Real estate in Nigeria, like in other advanced countries, has burgeoned into a spectrum, featuring an array of niches enough for the country’s bubbly population to consume. As expected, the real estate market in the country has keyed into several niches massively consumed by many. However, one niche has recently allured impressive traffic: land banking. Buying undeveloped land and keeping it as a reserve until it builds up real-time value appreciation is the practice of land banking. In the country’s fast-warming real estate market, it has emerged as a core investment tactic. The tactic exploits the country’s rapid urbanisation, population growth, and infrastructure development to yield high returns on investment. In this article, we delve into the details of land banking in Nigeria, its benefits, issues, and why it is a “sleeping goldmine”. Understanding land banking In simple terms, land banking involves purchasing plots of land, typically on the outskirts of cities or in future locations, and holding them for some time until such lands increase in value. Land banking exploits the inherent appreciation of land due to urbanisation, infrastructure, and economic growth. It is a less active investment than other real estate investments and, thus, is a popular choice for investors with a long-term vision. In Nigeria, the real estate sector has experienced unmatched growth in recent years, driven by urbanisation and an increasing population. Some of the fastest-developing cities are Lagos, Abuja, and Port Harcourt, with infrastructural developments, new business districts, and residential schemes sprouting up in these hubs. With the development of these cities comes the appreciation in value of land, and land ownership is increasingly an asset worthy of esteemable value. For investors, it means that now, more than ever, land banking in Nigeria has excellent potential for returns. Benefits of land banking in Nigeria Capital appreciation – One of the standout perks of land banking is the chance for impressive capital appreciation. As cities grow and the demand for land ramps up, the value of well-placed plots can soar over time. Take Ibeju-Lekki in Lagos, for example; it has seen a significant rise in land value, thanks to developments like the Lekki Free Trade Zone. Inflation hedge – Investing in land acts as a solid buffer against inflation. As prices for goods and services climb, the value of real estate tends to follow suit, helping to maintain the purchasing power of your investment. Low maintenance costs – Unlike properties that need constant upkeep, undeveloped land comes with very low holding costs, making it a smart and budget-friendly investment choice. Portfolio diversification – Land banking gives investors a great way to diversify their portfolios, allowing them to spread risk across various asset types. Read also: Nigerians urged to leverage land banking for investment diversification Challenges and considerations While land banking has plenty of benefits, there are some challenges that potential investors should keep in mind: Legal and regulatory hurdles – Dealing with Nigeria’s land ownership laws can be quite tricky. Problems like unclear land titles and bureaucratic delays can create significant obstacles. It’s essential to do your homework and consult with legal experts to ensure you have clear titles and are following all regulations. Market volatility – The value of land can be swayed by economic trends, government policies, and other outside factors. Investors need to be ready for possible ups and downs in land values. Illiquidity – Land isn’t as easy to sell as other types of investments. It can take time to find a buyer, so investors should be prepared for a longer-term commitment. Strategic locations for land banking in Nigeria Identifying the right location is crucial for successful land banking strategies. Below are some Nigerian states considered promising for land banking investments: Lagos State – Particularly, Ibeju-Lekki, which is often referred to as “The New Lagos”, is a clear epitome of land banking, posing interesting real estate potentials. Over the last ten years, this place has made a gigantic leap from being one of the sparsely populated areas to being a busy hub of economic activities. It has been marked out for heavy infrastructural development, such as the Lekki Free Trade Zone, the Dangote Refinery, Lekki Deep Seaport, and the proposed Lekki International Airport. These land-value-appreciating projects have spurred investments in land, and, as a result, land prices have hiked tremendously. Those who had bought lands in Ibeju-Lekki before the coming of these projects have had quite a positive turnaround from their investments. Ogun State – The fact that it is geographically the nearest and is developing industries-related projects makes it quite attractive for land banking. For instance, Abeokuta and Agbara are beginning to witness people’s movement towards industrialisation. Abuja (FCT) – Largely, the Federal Capital Territory keeps expanding, and the areas closer to it seize the opportunity of the expansion, as many residents and businesses are attracted to the capital city. Rivers State – Port Harcourt, which is the capital of Rivers State, is a very large commercial centre with a lot of ongoing infrastructural development, thus making it a tremendous opportunity for land banking. Enugu State – Enugu, known as the “Coal City”, is currently under impressive development, with its residential and commercial real estate markets blooming in investments, further offering opportunities for land banking. Strategies for successful land banking In order to gain the most from land banking in Nigeria, investors should consider the following strategies: Conduct thorough research – Investigate the area and learn as much as you can about growth potential, i.e., planned infrastructures, government policies, or demographics. Verify land titles – Always ensure the land has a title and is legitimate so legal complications can be avoided. Speaking with a legal professional for due diligence is suggested. Consider accessibility – When you invest in land located near major roads, transport hubs, and commercial land, it will appreciate quicker. If an area is being planned for by the government or is being developed by private capital, there will certainly be appreciation in the value of that land. Take a long-term view – land banking is not a lottery. You will not instantly get rich. Investors need to have patience and be able to hold their assets for years while waiting for returns. Engage expert advice – Working with reputable real estate consultants, surveyors, and legal professionals will mitigate risks and simplify the process of investment. Government policies and land banking The Nigerian government is a critical aspect of land banking from a policy and regulations perspective. The Land Use Act of 1978, which places land ownership in the hands of state governments, is still a crucial legal framework for land transactions. However, investors often find themselves tangled in bureaucratic red tape when trying to secure Certificates of Occupancy (C of O) and other vital land documents. To enhance the land banking system, government agencies need to simplify processes, digitise land registries, and implement policies that safeguard investors against fraudulent land sales. Recent efforts, like the Lagos State Land Administration Automation System, are designed to cut down on delays and boost transparency in land dealings. Looking ahead With Nigeria’s population expected to surpass 250 million by 2050, the need for housing and commercial real estate is set to soar. Consequently, land banking will continue to be a promising investment strategy, especially in areas undergoing rapid urbanisation and infrastructure development. Moreover, the increasing embrace of smart cities and technology-driven real estate solutions will make land banking even more appealing. Investors who make strategic moves now are likely to enjoy significant benefits in the years ahead. Unquestionably, one of the most promising investment opportunities in Nigeria’s real estate market is land banking. As long as investors perform careful due diligence and make informed site selections, it provides a low-risk, high-reward approach to long-term wealth accumulation. For forward-thinking investors, land banking is a “sleeping goldmine” because of the potential for large capital appreciation, even in the face of obstacles like market volatility and legal restrictions. Investors can unlock the enormous value buried in Nigeria’s land banking landscape by utilising professional advice, keeping an eye on infrastructure advancements, and remaining up to date on governmental policies. Those who make wise land investments now will become tomorrow’s real estate tycoons as the nation grows.