5 Facts About Real Estate in Nigeria

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The real estate business in Nigeria, like elsewhere, is capital-intensive and also very lucrative to venture into. It is more prominent in big commercial cities such as Lagos, Abuja, and Port Harcourt, amongst a few others, while spreading tentacles to other parts of the country. With an estimated US$2.26 trillion worth of value anticipated in Nigeria by the end of the year, the real estate business presents itself as one with peculiarities that often reward risk-takers handsomely. But to get these results, one must have foresight into what it entails and also have a proper understanding of the business environment to thrive.

Talking about peculiarities, every business venture has definite features that set it apart or that one can always reference when attempting to speak about them. For the real estate business, especially in Nigeria, like many other places, one might assert that it is a business for the elites, or, in simpler terms, a business for those who have made enough money for themselves and their families and wish to invest in a lifetime venture where they can continually earn from and pass down to their offspring.

Of course, building a house is big business! Imagine building a house in this present economy! Irrespective of the size, whether a set of single rooms, a flat, a duplex, or even an old or modern-fashioned bungalow, the cost of building materials is also very expensive, and if you live in Nigeria, how much is a bag of cement in your area today? That’s on a lighter note.

There are some interesting facts about real estate in Nigeria that you might need to know, especially if you have plans of venturing into the real estate business, whether as an independent agency or as a real estate firm.

1. Nigeria’s Housing Deficit

Nigeria faces a significant housing deficit, with estimates suggesting a shortfall of around 22 million units, as reported by the Federal Mortgage Bank of Nigeria. This figure has risen from previous estimates, such as the 17 million shortfall calculated by PwC in recent years.

2. Concentration of Real Estate Value

Over 20% of Nigeria’s total real estate value is concentrated in its major cities, particularly Abuja and Lagos. Exclusive areas like Banana Island in Lagos attract high-net-worth individuals, while Maitama, Asokoro, and Jabi stand out in the Federal Capital Territory (FCT).

3. Homeownership Rates

Nigeria scores a homeownership rate of approximately 25 percent, ranking lower than other emerging markets like Turkey (58%), Indonesia (84%), and South Africa (84%).

4. Housing vacancy rates

Reports indicate that the Katampe area in the FCT exhibits the highest vacancy rates for residential properties, nearing 40%, followed by Apo with a vacancy rate of 19%. Similarly, Victoria Island, Lekki, and Ikoyi in Lagos experience notable vacancy rates, among others.

5. Real Estate Investment Trusts (REITs)

Real estate investment offers diverse opportunities, including land sales for profit, crowdfunding with partners, residential or commercial property development for rental income, or investing in Real Estate Investment Trusts (REITs) through purchasing REIT stocks.

Despite facing challenges and vulnerability to economic downturns, Nigeria’s real estate market holds long-term value and serves as a key facilitator of economic productivity. It remains a vital sector where significant wealth is generated, contributing to the nation’s overall prosperity.