2025 Real Estate Market Review: What Happened & What 2026 Promises for Nigeria

• Precious

 

The year 2025 marked a transition point for Nigeria’s real estate sector. After several years of economic volatility, rising building costs, and unpredictable market conditions, the industry finally began to show pockets of stability — even though key challenges like affordability and access to finance remained. This review summarises the major movements in 2025 and outlines what stakeholders can realistically expect as we move into 2026.

 

1. Macro-Economic Climate: A Year of Controlled Uncertainty

The broader economy set the tone for real estate performance in 2025. Interest rates remained elevated for most of the year as monetary authorities attempted to control inflation and maintain currency stability. This made borrowing extremely expensive, affecting both developers and everyday buyers.

Inflation stayed high, eroding purchasing power and pushing many potential homeowners into the rental market. On the brighter side, the foreign exchange environment showed mild stability compared to previous years, reducing some of the extreme shocks that had previously inflated the cost of building materials.

Bottom line:
Developers adopted more cautious strategies — preferring phased, smaller projects and alternative financing options such as pre-sales, private equity, and joint ventures.

 

 

2. Residential Market: Strong Demand, Weak Affordability

Demand for housing remained high due to continued urbanisation, migration to economic hubs, and Nigeria’s persistent housing deficit. However, affordability became a central challenge. Many families and young professionals opted for smaller apartments, peripheral locations, or extended rental periods because outright purchase remained out of reach.

A major trend in 2025 was the shift toward mid-market apartments and professionally managed rentals. Short-let units continued attracting diaspora investors and working-class residents looking for flexible accommodation options.

Key takeaway:
There is strong demand, but a serious mismatch exists between the type of housing supplied and what most Nigerians can actually afford.

 

 

3. Commercial Real Estate: Selective Growth

The commercial segment showed mixed performance:

Office Spaces

Occupancy levels improved in certain premium districts as companies adjusted to hybrid work models. Businesses focused on efficiency and preferred well-managed spaces over large, traditional office blocks.

Retail

Neighbourhood retail, value-driven stores, and mixed-use centres performed well, benefiting from daily consumer needs. Large malls, however, faced pressure due to rising operating costs and shifting shopping habits.

Industrial & Logistics

This was one of the strongest segments in 2025. Warehousing, fulfilment centres, and logistics hubs saw increased demand, driven by e-commerce growth, cold-chain expansion, and restructured supply chains.

Overall message:
Commercial real estate favoured sectors with strong cashflow potential and operational resilience.

 

 

4. Construction Costs & Project Delivery

Construction inputs such as cement, steel, and imported finishing materials experienced upward price pressure throughout 2025. These increases forced developers to become more creative. Many adopted value engineering, bulk procurement, and modular construction methods to manage costs.

Project delivery timelines were often extended, not just due to cost but also because developers were more cautious about cashflow.

Insight:
Developers who embraced cost discipline and local sourcing were better able to withstand market pressures.

 

 

5. Investment Flows: Diaspora Confidence & Cautious Foreign Capital

Diaspora investors remained a strong force in the residential and short-let markets, partly due to increased trust in reputable developers and better digital transaction systems. They focused on smaller, high-yield properties that were easy to manage remotely.

Foreign institutional investors were selective. They preferred opportunities with transparency, proper title documentation, clear regulatory frameworks, and predictable returns. These conditions were more frequently found in industrial assets, mixed-use hubs, and high-end commercial properties.

Conclusion:
Capital is available — but it flows toward transparency, structure, and risk-managed projects.

 

 

6. Policy & Infrastructure Developments

Several government-led initiatives influenced market confidence in 2025:

• Fiscal policies aimed at stabilising the economy set expectations for more structured spending, particularly on key infrastructure.

• Efforts to improve power supply, especially through debt settlements in the electricity value chain and expanded gas projects, signaled potential relief for building operational costs.

While many of these moves were still in progress by year-end, they had a positive psychological effect on investors and developers.

SEB Perspective:
Real impact depends on consistent policy execution — not just announcements.

 

 

7. Risks That Continued Into 2026

While the market strengthened in areas, 2025 revealed several persistent risks:

• High mortgage rates and limited access to long-term housing finance

• Affordability gaps between what is supplied and what is needed

• Slow infrastructure delivery

• Dependence on imported building materials

These challenges continue to shape how developers and investors approach 2026.

 

 

8. What 2026 Promises for Nigeria’s Real Estate Sector

Looking ahead, 2026 carries cautious optimism. Here’s what industry players can expect:

1. Gradual Macro Stability

With tighter fiscal and monetary frameworks, inflation and FX volatility may ease slightly, improving planning and pricing for developers.

2. Stronger Investor Confidence in Specific Segments

Logistics hubs, mid-market housing, build-to-rent, and flexible office spaces are likely to outperform.

3. Infrastructure-Led Growth

If power and transportation improvements continue, real estate nodes near industrial corridors and urban infrastructure upgrades will attract significant demand.

4. Digital Transformation

Proptech innovations — digital land registries, online transactions, smarter building management — will enhance transparency and efficiency.

 

 

9. Final Thoughts

In 2025, Nigeria’s real estate sector demonstrated resilience amid economic pressure. Though affordability and financing remain major hurdles, the foundations for a more stable market are gradually forming. The opportunities in 2026 will favour stakeholders who prioritise transparency, disciplined cost management, strong partnerships, and adaptable product offerings.

For developers, investors, policymakers, and learners in the real estate field, the coming year offers a chance to build smarter, plan better, and contribute to a more inclusive property market.