The Nigerian real estate market is undergoing substantial transformations due to inflation and fluctuating economic conditions. Key challenges such as rising costs of materials, currency devaluation, and declining purchasing power have reshaped how stakeholders operate. Below are 10 ways the market is responding, with monetary examples included.
1. Rising Construction Costs Due to Inflation
The cost of essential building materials in Nigeria has surged in response to inflation. For instance:
- Cement prices have increased from ₦3,000 per bag in 2021 to ₦5,500–₦6,500 in 2024.
- A ton of reinforcement steel now costs between ₦450,000–₦550,000, up from ₦300,000 in 2020.
As a result, developers face significant cost increases, which are reflected in higher property prices or rents. For example, a 3-bedroom apartment that previously sold for ₦25 million in Lagos now costs ₦40–₦50 million, depending on the location.
2. Shifts Toward Affordable Housing
Economic changes have pushed developers to focus on smaller, budget-friendly units:
- In suburban areas like Epe and Mowe, a 2-bedroom apartment now ranges between ₦12–₦15 million, compared to urban centers where prices exceed ₦40 million.
- Rent-to-own options allow buyers to pay ₦80,000–₦150,000 monthly toward homeownership, making housing more accessible.
These strategies accommodate Nigeria’s shrinking middle class and declining disposable income.
3. Increased Demand for Commercial Real Estate
The rise of e-commerce and logistics has increased demand for warehouses:
- A 300-square-meter warehouse in Lagos’ industrial zones costs between ₦4–₦6 million annually.
- High-end office spaces in prime areas like Victoria Island now rent for ₦70,000–₦100,000 per square meter per annum.
This segment of real estate is more resilient to inflation as businesses prioritize modern, well-located facilities.
4. Impact of Naira Devaluation
The devaluation of the Naira has made imported materials costlier. For instance:
- The exchange rate increased from ₦360/USD in 2020 to over ₦1,400/USD in 2024.
- Imported tiles, windows, and paints now cost 30–50% more than last year.
However, this devaluation benefits Nigerians in the diaspora. A property priced at ₦100 million, which previously cost $278,000 at ₦360/USD, now costs just $71,000 at ₦1,400/USD—making luxury homes more affordable for foreign investors.
5. Adoption of Proptech Platforms
Property technology tools like Naijaspider are helping buyers find homes within their budget. For example:
- A search filter for “2-bedroom apartments under ₦20 million” in Lagos suburbs yields multiple results for middle-income earners.
- Transparent platforms reduce fraudulent transactions, saving Nigerians millions annually in lost investments.
6. Real Estate as a Hedge Against Inflation
Investors increasingly turn to real estate as a way to safeguard their wealth:
- Land prices in high-demand areas like Ibeju-Lekki have risen from ₦1.5 million per plot in 2019 to ₦8–₦12 million in 2024.
- Returns on property investments outpace inflation, ensuring long-term value growth.
For example, investors who purchased ₦10 million properties in 2020 are now reselling for ₦30–₦35 million, reflecting significant appreciation.
7. Government Interventions
Government-backed programs aim to improve affordability:
- The National Housing Fund (NHF) offers mortgage rates as low as 6% annually, compared to private banks’ rates of 20–25%.
- The Family Homes Fund delivers affordable housing units priced at ₦5–₦10 million for low-income earners.
However, challenges such as limited accessibility and bureaucracy persist.
8. Suburban Development to Reduce Costs
High property prices in urban centers like Lekki and Victoria Island have driven buyers toward suburban areas:
- In Ogun State, a 2-bedroom apartment in areas like Mowe costs ₦10–₦12 million, whereas the same unit in Lekki costs upwards of ₦40 million.
- Improved road networks and infrastructure make these locations attractive alternatives.
Developers now focus on gated communities with amenities to attract middle-income families.
9. Flexible Payment Plans and Installments
To accommodate buyers with limited cash flow, developers are offering:
- 12–24-month installment plans, requiring as little as ₦2–₦5 million initial deposits.
- Mortgage-backed options for buyers earning ₦150,000–₦300,000 monthly salaries.
For example, homes priced at ₦20 million can now be paid in structured installments of ₦200,000 monthly over 7–10 years.
10. Resilience of the Luxury Real Estate Market
Despite economic pressures, the luxury segment remains stable:
- Mansions in Ikoyi and Banana Island range between ₦800 million–₦2 billion, with significant interest from high-net-worth individuals.
- Diaspora investors account for 30–40% of luxury real estate purchases in Lagos, leveraging the favorable exchange rate.
For example, luxury properties listed at ₦500 million are now seen as attractive investments for foreign buyers due to the weakened Naira.
The Nigerian real estate market is responding to inflation and economic challenges through innovative strategies such as affordable housing, suburban development, and flexible payment plans. While rising costs affect both developers and buyers, the sector remains resilient, particularly in commercial and luxury segments. With increasing diaspora investment and technological advancements, the market offers opportunities for long-term value creation, despite current economic uncertainties.
For investors and homebuyers, the key is adapting to market trends, leveraging new financial solutions, and focusing on emerging opportunities in both residential and commercial spaces.