PropTech in Nigeria: An Investor’s Introductory Guide

By Ayobami Tunde, Oladapo Olabode and Obajimi Olutunda

Introduction

The real estate landscape in Nigeria has never been more intriguing than it is now, from stunning architectural masterpieces to fast-selling housing units and everything in between. Frustratingly for many Nigerians, however, the remarkable growth of the real estate sector has remained difficult to benefit from. Rising property prices, ever-escalating construction costs and the significant capital required to acquire property have placed homeownership, and indeed meaningful participation in the real estate market, beyond the reach of the average Nigerian.

The emergence of property technology (“PropTech”), however, has introduced innovative ways of accessing the real estate market, including the digitalisation of fractional real estate investment. By enabling multiple individuals to invest collectively in a property, fractional real estate ownership is gradually lowering the financial threshold for participation and making real estate investment more accessible to a wider spectrum of the population.

This development, however, raises important regulatory concerns. As technology makes it increasingly easy to market property investment opportunities to a large number of people, when does a fractional real estate arrangement become a regulated investment product? In the same vein, what obligations arise for the businesses facilitating such investments?

This article touches on the meaning of PropTech while bringing to the fore the regulatory compliance requirements and restrictions, particularly those contained in the Investments and Securities Act, 2025 (the “ISA”).

PropTech: Based on an Old Concept but a New Delivery Model

PropTech describes the application of technology to the real estate sector, particularly the use of digital and innovative technologies to improve the way real estate is developed, marketed, financed, bought, sold, leased and managed.

On the other hand, an investment model that enables multiple individuals to collectively invest in a single real estate asset by each acquiring a fractional interest, rather than purchasing the property alone, is known as fractional real estate.

This is an old concept in which individuals have historically pooled resources to acquire and, in some cases, manage property. PropTech has merely changed the way in which this arrangement can be created, administered and distributed.

Before the advent of PropTech, bringing together multiple investors for a property investment was cumbersome, often involving extensive documentation, coordination, administrative costs and poor structures for tracking and monitoring the investment.

Depending on the structure adopted, investors may hold a direct ownership interest in the property, own shares in a special purpose vehicle established to acquire and hold the property, or participate through a trust or other legally recognised investment arrangement.

PropTech has now digitised and streamlined many of the processes involved in structuring, administering and facilitating such investments. By reducing administrative friction and making investment opportunities easier to access and manage, technology has significantly widened the potential pool of investors and made fractional real estate more scalable and accessible.

Regulatory Oversight

It is important to note that while PropTech-enabled fractional real estate has undoubtedly made property investment more accessible, it also raises important legal and regulatory considerations.

Where members of the public pool funds into an investment arrangement with the expectation of earning returns, the transaction may attract the oversight of the Securities and Exchange Commission (the “SEC”) and become subject to the provisions of the ISA and, for a myriad of other reasons, other regulations, including 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, 2022.¹

Consequently, both investors and platform operators should understand that although technology has modified real estate investment, regulatory compliance requirements have equally evolved upwards, with additional requirements, restrictions, mandatory disclosures and obligations.

SEC and the ISA

The SEC is empowered, by virtue of powers conferred upon it by the ISA, to, amongst other functions, act in the interest of the public, having regard to the protection of investors and the maintenance of fair, efficient and transparent markets.² More than that, the SEC is imbued with overarching powers to regulate Nigeria’s capital market and protect investors.

Collective Investment Scheme

Further to the powers of the SEC, the very nature of the investment arrangement determines whether or not said investment falls within the ambit of the SEC.

For example, where an investment arrangement requires members of the public or qualified investors³ to contribute money to hold a participatory interest in a portfolio, and such contributions are pooled and managed as a whole, the ISA considers this a collective investment scheme (“CIS”), which is regulated by the SEC.⁴

This, however, does not mean that every form of fractional ownership is a CIS. A co-ownership arrangement where investors actually acquire direct interests, like two individuals coming together to buy a plot of land, does not constitute a CIS as there is no public pooling of funds or professional fund manager handling the investment.

Real Estate Fundraising via Securities

The ISA also establishes a legal and regulated approach towards the public investing in real estate and property development by allowing companies to sell special “income certificates” and shares that give investors a right to a portion of the project’s earnings and a say in how the company is run.⁵ The provisions of the ISA also support the creation of real estate trusts, where groups of people pool money to collectively own property and benefit from rental income and long-term price growth.

To ensure these investments are safe, the law requires that any company running such a scheme must be officially registered with the SEC and meet specific financial and legal standards to protect the investors’ funds.⁶

It is important to note that this arrangement is distinct from an investment in the shares of a company established to acquire and develop real estate, as acquisition of shares in a company should not be conflated with the acquisition of an interest in a property.

Invitation to the Public

The ISA clarifies exactly when an investment offer becomes an “invitation to the public”, which triggers specific legal requirements and protections for investors, including issuing a prospectus.⁷

Generally, any offer advertised through mass media, the internet or electronic means is considered a public one, including offers circulated to specific groups.⁸ The ISA even extends its scope to cover the distribution of an application form for shares or money.⁹

The ISA, however, provides that private arrangements which are not intended to result in the investment becoming available to anyone outside the group originally receiving the offer are exempt from being considered an invitation to the public.¹⁰

Conclusion

Fractional real estate is not a new concept. For generations, people have been able to pool resources and participate collectively in property ownership and investment. What is novel is the scale, speed and accessibility that technology has introduced to the equation.

The potential benefits of PropTech-enabled fractional real estate are significant, as barriers to participation are lowered and access to real estate investment is broadened.

However, the age-old legal principle that substance prevails over form is particularly instructive in this context. Regardless of the terminology adopted, regulators will look beyond its label to the true legal and commercial substance in determining the applicable regulatory framework.

For real estate developers, founders and PropTech business owners, innovation alone is no longer sufficient. Sustainable growth is dependent not only on developing attractive technology-driven investment products, but also on embedding legal and regulatory compliance into the business model from inception. Attempting to address compliance issues after attracting investors is often more costly, disruptive and capable of attracting regulatory scrutiny.

Prospective investors should understand how an investment is structured, who owns the underlying asset, how returns will be generated, what risks are involved and whether the platform is operating within the applicable regulatory framework. Sound due diligence¹¹ remains one of the most effective safeguards against avoidable investment losses.

In an increasingly digital and sophisticated real estate market, asking the right questions before committing capital may be just as important as identifying the right property or investment opportunity.

Disclaimer

The information contained in this article is provided for general educational purposes only and does not constitute, nor is it intended to constitute, legal or any other professional advice.

If you have any questions or require further information on PropTech in Nigeria, reach out to our Real Estate team at contactus@tundeadisa.com, and we will be happy to provide any assistance you may need.

References

[1] Ayobami Tunde, Oladapo Olabode, Ademola Odunayo: “Real Estate and Anti-Money Laundering Compliance”. Available at: https://tundeadisa.com/media_insights/real-estate-and-anti-money-laundering-compliance/ (accessed 21 July 2026).

[2] Section 3(2)(a) of the Investments and Securities Act, 2025.

[3] While the ISA does not define who a qualified investor is, the SEC’s New Rules on Issuance and Allotment of Private Companies’ Securities, issued on 24 April 2025, are instructive. The SEC’s April 2025 rules expressly define a “Qualified Investor” as “an institutional investor or high net worth individual as defined in the Commission’s rules”.

[4] Section 150(a) and (b) of the Investments and Securities Act, 2025.

[5] Sections 191 and 192 of the Investments and Securities Act, 2025.

[6] Ibid.

[7] Sections 99, 101 and 107 of the Investments and Securities Act, 2025.

[8] Section 97(1) of the Investments and Securities Act, 2025.

[9] Section 97(3) of the Investments and Securities Act, 2025.

[10] Section 97 of the Investments and Securities Act, 2025.