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How to Build Recession Proof Real Estate Portfolio in Nigeria

Posted by John Igbaifua on March 21, 2024

Building a recession-proof real estate portfolio in Nigeria requires strategic planning, diversification, risk management, and a thorough understanding of market dynamics. Diversification of property types is a fundamental strategy for real estate investors in Nigeria seeking to optimize their portfolios, mitigate risk, and capitalize on diverse market opportunities. Here’s a detailed guide on how to achieve this:

1. Diversification of Property Types:

1.1 Residential Properties:

  • Invest in residential properties, such as apartments, townhouses, or single-family homes, which tend to be more resilient during economic downturns due to stable demand for housing.
  • – Apartments and Flats:
    • Multi-unit residential buildings offering rental income from tenants seeking accommodation in urban areas. These properties are popular among young professionals, students, and families.

    – Single-Family Homes:

    • Stand-alone houses typically located in suburban or gated communities. They appeal to families and individuals seeking privacy, space, and a sense of ownership. Acada Arcade Modern Mall says it all from the strategic location along LASU-Iyana Iba road close to Nigerian Army Post-Service is a viable investment right now.

1.2 Commercial Properties:

  • Include commercial properties, such as office buildings, retail spaces, or warehouses, in your portfolio to diversify income streams and reduce reliance on any single property type.

    – Office Buildings:

    • Commercial office spaces catering to businesses, corporations, and government agencies. These properties generate rental income from office tenants and are often located in central business districts.

    – Retail Spaces:

    • Commercial properties such as shopping malls, retail outlets, and standalone shops. They cater to retailers, restaurants, and service providers, generating rental income and capitalizing on consumer spending. We have the Super Mall a very lucrative opportunity for entrepreneurs and retailers alike.

1.3 Mixed-Use Developments:

Consider mixed-use developments that combine residential, commercial, and retail components to create a diverse portfolio that caters to different market segments and revenue sources.

Integrated Developments:

  • Mixed-use projects combining residential, commercial, retail, and recreational components within a single development. They create vibrant, self-contained communities offering diverse amenities and services.

1.4 Industrial Properties:

– Warehouses and Logistics Centers:

  • Industrial properties designed for storage, distribution, and logistics operations. They serve businesses involved in manufacturing, e-commerce, and supply chain management. Alade Mall, is one of such from Pluswold realtors.

– Manufacturing Facilities:

  • Properties equipped for manufacturing processes, including factories, plants, and industrial estates. These properties cater to industrial tenants engaged in production activities.

1.5  Specialized Properties:

– Healthcare Facilities:

  • Properties such as hospitals, clinics, and medical centers catering to healthcare providers and patients. These properties offer stable rental income and serve essential community needs.

– Educational Institutions:

  • Properties housing schools, universities, and educational facilities. They provide long-term lease opportunities and cater to the growing demand for quality education services.

2. Geographic Diversification:

2.1 Urban and Suburban Markets:

  • Explore investment opportunities in both urban and suburban markets to diversify geographic risk and capitalize on varying demand dynamics across different locations.

2.2 Emerging Markets:

  • Identify emerging markets with growth potential, such as secondary cities or peri-urban areas, where property prices may be more affordable and offer higher potential returns.

Importance of Diversification:

1. Risk Mitigation:

  • Diversifying across property types helps spread risk and reduces exposure to specific market dynamics or economic cycles. This can cushion investors against downturns in any single sector of the real estate market.

2. Income Stability:

  • Different property types generate income streams from various sources, such as rental income, capital appreciation, or development projects. Diversification ensures a stable and diversified income stream, even if one sector experiences volatility.

3. Market Opportunities:

  • By diversifying across property types, investors can capitalize on diverse market opportunities and emerging trends. This allows them to adapt to changing market conditions and capitalize on sectors experiencing growth or high demand.
  • Diversification of property types is essential for real estate investors in Nigeria looking to optimize returns, mitigate risk, and capitalize on diverse market opportunities. By allocating investments across residential, commercial, industrial, mixed-use, and specialized properties, investors can build resilient portfolios that withstand market volatility and capitalize on emerging trends in Nigeria’s dynamic real estate market.
  • Whether focusing on income generation, capital appreciation, or development projects, diversification allows investors to tailor their portfolios to their investment objectives while maintaining a balanced and sustainable approach to real estate investing.

3. Focus on Cash Flow and Liquidity:

3.1 Stable Rental Income:

  • Prioritize properties with stable rental income streams and long-term leases to ensure consistent cash flow even during economic downturns.

3.2 Adequate Cash Reserves:

  • Maintain adequate cash reserves to cover operating expenses, mortgage payments, and unforeseen contingencies during periods of economic instability.

4. Conservative Financing:

4.1 Low Leverage:

  • Avoid excessive leverage and opt for conservative financing options with favorable terms and low interest rates to reduce financial risk and ensure debt sustainability.

4.2 Fixed-Rate Mortgages:

  • Secure fixed-rate mortgages to lock in favorable interest rates and protect against potential interest rate hikes during recessions.

5. Value-Add and Opportunistic Investments:

5.1 Renovation and Rehabilitation:

  • Identify value-add opportunities, such as distressed properties or properties in need of renovation, and implement improvements to enhance property value and rental potential.

5.2 Distressed Sales:

  • Capitalize on distressed sales or foreclosure auctions to acquire properties at below-market prices and capitalize on potential upside when market conditions improve.

6. Focus on Essential Services:

6.1 Healthcare and Education:

  • Invest in properties that cater to essential services, such as healthcare facilities, educational institutions, or affordable housing, which tend to exhibit more resilience during economic downturns.

6.2 Infrastructure and Transportation:

  • Target properties located near infrastructure developments, transportation hubs, or government projects that drive demand and enhance property value over the long term.

7. Professional Property Management:

7.1 Experienced Property Managers:

  • Engage professional property management firms like Plusworld realtors, with local expertise and a proven track record to oversee day-to-day operations, tenant relations, and maintenance activities.

7.2 Tenant Retention Strategies:

  • Implement tenant retention strategies, such as responsive maintenance, tenant incentives, and lease renewal incentives, to minimize vacancies and maintain stable rental income.


Building a recession-proof real estate portfolio in Nigeria requires a disciplined investment approach, proactive risk management, and a focus on long-term value creation.

Therefore, diversifying property types, geographic locations and  prioritizing cash flow and liquidity; adopting conservative financing strategies, and seizing value-added opportunities, investors can mitigate risks and position their portfolios to withstand economic downturns while capitalizing on opportunities for growth and profitability in the Nigerian real estate market. Plusworld has been in the game for decades and we are here to help you. Get in touch.

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