Nigeria’s real estate sector faced significant headwinds throughout 2025, as macroeconomic instability, currency depreciation, and rising construction costs combined to slow investment activity and push house prices sharply higher.
A new industry report by property valuation firm Ubosi Eleh & Co. reveals that uncertainty in the broader economy discouraged both local and foreign investors, forcing many developers to delay projects or rethink expansion plans.
Inflation Drives Construction Costs Higher
According to the 2025 Nigeria Real Estate Report, escalating prices of key building materials—including cement, steel, and labour—have dramatically increased development costs across the country.
Frank Okosun, Chief Executive Officer of Knight Frank Nigeria, confirmed that inflationary pressure has directly translated into higher property prices.
“We have seen house prices rise by as much as 40 percent for both sales and rentals, largely driven by inflation,” Okosun said.
“Newly completed developments are the most affected, as pricing must reflect today’s construction realities.”
Investment Slows as Developers Adopt ‘Wait-and-Hold’ Strategy
The report notes that economic volatility and supply chain disruptions have resulted in widespread project delays and cost overruns. Many investors have responded by adopting a cautious “wait-and-hold” approach, prioritising capital preservation over aggressive expansion.
Senior Partner at Ubosi Eleh & Co., Emeka Eleh, identified naira devaluation as a major contributor to the sector’s slowdown.
“The weakening of the naira has significantly reduced productivity in real estate development,” Eleh said. “While capital still exists, investors are redirecting funds toward more capital-efficient opportunities until macroeconomic conditions stabilise.”
Rental Market Under Pressure
As operating expenses continue to rise, landlords are increasingly transferring costs to tenants. Higher utility bills, maintenance expenses, and service charges have led to sharp rent increases, further straining affordability for households in major cities.
Despite these challenges, demand for housing remains strong, driven by urbanisation, population growth, and limited supply—particularly in Lagos, Abuja, and Port Harcourt.
Affordable Housing Emerges as Key Opportunity
While luxury and mid-market developments face slowing momentum, the report highlights a growing opportunity in affordable housing, especially projects supported by government incentives and public-private partnerships.
Analysts believe developers who can deliver cost-efficient housing solutions may benefit from sustained demand, even amid economic uncertainty.
Outlook for 2026
Industry experts agree that Nigeria’s real estate market is entering a period of recalibration rather than collapse. Although inflation and currency risks remain key concerns, long-term housing demand continues to underpin the sector.
For investors, 2026 is expected to reward caution, strategic positioning, and a focus on value-driven developments—particularly in rental housing and affordability-led projects.
