Benefits of Infrastructure Investment to Real Estate Development

January 16, 2023by Sterling Homes0

Statistics have shown that infrastructure represents about 50% of the construction cost for property developers. This indicates that good infrastructures are a key operator of where real estate investment millions go. 

Nigeria’s real estate sector posted a 3.85% growth in the second quarter of 2021, representing its highest growth in six years. This has been achieved only because government and real estate developers have prioritized developing massive infrastructures in strategic locations. Nigeria has been able to achieve this milestone and achievement due to an increase in property value, which is a result of the enormous infrastructures that are being put in place.

Some of the benefits of Infrastructures in real estate includes;

  1. Property Value: Infrastructure development is an essential element in encouraging a property value. With greater infrastructure, it becomes effortless to do business as the cost of communication, transportation, sanitation, and energy decreases.
  2. Stable Cash Flow: Infrastructure benefits express long-term stable cash flow which is favorable for investors. It serves as a means of adding value to a real estate investment thereby generating more funds and steady cash flow for investors.
  3. Reliable infrastructure serves as support to real estate investment: Infrastructures like good roads, recreational centers, and water attract people to a particular location and improve the worth of the properties situated in that region. Development of infrastructures in a location contributes a larger percentage to the value of properties in that entity. A real estate investment cannot appreciate in value or increase in ROI if there are no newly developed amenities in that location.

Why do you think a property cost 3 million naira a few years back and it’s already 15 million naira or more as of today? It’s the development that has been in place over the years that made the property in that location appreciate in value. A good case study is Lekki, Lagos State.

Lekki used to be an ancient town before it became one of the most sought-after locations in Lagos State. What do you think contributed largely to the development? of real estate value in Lekki? Due to massive infrastructures coming on board, the reputation of Lekki is considered to be the most expensive real estate in Lagos State. As at today, Lekki property market will generate over 70% of Lagos wealth by 2025.

Infrastructures and real estate ROI work hand in hand. It is advisable for smart investors to be strategic when buying a property in any location in order to get the best out of it.

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