Nigeria’s real estate market is booming, with new skyscrapers and fast-selling housing units drawing attention. Yet soaring prices, rising construction costs and the large capital needed to buy property keep homeownership out of reach for most Nigerians.
PropTech and fractional real estate
Property technology, or PropTech, applies digital tools to improve how real estate is developed, marketed, financed, bought, sold, leased and managed. A key offering is fractional real-estate investment, where several investors each acquire a share of a single property rather than buying it outright.
The idea of pooling resources to own property is not new; historically, groups have combined funds to purchase land or buildings. What changes is the delivery model: technology now digitises documentation, coordination and monitoring, cutting administrative costs and expanding the pool of potential investors.
Depending on the structure, participants may hold a direct interest in the asset, own shares in a special-purpose vehicle, or invest through a trust or other legally recognised arrangement. By streamlining these processes, platforms can scale fractional ownership more efficiently than before.
In practice, a digital service can list a property, collect contributions, issue electronic certificates and provide investors with real-time updates on performance. This reduces the friction that previously made collective property purchases cumbersome.
Regulatory system
While technology lowers barriers, it also triggers regulatory oversight. When the public pools money with an expectation of returns, the transaction may fall under the jurisdiction of the Securities and Exchange Commission (SEC) and the Investments and Securities Act, 2025 (ISA). Other statutes such as the Land Use Act, 1978, the Companies and Allied Matters Act, 2020, the Nigeria Data Protection Act, 2023 and the Money Laundering (Prevention and Prohibition) Act, 2022 can also apply.
The ISA grants the SEC broad powers to protect investors and maintain fair, efficient markets. An important test is whether an arrangement constitutes a collective investment scheme (CIS). A CIS arises when funds from the public or qualified investors are pooled and managed as a whole, requiring SEC registration.
Not every fractional deal is a CIS. For example, two individuals buying a plot together hold direct interests and do not involve public pooling or a professional manager, so the CIS rules would not apply.
The law also permits companies to raise capital for real-estate projects by issuing “income certificates” or shares that grant investors a right to earnings and a say in governance. Such schemes must be registered with the SEC and meet financial and legal standards to safeguard investors’ money.
Compared with earlier, paper-based pooling arrangements, the digital model’s speed and transparency resemble online equity crowdfunding in other sectors, where technology similarly reduced entry barriers and broadened participation.
Another key provision defines an “invitation to the public.” The ISA states that any offer advertised through mass media, the internet or electronic means—including distribution of application forms—is deemed public and triggers prospectus requirements under sections 99, 101 and 107.
Private offers that are not intended to reach anyone outside the original group are exempt from the public-invitation rules, provided they remain confined to that limited circle.
For platform operators, compliance therefore means not only registering any CIS-type scheme with the SEC but also adhering to data-protection, anti-money-laundering and land-use regulations throughout the investment lifecycle.
Investors, in turn, should verify how a project is structured, who holds the underlying asset, the source of returns and whether the platform complies with the applicable statutory framework. The ISA requires a prospectus for public offers, which provides detailed disclosures.
Qualified investors and private offerings
Regulators distinguish between the general public and those classified as qualified investors, allowing different treatment under the securities framework.
Qualified investors include institutional entities and high-net-worth individuals, as defined by the regulator’s rules on issuance and allotment.
Platforms facilitating such private offers must retain documentation proving the limited nature of the solicitation, including records of the investor list and communication channels used.
Compliance may begin at the design stage, and platforms may need to embed regulatory checks into their technology architecture.
Leave a Reply