The Impact of Sustainability on Valuation Practice in Nigeria

ESV George Ofuani,

Sustainability has emerged as a significant consideration in global real estate markets, and its influence on valuation practice in Nigeria is becoming increasingly evident. As environmental, social, and governance (ESG) factors gain importance among investors, developers, and regulators, valuers are expected to incorporate sustainability considerations into their assessments. While the Nigerian market is still developing in this regard, the impact of sustainability on valuation practice is steadily growing.
At its core, sustainability in real estate relates to the design, construction, and operation of buildings in a manner that minimises environmental impact while promoting economic efficiency and social well-being. Features such as energy efficiency, renewable energy integration, water conservation systems, and sustainable materials contribute to what are commonly referred to as “green buildings.” In more mature markets, such attributes are increasingly reflected in property values, and there is a growing recognition that similar trends may shape the Nigerian property landscape.

One of the primary ways sustainability impacts valuation is through its effect on market demand. As awareness of environmental issues increases, occupiers and investors are beginning to favour properties with sustainable features. In Nigeria’s major urban centres, including Lagos and Abuja, there is a gradual shift towards developments that offer improved energy efficiency and reduced operating costs. From a valuation perspective, such properties may attract higher rents, improved occupancy rates, and stronger investor interest, thereby supporting enhanced capital values.

A number of emerging examples of green buildings in Nigeria illustrate this trend. Heritage Place in Ikoyi, Lagos, widely regarded as Nigeria’s first LEED-certified commercial building, incorporates energy-efficient lighting, water-saving systems, and design features that reduce energy consumption by approximately 30–40% compared to conventional buildings. Similarly, developments such as The Wings Towers in Victoria Island and Kingsway Tower in Ikoyi integrate natural lighting, efficient cooling systems, and water conservation technologies to reduce operating costs and environmental impact. Other projects, including Alliance Place, Cornerstone Tower, and Lekki Pearl Estate, have received EDGE certification, indicating compliance with international sustainability benchmarks. These examples demonstrate how sustainability features are becoming embedded in high-grade commercial and residential developments.

In addition, sustainability can influence operating costs, which is a critical factor in income-producing property valuations. Buildings that incorporate energy-efficient systems, such as solar power or passive cooling technologies, may benefit from lower utility expenses. In a country where energy supply can be inconsistent and costly, these savings can be particularly significant. Valuers must therefore consider the extent to which sustainability features contribute to net operating income, as this directly affects valuation outcomes under income-based approaches.

However, the integration of sustainability into valuation practice in Nigeria is not without challenges. A key limitation is the lack of comprehensive data and market evidence. Unlike more established markets, where there are clear benchmarks and transactional evidence demonstrating the premium associated with green buildings, Nigerian valuers often operate with limited comparable data. This makes it difficult to quantify the exact impact of sustainability features on value, and in many cases, such features may not yet be fully reflected in market transactions.

There are also issues relating to awareness and standardisation. While sustainability is gaining attention, there is still a need for broader understanding among stakeholders, including developers, investors, and valuers. The absence of widely adopted green building certification systems and regulatory frameworks further complicates the valuation process. Although organisations such as the Green Building Council Nigeria are working to promote sustainable construction practices, adoption remains gradual.
Furthermore, valuers must balance sustainability considerations with traditional valuation principles. While sustainable features may enhance value, they must be supported by market evidence and not merely assumed. This requires professional judgement and careful analysis to ensure that valuations remain objective and evidence-based. In practice, sustainability is often treated as an influencing factor rather than a standalone determinant of value.

In conclusion, sustainability is gradually reshaping valuation practice in Nigeria by influencing market demand, operating costs, and investment preferences. The emergence of green buildings such as Heritage Place and other certified developments demonstrates the practical application of these principles within the Nigerian context. Although the full impact is still evolving, sustainability represents a critical area of development for the valuation profession, requiring ongoing adaptation to ensure relevance in a changing real estate environment.
ESV George Ofuani is a registered Estate Surveyor and Valuer