If you have noticed that the money you saved two years ago buys noticeably less today, you have felt inflation. When prices rise and the naira weakens against the dollar, savings sitting in a bank account quietly lose their power.
This is why so many Nigerians say, “Put your money in land.” There is real truth in that advice. But it is not the whole truth, and buyers who treat it as a guarantee often get disappointed.
WHY PROPERTY OFTEN HOLDS ITS VALUE
Real estate is a physical, limited asset. Land cannot be printed, and in prime areas of Lagos it is increasingly scarce. Three forces explain why property has historically kept pace with, or outrun, inflation:
- Replacement cost rises. When cement, iron rods, labour, and transport get more expensive, so does the cost of building a similar property tomorrow. Existing properties become worth more because replacing them costs more.
- Many inputs are tied to the dollar. A large share of building materials and fittings is imported or priced with the exchange rate in mind. When the naira weakens, developers’ costs rise, and prices follow.
- Rents tend to adjust. Landlords can raise rents over time, so rental income can grow alongside the general price level, something a fixed deposit rate often cannot match.
A SIMPLE ILLUSTRATION
The numbers below are for illustration only.
Imagine someone had N20 million in savings. If it sat in an account earning less than the inflation rate, its real buying power shrinks every year. The same N20 million placed in a well-chosen plot in a growing corridor may rise in naira value as demand and replacement costs increase.
Notice the words “well-chosen”. That is where the story gets more complicated.
WHERE PROPERTY CAN FAIL TO PROTECT YOU
Property is a hedge only when certain conditions are met. Here is where it often breaks down:
- Wrong location. Not every plot appreciates. Land with no road access, no planned infrastructure, or no real demand can sit unchanged while inflation keeps eating into its real value.
- Weak or disputed title. A property you cannot legally prove you own is not a store of value. It is a risk. Verify the C of O, Deed of Assignment, or Governor’s Consent, and search the records before you pay.
- Overpaying at the start. If you buy at an inflated, hype-driven price, you may wait years just to break even in real terms.
- Poor liquidity. Property is not easy to sell quickly. If you need cash urgently, you may have to accept a discount. Do not put in money you may need within a short period.
- Carrying costs. Service charges, maintenance, security, and taxes reduce your real return, especially on a property that is not earning rent.
- Price growth is not the same as real growth. A property whose naira value doubles may still have lost value in dollar terms if the naira weakened even faster. Always ask whether the gain is a real gain or only a rise in numbers.
NAIRA VALUE VS. REAL VALUE
This is the point many buyers miss. When we say a property “appreciated”, we usually mean its naira price went up. But if inflation and currency weakness rose faster than the property’s price, you have gained on paper and lost in purchasing power.
The honest measure of a good property investment is not “did the price go up?” but “did it grow faster than inflation, after costs?”
HOW TO USE REAL ESTATE AS AN INFLATION HEDGE, WISELY
- Buy in areas with real demand drivers, such as growing infrastructure, expanding commercial activity, and rising population.
- Consider income-producing property. Rental yield gives you cash flow that can adjust over time.
- Insist on clean, verifiable documents. A hedge you cannot legally defend is not a hedge.
- Plan for the long term. Property tends to reward patience, not quick flips driven by hype.
- Budget for the full cost of ownership, so your returns are measured honestly.
- Do not put everything in one asset. Property works best as one part of a balanced plan.
THE BOTTOM LINE
Real estate can protect your wealth against inflation and a weakening naira, but only when you buy the right property, in the right place, with the right documents, at the right price, and hold it with the right expectations.
It is a powerful tool. It is not magic.
At Babajide Okusaga & Co., we help buyers and investors identify properties that make sense on the numbers, not just on the story.
Want to protect your money with property? Speak with us before you buy.
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Babajide Okusaga & co are Chartered Surveyors and Real Estate Consultants with expertise in Agency, Investment, Management, and Syndication (AIMS). We are known for being client-focused and results-driven, aiming to connect clients with their specific real estate needs such as sales, letting, joint ventures, and partnerships.
We dedicate time and energy to ensure clients’ satisfaction by helping them find the best-suited real estate solutions. Whether it’s leasing office space, financing a first home, purchasing a new factory, or managing an investment portfolio, Babajide Okusaga & Company caters to the considerations of corporate entities, individuals, and High Net Worth Individuals (HNIs).
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