrialists from neighbouring countries in the Sahel. Insecurity and the fondness of Sahelian juntas for expropriation have prompted the rich in Mali, Niger and Burkina Faso to send their families to safer places like Ivory Coast or Senegal.

African property has also become more attractive for rich locals as tighter financial regulations on the continent and stricter rules against money-laundering around the world have made it harder to move money. Rich Africans used to park their money in Britain, Switzerland or the Middle East, says Pedro Novo, a property boss who used to be based in Abidjan. “Today it is much more difficult to get this money out [of Africa].” By contrast, luxury property in Africa is still loosely regulated. Pricier plots are bought and sold in dollars, insuring against the risk of weakening local currencies.

Members of the diaspora appreciate the opportunity to earn rent within the country from their flats when they are not using them, saving on the cost of transferring money in and out of the country. That is an especially lucrative option in cities like Dakar, Senegal’s capital, where luxury hotels are thin on the ground. Others opt for build-to-rent blocks. Developers help them find tenants who can pay the high rents, which are often pegged to dollar values. It helps that property across the region is still relatively cheaper than in other places, promising higher returns as cities grow.

That growth is itself spurring the trend along. Abidjan gains 200,000 new residents a year; in Lagos, it is 1m. The vast majority are unlikely to see much benefit from the trend, as few investors are interested in building non-luxury homes. Affordable housing “is very risky. You don’t make lots of money so you don’t attract foreign investors,” says Nicolas Moreau, a developer in Ivory Coast. Yet while new middle-class residents may not be able to afford the priciest flats, they enjoy mixed-use developments that combine luxury residences with malls and restaurants and serve as urban islands in the cities’ traffic-snarled chaos. For investors, combining residential and commercial property in this way mitigates risk.

There are some concerns that the boom is a bubble. Many observers are puzzled by the sky-high valuations, particularly as the trend spreads to sleepier cities. Yet for now, a sufficient number of rich buyers and the continuing dearth of investment options will probably ensure it continues. Says Mr Moreau: “Every year since 2010 I hear that this is a bubble, and this market will collapse. Every year I hear that, and it doesn’t happen.”