The structure makes investors co-participants in the development rather than simply buyers of completed properties. BusinessDay reported that the model was adopted for Estate Links’ latest ultra-luxury residential project in Ikoyi.
Co-Investment Changes the Traditional Buyer-Developer Relationship
Under a conventional off-plan arrangement, buyers typically agree to purchase properties at fixed prices before construction is completed. The developer consequently carries much of the exposure to changes in construction costs and other development expenses.
Estate Links’ model takes a different approach by linking investors more directly to the economics of the project.
As development costs change, investors participating in the project are exposed to the corresponding movements rather than being insulated by a predetermined purchase price. This creates a closer financial relationship between the developer and investors throughout the development cycle.
Olaitan Olaoye, associate partner and head of projects at Estate Links, said the structure was designed to create greater alignment between the company and its investors, with both parties sharing an interest in the successful delivery and performance of the development.
Ikoyi Development Tests the Model in the Luxury Market
The development comprises eight maisonettes and a penthouse, with each residence offering four bedrooms, two boys’ quarters and three dedicated parking spaces.
The property is located in Ikoyi and has views of Five Cowrie Creek, placing the development within one of Lagos’ established premium residential markets.
The project’s high-end positioning also makes its funding structure notable. Luxury developments require substantial capital for land acquisition, construction, professional services and finishing, while changes in material and labour costs can affect project economics during construction.
By bringing equity investors into the project at the development stage, Estate Links has adopted a funding structure in which private investors provide part of the capital required to develop the asset.
Investors Share Development Risks and Potential Returns
The co-investment model also changes the risk profile for participating investors.
Investors can benefit from increases in the value of their properties as the development progresses and the completed assets enter the market. However, they also remain exposed to changes in development costs.
This differs from a conventional fixed-price off-plan purchase, where the buyer generally commits to an agreed price regardless of subsequent movements in the developer’s construction costs.
The structure therefore places greater importance on transparency around project expenditure, construction progress, delivery timelines and the eventual value of the completed property.
For investors with an appetite for development exposure, the model provides a way to participate more directly in the economics of a real estate project rather than simply acquiring a finished apartment.
Early Investor Activity Provides Market Signal
The project has also generated activity beyond the initial investment stage.
According to BusinessDay, some investors have subsequently rented out their units, while two units are currently being offered for resale. This gives participating investors potential exit or income options after entering the project during its development phase.
The activity also illustrates how a development-focused investment structure can connect project financing with longer-term property investment strategies.
For developers, attracting investors at the beginning of a project can provide access to equity while reducing the extent to which they must rely solely on conventional property sales or debt financing.
Alternative Funding Gains Relevance as Development Costs Rise
The model comes as developers continue to operate in an environment where construction costs, land prices and financing expenses can significantly influence project viability.
Alternative funding structures could therefore become increasingly important as developers look for ways to mobilise private capital without relying exclusively on conventional bank lending or traditional off-plan sales.
A co-investment structure can potentially distribute some of the financial exposure associated with development between the developer and investors. However, its success depends on clear agreements covering project costs, investor rights, construction responsibilities, timelines, revenue arrangements and exit mechanisms.
The model also requires investors to understand that participation in development carries a different risk profile from simply purchasing a completed property.
Implications for Nigeria’s Real Estate Investment Market
Estate Links’ approach highlights a broader shift in how developers can structure relationships with property investors.
Instead of treating investors solely as purchasers of completed or off-plan units, developers can involve them directly in the capital structure of individual projects.
This could create additional opportunities for private capital to enter the property development market, particularly where investors are prepared to take development-stage exposure in exchange for potential participation in the resulting asset value.
However, wider adoption would require strong transparency, clear investment documentation and effective management of project and investor risks.
The model may initially have greater relevance to premium developments where investors have the financial capacity and sophistication to absorb construction and market risks. Its longer-term significance will depend on whether similar structures can be adapted successfully to other segments of Nigeria’s property market.
Co-Investment Could Broaden Property Funding Options
Estate Links’ Ikoyi project provides an example of how Nigerian developers are experimenting with alternative approaches to project equity.
The model moves the relationship between developer and investor beyond a simple buyer-seller transaction by giving investors a direct economic interest in the development process.
For the wider real estate sector, the development highlights the potential for innovative funding structures to complement traditional mortgages, bank lending and off-plan sales.
As developers face continued pressure to secure affordable project capital while delivering properties in a volatile cost environment, models that bring private investors closer to the development process could become another avenue for financing real estate projects.
The extent to which co-investment models gain wider adoption will depend on investor confidence, transparency, project performance and the ability of developers to demonstrate that the structure can deliver sustainable returns while managing development risks effectively