Soaring costs, weak naira push Nigeria out of $13.5bn real estate market

Nigeria’s real estate sector is facing its toughest period yet as soaring interest rates, rising construction costs, and a weakened naira lock operators out of a $13.5 billion global investment opportunity.

From tenants to developers, every player in the property chain is feeling the squeeze.

Rental prices in major cities have doubled in the last two years, pushing the rent-to-income ratio above 60% — twice the United Nations’ recommended 30%.

Speaking at a breakfast session in Lagos hosted by Ubosi Eleh & Co., co-founder of Alitheia and Chairman of Purple Group, Olajumoke Akinwunmi, said the affordability crisis is forcing more Nigerians into financial strain.

President of Pison Housing Company, Roland Igbinoba, in his State of Lagos Real Estate Market report, noted that over 70% of Lagos residents live in rented homes, with many spending more than half their income on housing.

He linked the worsening situation to rapid urbanisation, population growth, and surging demand.

For developers, the challenges are just as severe. Escalating construction costs have stalled projects, while unsold luxury and mid-market units pile up.

With the Monetary Policy Rate now at 25.5%, borrowing has become prohibitively expensive, further dampening investment.

“What could have been a lucrative $13.5 billion opportunity is slipping away,” Igbinoba warned.

Despite the downturn, the rebased GDP figures from the National Bureau of Statistics place real estate as Nigeria’s third-largest economic contributor, surpassing crude oil and natural gas — a shift driven largely by the inclusion of the informal sector in new calculations.