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The Real Estate Conundrum in Nigeria
The Real Estate Conundrum in Nigeria
Introduction
Real estate plays a pivotal role in Nigeria’s economy. In 2024, following the GDP
rebasing exercise by the National Bureau of Statistics (NBS), the sector was stated to have contributed N41.3 trillion( amounting to 5.45 percent) to Nigeria’s economy, making it the third-largest sector after Trade and Crop Production. This was a
marked increase from N10.5 trillion in 2023 (pre-rebasing).
The growth of the sector has been quite apparent particularly in the major urban cities across Nigeria and the Nigerian real estate market was estimated at $2.14 trillion in 2024 and projected to reach a size of $2.25 trillion by the end of 2025.
Meanwhile, its contribution to employment, infrastructural growth and the development of the national economy continues to grow, driven by increased
formalisation of property services including land valuation, rentals, and stronger demand due to urbanization and diasporan investments.
This boom in property activity must also be seen in the context of Nigeria’s rapid population growth and increasing urbanisation. Nigeria’s current population was estimated at over 210 million in 2024, growing at approximately 3.2 percent annually.
As more people move into cities, the demand for housing intensifies. However, supply has lagged. According to the most recent data, Nigeria has a housing deficit of about 28 million units. Experts suggest that at least $3 trillion needs to be spent
within the next 30 years and that approximately 700,000 new housing units need to be constructed annually, at least in the short to medium term, to begin to close this
gap.
The Absence of Control
While the market is expanding, many of its practices remain arbitrary, unregulated, or opaque, particularly with regard to renting and the sale of property.
- Arbitrary Rent Increases: Tenants across major cities report rents being raised without clear justification, sometimes by over 100 percent in one go. There is often no consistent, regulated mechanism or benchmark for rent review. Landlords may base increases on informal, subjective notions of desirability, access to amenities, or real or perceived “market pressures,” rather than clearly defined, transparent metrics.
- Property Valuation without Standard Metrics: Prices for properties (for sale or rent) can swing wildly depending on location, bargaining power, agent used, amenities, developer reputation, and perceived prestige, rather than clear formulas like cost of materials, yield, or comparable market rates. This leads to some areas being vastly overpriced and scantily occupied, while other less desirable or less well-served areas remain undervalued, poorly served but overcrowded and under-resourced.
- Lack of Regulatory Oversight and Stakeholder Clarity: Many states do not have strong regulatory bodies or enforceable bodies for real estate transactions. Licensing and registration of stakeholders, including brokers, Landlords/property owners, estate valuers, property developers, and agents, is often weakly enforced. Contracts are sometimes informal and property ownership, transfer of title, and registration processes are cumbersome, ambiguous, and often expensive or slow. Additionally, in rent situations, tenants often have limited legal recourse when things go wrong aside from tedious court cases. These gaps serve to further expand and proliferate inequity as those with better networks, capital, or connections often fare better in securing good properties, while others are subject to arbitrary terms, sudden eviction, fraud or being overcharged.
The Wrong Focus? The Wrong Controls?
Despite the booming value of real estate, much of the development and investment, particularly in the urban cities, appears skewed toward luxury or high-end housing,
rather than housing suited for the bulk of Nigeria’s population, especially young
professionals and smaller households.
- Affordability vs Official Incomes: For many young professionals in Lagos, Abuja, and Port Harcourt, renting even modest apartments has become prohibitively expensive. A self-contained room might cost N1,000,000 to N1,500,000 per annum, while a 2-bedroom flat may go for N2,000,000 to N2,500,000 per year. In sharp contrast, salaries for many in this demography are often well below N200,000 – N300,000 monthly in many private sector roles. Thus, a large share of income is taken up by rent.
- Vacancy Amid Overcrowding: In many high-brow or luxury estates in Lagos, Abuja, and Port Harcourt, there are substantial numbers of unoccupied or under-utilised high-end housing units. Many of these are priced out of reach for average earners. In contrast, underserved areas and satellite towns are densely populated, with informal housing, overcrowding, and infrastructural deficits. This imbalance creates a skewed perception as to the real availability of housing in Nigeria.
- Mismatch of housing types: Much of what is being developed tends to be larger, more luxurious units, sometimes villas or large apartments, rather than the 1, 2 or 3 bedroom flats which are more realistic for young professionals or small families. Given that family sizes are decreasing relative to past decades, this mismatch is increasingly problematic not just for the present but even for the future.
- Planning, Permits and Functionality: There is often insufficient attention to whether housing projects are functional in terms of location, access to transport, utilities, security, and services. Planning permissions sometimes allow for large footprint luxury estates while neglecting denser, more affordable housing, mixed-use developments, or transit-oriented housing that could reduce commuting burdens and cost of living. Indeed a question must be asked as to whether existing master plans, regulations and incentives encourage the “right” kinds of development, or just prestige projects.
Tenancy in Lagos, Abuja, Port Harcourt: On the Ground Realities
A brief look into how tenants experience housing in the three largest / most
economically significant cities in Nigeria reveals concrete challenges:
In Lagos, the intense demand drives rents in high-demand districts (Lekki, Victoria
Island, Ikoyi) to astronomical levels. Young professionals frequently live far from the city center to afford rent, increasing commuting times and costs. Landlords often
require large advance payments (sometimes two to three years up front), plus property inspection, guarantors, and other hidden charges.
In Abuja, as the administrative and political capital, demand is inflated by politicians, senior civil servants, contractors, diplomats etc. This drives up both sale and rental
prices particularly within the AMAC Municipality. Satellite suburbs are growing rapidly, but infrastructure and amenities often lag, which reduces the utility of those
lower rents.
In Port Harcourt, much of the real estate demand is tied to oil sector-driven projects and short-term stays by contractors, which causes volatility. Prime, serviced housing in secure enclaves commands high rent while lesser-served locations are crowded,
lacking maintenance, have questionable security with unreliable utilities. When oil
prices drop or sector projects reduce, demand softens, but prices often remain upwardly facing.
Young professionals in all three cities report that rent takes a large share of income, often leaving little disposable income for savings or other life investments. Upfront
requirements (advance rent, deposits) further compound the burden.
Conclusion
The conversation around the review, proper structuring and effective regulation of Nigeria’s real estate sector is one of vital importance even to the future of the nation. While opportunities exist for economic success for stakeholders, the vital role that the real estate sector plays mandates a proper look at the ills that currently plague it. There are serious opportunities and serious challenges. Some key things that need urgent attention:
- Review what kinds of properties are being built and planned, to ensure they
match the needs of the population: more smaller units (1-3 bedroom), more
affordable, better located, with access to utilities and transport. - Strengthen regulatory frameworks: rent-review legislation; licensing of agents,
brokers, developers; transparency in pricing and valuation; clear rules for
tenancy (eviction, maintenance obligations). - Expand digital systems for property transactions: land titling, registration,
valuation, lease agreements, etc., to reduce friction, corruption, and arbitrary
behavior. - Encourage states and local governments to establish bodies similar to Lagos
State Real Estate Regulatory Authority (LASRERA) that can register and
license stakeholders, enforce standards, mediate disputes, ensure safety,
and protect tenants. - Invest more in affordable housing delivery, perhaps via public-private
partnerships, subsidies, mortgage reforms, or rent-to-own models to reduce
upfront cost burdens. - Monitor and enforce planning permissions to promote sustainable, dense,
mixed-use and transit-oriented developments rather than gated luxury estates only.
Ultimately, Nigeria’s real estate sector has enormous growth potential. But unless the system becomes more transparent, equitable, and aligned with the real needs of the people and the demands of the global technology reliant landscape, the sector risks exacerbating inequality, reducing livability and impacting further on the quality of life of Nigerians, and undermining economic potential.