Land banking means buying land to hold for a later use or sale. It can tie up cash for an uncertain period, often without operating income. A worthwhile assessment starts with the land’s legal and physical position, all costs and a credible exit, not a promised annual appreciation rate.
This guide does not recommend a particular plot or promise that land will preserve value. It gives you a way to examine the offer before committing money.
Write the investment case in plain language
Explain who might buy or use the land later, why that demand is plausible, what must happen first and how long you could hold if it does not happen. A planned road or nearby industrial project does not establish a buyer for your specific plot.
Separate an existing, observable fact from a proposal, an agent’s expectation and your own assumption. Record the source and date of each.
Count more than the purchase price
| Stage | Items to investigate |
|---|---|
| Acquisition | Price, professional investigations and applicable transaction costs |
| Ownership | Applicable charges, maintenance, monitoring and agreed estate obligations |
| Sale | Marketing, agency, legal, tax and other applicable disposal costs |
| Funding | Financing costs and the effect of tying up cash |
Ask your advisers which items apply and obtain written estimates. The schedule is a set of questions, not a universal fee list.
A worked return example
Suppose, entirely hypothetically, you buy for NGN 5 million, spend NGN 500,000 acquiring the land and NGN 500,000 while holding it. Total cash out is NGN 6 million. You later sell for NGN 8 million and pay NGN 400,000 in disposal costs, leaving NGN 7.6 million.
The cash surplus is NGN 1.6 million, or about 26.7% of NGN 6 million. That is a simple total return under the stated assumptions, not an annual return. It also excludes any cost omitted from the example.
Time changes the result
The same cash surplus received after two years is not equivalent to receiving it after ten. An annualised or cash-flow return calculation needs the dates and amounts of payments and receipts. Inflation and the currency in which you measure your wealth also matter.
For a diaspora buyer, keep both foreign-currency transfers and naira receipts. A naira price increase does not automatically represent the same return in pounds, dollars or euros.
Test a weaker sale
Using the invented NGN 6 million outlay above, suppose the eventual selling price is only NGN 6 million and disposal costs are NGN 300,000. Net proceeds would be NGN 5.7 million: a cash loss of NGN 300,000 before other omitted costs. A buyer who looks only at purchase and resale price would miss it.
Also test a delayed sale with continuing holding costs. Do not fund an essential near-term expense on the assumption that a plot can always be sold quickly.
Verify the asset before debating the return
Commission the appropriate title, seller-authority, boundary and planning investigations. Understand the exact interest offered and any restrictions or outstanding steps. Our land verification guide explains how to organise that work.
If the offer relies on an excision or gazette, use the excision guide to prepare questions. If you are abroad, agree the remote reporting arrangements before payment.
Your decision page
Summarise the evidence, full cost, intended holding period, plausible buyer, weaker scenario and unanswered questions on one page. A strong case should still make sense without the words “guaranteed appreciation.” Have qualified advisers review the transaction and its fit with your circumstances.
Next: visit the buyer checklist page before committing to a shortlisted plot.
Lagos waterfront gallery image is contextual; it does not depict land offered for sale.
Reviewed 21 September 2026. Examples labelled hypothetical are calculations, not market forecasts or personalised investment advice.
