The Nigerian real estate sector entered 2025 on a trajectory of growth and optimism, fueled by rising urbanisation, infrastructure expansion and a renewed focus on affordable housing.
Yet, despite these positive signals, the industry faced one persistent and crippling challenge of chronic shortage of funding.
For developers, investors and other stakeholders, access to capital remained a key bottleneck, limiting the pace of construction, delaying project completion and in many cases, pushing ambitious plans into stagnation.
Building materials, already in short supply, became increasingly expensive due to inflation, import dependency and logistical constraints, further compounding the funding dilemma.
Medium-and-large-scale developers were forced to navigate high-interest loans, delayed mortgage disbursements, and private-sector financing gaps, all of which eroded profitability and discouraged new investments. The ripple effects extended to the housing market itself, with rising property costs, stalled projects, and shortages in affordable accommodation becoming all too common.
Industry experts argue that while policy reforms, mortgage initiatives and public-private partnerships offered some relief, structural challenges in capital access continued to dominate the sector. In 2025, Nigeria’s property boom was therefore defined not just by growth, but by the stark reality of financial constraints shaping the pace and scope of development.
Nonetheless, Nigeria’s real estate sector has undeniably made significant strides over the years, providing employment to countless citizens and maintaining its position as one of the country’s largest employers. Yet, the industry continues to navigate challenges such as fluctuating interest rates, limited property inventory, and a growing shift toward suburban and secondary markets. Despite these hurdles, inventory levels remain tight, while technology — particularly virtual tours — has grown in importance. This digital shift complements the renewed demand across key segments like logistics, data centers, and residential properties, reflecting the sector’s ongoing growth and evolving dynamics.
The building materials market is very important to real estate. These building materials come in different kinds and are for different purposes.
According to research, building materials account for between 30 and 50 per cent of project cost and control about 80 per cent of its schedule. Usual building materials seen on construction sites include blocks, tiles, roofing sheets, wood, iron rods, etc.
In Nigeria, private individuals control the building material market, which makes it prone to market forces (supply and demand) and dealings of private players, especially middlemen, even though critics of the housing sector have argued that building materials shouldn’t be left to market forces of demand and supply, given that shelter is considered one of the basic needs of life after security, food, and clothing. Industry experts have attributed the rapid inflation in the price of building materials to numerous factors such as government fiscal policies, scarcity of building raw materials/hoarding of building materials, fluctuation in the cost of fuel and power supply, inadequate infrastructure, interest rates, corruption and what have you.
In Nigeria, the majority of conventional building materials are imported, with the notable exception of cement, where major conglomerates like Dangote and BUA have significantly contributed to meeting domestic demand. Imported materials, however, remain highly susceptible to inflation, which drives up their landing costs and, ultimately, construction expenses. Industry experts point to a range of factors behind the rapid inflation in building material prices, including government fiscal policies, scarcity or hoarding of raw materials, fluctuations in fuel and electricity costs, inadequate infrastructure, high interest rates, and corruption.
Proximity also plays a critical role in determining construction costs. For example, building a four-bedroom bungalow in Igbakwu, Ayamelum Local Government Area, would incur higher expenses than constructing the same house in Onitsha, largely due to the cost of transporting materials to more remote locations. Other factors, such as brand, product quality, and point of purchase, further influence costs. Many of these issues are tied to location, as most local manufacturing plants are concentrated in urban centers, leaving rural and peri-urban areas dependent on distant supplies. The lack of government intervention to decentralise production exacerbates these disparities, creating significant cost variations across regions and making building in Nigeria both complex and expensive.
This also shows that the rising cost of building materials has high implications on affordable housing provision, risk of project abandonment due to delay in project completion, construction of substandard houses, as well as increase in the price of rent. Recent real estate activity in Nigeria includes the Lagos government’s commissioning of new housing units, the opening of the Lagos-Calabar Coastal Highway section, and incessant demolitions of structures in some areas, like in Lagos. A major trend is the government’s focus on affordable housing, alongside increasing adoption of smart home technology and mixed-use developments. The market is also seeing significant investment, driven by rapid urbanization and the resilience of property values, especially in high-demand areas like Lekki and Ikoyi.
Housing and demolitions
The story of real estate in the year 2025 will not be accurate without remembering new buildings that were unveiled and incessant demolitions in various Lagos environs. The Lagos State government commissioned 233 new housing units while continuing to demolish what it termed illegal structures in areas like Ikate Elegushi and the Lekki-Ikoyi corridor, Festac axis. The federal government is also preparing to open a section of the Lagos-Calabar Coastal Highway in December 2025, while demolitions are a recurring issue, with the FCTA pausing some at Gwarinpa Estate pending verification of legal orders, and other groups demanding compensation for recent demolitions in the FCT. The Federal Capital Territory Administration (FCTA) is also set to begin full enforcement against property fee defaulters on November 26th, 2025, which may also attract demolitions.
Property value appreciation
The demolition of existing properties is likely to exacerbate the shortage of available accommodation, intensifying the pressure on the housing market. As demand increasingly outpaces supply, market forces are expected to drive up property values. High-demand areas such as Lekki, Ikoyi, Victoria Island, and key urban centers in Abuja have already experienced significant appreciation in property prices, and this upward trend is widely anticipated to persist.
Smart homes and prop tech
The adoption of smart home technology rose significantly in 2025, especially in new developments, incorporating features like smart security and automated controls. It is a dominant feature in exotic estates in Lagos, Enugu, Abuja, and Onitsha GRA. Additionally, the Lagos state government is using blockchain technology to revamp its land registry for increased transparency. There is a growing demand for mixed-use developments that combine residential, retail and office spaces to provide convenience and reduce commute times. Julius Berger Nigeria Plc has noted policy enforcement gaps in the FCT, contributing to a sector facing both oversupply in luxury estates and a shortage of affordable housing for low-income earners.
According to Dr. Meckson Innocent Okoro, Principal/CEO, M.I. OKORO & ASSOCIATES (Estate Surveyors & Valuers/Property Consultants), the federal government is to be commended for the bold initiative of delivering houses to the teaming population and matching it with funding cum mortgage facilities of 20 years tenure and single-digit interest rate, with contribution of 10 per cent equity from the subscribers. The Federal Ministry of Housing and Urban Development is focusing on the “Renewed Hope Housing and Infrastructure Agenda.” It recently planned and launched a National Housing Data Centre. This is the first in the history of Nigeria that we are getting closer to what obtains in first-world countries.
“Now that this initiative has started, I implore the Federal Government, through the Ministry of Housing and Urban Planning, to ensure that this housing provision strategy does not die even after the tenure of President Bola Tinubu’s administration. What the Ministry could be doing is to gather data based on feedback from the present initiative of the Renewed Hope Estates and try to modify the strategy where necessary in order to achieve a far better approach and strategy in future housing policy and delivery. He said that the critical components in housing delivery are finance, land, and infrastructure generally. In order for the cost of our housing delivery to get cheaper, I suggest the government should pay more attention to directly allocating lands for this type of development, and put in place as a matter of deliberate policy infrastructure such as good roads, electricity, pipe-borne water, good transport/mass transit to move the population that occupy these developments, particularly where the land is far from the urban center.
“Such an easy transport system would motivate people to buy and occupy the estate, while government direct involvement in infrastructural development would reduce the selling price per unit. If the developer is allowed to create roads, put electricity, water, etc., the costs of these facilities will push up the delivery cost of the estate per unit. I also suggest that in every Federal Government Housing Estate, the developer should incorporate solar panels as a means of power supply in order not to allow the subscribers to start buying generators to power the buildings throughout. There is a strong and growing focus on affordable housing projects to address the country’s housing deficit, with public-private partnerships and government schemes playing a significant role.
Funding via mortgage
While this option is always on the table, Okoro worried about the accessibility of the mortgage to the subscribers. He said it was a challenge in 2025.
What checks has the government put in place to ensure that the appointed disbursement banks are not creating unnecessary bottlenecks to cause delay in disbursing funds to the subscribers through the MREIF arrangement? I suggest that the Central Bank of Nigeria carry out monthly supervision and checks on all the disbursement banks to ensure they operate under their laid-down guidelines for obtaining mortgage facilities. An example is the case of 1992-1994 when the General Babagida Administration created Primary Mortgage Institutions to facilitate housing delivery in Nigeria with a capital base of N5 million. Due largely to inadequate regulation and policing in the operations of these Primary Mortgage Institutions, a lot of them collapsed, and many people lost their investment. The point I am making here is that no matter how beautiful the intentions of the government would be, the initiative of making mortgage funding available to subscribers would only work where the same government puts enough checks in place so as to make the disbursing banks perform efficiently”.
In the opinion of Dr. Akin Opatola, Chapter President, International Real Estate Federation (FIABCI), the year 2025 was a defining and transitional year for Nigeria’s real estate sector. Despite macroeconomic pressures, high interest rates, and cost inflation, the industry showed resilience, innovation, and a growing shift towards professionalism, data-driven decision-making, and sustainability. Demand remained strong in strategic residential, mixed-use, and logistics segments while developers became more creative with structuring, partnerships, and delivery models. The successful hosting of the FIABCI World Real Estate Congress in Lagos also reinforced Nigeria’s rising profile on the global real estate map and opened new conversations around standards, transparency, and international collaboration. We saw infrastructure-led resilience around projects like the Lagos Blue and Red Rail Lines, the Lekki Deep Sea Port corridor, and the Abuja Metro and arterial road expansions, which sustained demand for mixed-use, logistics, and well-located residential assets. The year exposed structural gaps, particularly around construction insurance, land title clarity, and multiple taxation, but it also created momentum for reforms. Looking into 2026, clearer tax harmonization, stronger enforcement of compulsory building insurance, and continued infrastructure investment would unlock institutional capital and restore investor confidence.
If reforms are sustained, 2026 would mark the transition from survival to sustainable growth for the sector.
For Chief Godwin Alenkhe, National President, Estate Rent Agent Association of Nigeria (ERCAAN), many players showed remarkable resilience despite facing numerous challenges in 2025.
He said the sector contributed to the country’s Gross Domestic Product with well over N2 trillion in 2025 alone.
“It has created significant job opportunities, infrastructure development, visible government revenue, and additional wealth creation for hardworking Nigerians. But the sector still faces some noticeable challenges like high cost of building materials, regulatory bottlenecks, and lack of infrastructural development. And to address this, we are suggesting government intervention into our Land Reform Act, infrastructural development, access to mortgage, and subsidy for those seeking rental homes”, he said.
In his contribution, Mr. Moses Ogunleye, Managing Director, MOA Planners Limited (Environmental Consultants), noted that the sector recorded growth in the residential and commercial real estate areas. For instance, there were new developments, particularly in the medium-income housing provision by the private sector in major cities of Lagos, Abuja, Port Harcourt, Onitsha, and Kano. Some state agencies also developed new homes. In the commercial property market, there were many completed projects, including shopping malls, cinemas, lounges, hotels, and petrol/gas stations. A key challenge in the year for actors in the industry is access to funds. The available sources of funds carry high interest rates. Since development in the sector is capital intensive and requires long-term funds, it became unprofitable and retrogressive to seek such funds. The security challenge in most parts of Northern Nigeria is also a critical risk factor in embarking on real estate investment in the affected states.
