Real estate is a down payment on private infrastructure

Real estate is a down payment on private infrastructure.

Splitbox Journal • Principle of Capital

Lagos prime land prices are a fiction. A one million dollar entry price for 500 square metres is not a scarcity premium. It is a security deposit for a lifetime of private power, water, and security provision.

The state has offloaded its infrastructure deficit to the landlord. What looks like capital appreciation is often just the capitalized cost of utility substitution. The 'island of excellence' model carries a hidden terminal value trap.

Investors must discount the scarcity premium in prime nodes by the projected cost of private maintenance over a ten-year horizon. If the maintenance cost eats the yield, the land is not an asset. It is a liability with a view.

— Splitbox Journal