5 Factors that Could Shape Nigeria’s Real Estate Industry in 2025

  Nigeria’s real estate industry is an important part of its economy. Last year, it contributed at least 5% of the country’s GDP every quarter. A growing population and a housing deficit combine to make it a space filled with immense opportunities. Investors have noticed, and are flocking to it in droves.

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Read more about Real Estate However, the generally upward trajectory of property values in Nigeria is sometimes punctuated by dips in the industry. There’s no guarantee of perpetual growth. In order to determine the prospects for real estate in the New Year, we’ll have to consider the factors that will most likely affect it. We discuss those factors below:

Inflation

Inflation has intensified over the past few years. Prices have surged, even multiplying several times in some cases. Property valuations have gone along with this trend. It’s also true that investors have bought into real estate as a hedge against inflation. If inflationary trends persist at anywhere near the levels of the previous years, we’ll probably see more people try to preserve their wealth by purchasing property (especially land).

Exchange Rate

Exchange rates affect Nigeria’s real estate industry in at least two ways. First, a substantial amount of investments in the space comes from the Diaspora. If the value of the naira relative to foreign currencies slides, their investments will be worth less. This in turn could trigger a slowdown in Diaspora capital flowing into Nigerian real estate. Secondly, a large portion of building materials used in Nigeria is imported. Because they are purchased with foreign currency, a fall in the value of the naira relative to those currencies will make the materials more expensive.

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Government Policy Execution

Starting in 2023, we’ve witnessed an aggressive clampdown by the government on what they have labelled illegal land purchases and constructions. This activity is concentrated in Lagos State and the FCT, the two largest real estate markets in Nigeria. Although the government has emphasized that these are corrective operations, investors may be wary of funnelling funds into those locations due to the uncertainty that such actions have brought.

Interest Rates

In 2024, the CBN steadily raised interest rates, with the aim of fending off inflation. Historically, increased interest rates have led to higher borrowing costs. As a result, mortgages become more expensive, and a lot of people are dissuaded from buying or building property. Unless interest rates are calibrated downwards soon, it’s possible that borrowing for real estate projects will become costlier.

Security

Nigeria is currently in the throes of a significant security challenge. This has the potential to scare investors away from the country’s real estate industry—or at least portions of it. If they perceive a reduction in the risks present, they might be willing to inject more money into projects. But if things get worse, they will hold their purses tighter.

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Final Words

Nigeria’s real estate industry will likely grow in 2025, along with much of the economy. But it’s not clear what scale of growth we can expect. It will be interesting to see how business unfolds in the industry this year.

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Got something you want to read about on our platform? Contact us: editor@connectnigeria.com

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This article was first published on 10th February 2025
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