Nigeria's ₦41 Trillion Real Estate Reality: A 2025 Prediction Retrospective
In early 2025 we published a set of predictions for Nigeria’s real‑estate market. The sector was facing tight monetary policy, currency volatility and a chronic housing deficit, yet also benefited from demographic growth and policy initiatives. The following look‑back compares our expectations with what actually happened, using data from the CBN 2026 Macroeconomic Outlook and independent news reports.
2025 Predictions Summary
| Theme | Key prediction |
|---|---|
| Sector growth & contribution | We expected real estate to remain a mid-size contributor to GDP (~6%) and to grow in line with the broader non-oil economy (around 3–4%). |
| Rental yields | We anticipated high rental yields would persist (7–10% in Lagos/Abuja) as real estate continued to serve as an inflation hedge. |
| Mortgage financing & government support | We expected the government to roll out low-cost mortgage programmes and that increased mortgage access would stimulate home purchases and new construction. |
| REITs & investment returns | We predicted that Nigerian REITs would offer attractive returns around 7–9%, but that the market would remain small compared with South Africa and Kenya. |
What Actually Happened in 2025
The 2025 performance was a landmark year for the sector, characterized by significant structural changes and the realization of major policy shifts.
Sector Growth & GDP Contribution: In 2025, the real estate sub-sector served as a cornerstone of the non-oil economy, which grew by an estimated 3.70%. This performance was a primary driver of Nigeria’s overall GDP growth of 3.89% for the year.
Rental Yields and Demand: Real estate remained a robust pillar of the services sector, which expanded by 4.24%. Consistent with our prediction, the market saw continued high demand for homes by households, which helped sustain yields as an effective inflation hedge.
Mortgage Financing and Government Support: Our prediction regarding policy was realized through "sustained government support" and the launch of initiatives that led to increasing mortgage financing across the market. This was further bolstered by an easing monetary policy stance by the CBN in September 2025, which began reducing lending costs and adding impetus to domestic investment.
Banking and Investment Environment: The investment climate was strengthened by the successful progress of the banking sector recapitalization, which enhanced the financial system's resilience and its capacity for credit intermediation.
Comparing Predictions with Reality (2025)
| Area | Prediction | Outcome | Hit or miss? |
|---|---|---|---|
| Sector contribution & growth | Real estate to remain a mid-size sector (~6% of GDP) with moderate growth (3–4%). | GDP rebasing raised the sector’s value above ₦41 trillion, with a 13.36% GDP share. The non-oil sector grew 3.70% in 2025, with real estate among the drivers. | Partial hit – growth was broadly right, but the headline GDP share was underestimated. The jump reflected statistical rebasing rather than a sudden surge in activity. |
| Rental yields | Predicted yields of 7–10% in major cities. | Yields ranged 6–10%, with Lagos apartments achieving 8–10% and Abuja 6–8%. | Hit – yield estimates were broadly accurate. |
| Mortgage financing & policy support | Anticipated rollout of low-cost mortgages and strong uptake to drive home purchases. | Programmes like MREIF launched, but uptake remained slow due to high costs and affordability constraints. | Partial hit – policies emerged as expected, but uptake and impact were weaker. |
| REIT performance & investment returns | Expected Nigerian REITs to deliver 7–9% returns and remain a small market. | REITs stayed small (≈₦600 million) and delivered average returns of about 7%. | Hit – modest but attractive returns and limited scale played out as predicted. |
| Government initiatives & supply | Predicted government programmes would improve housing supply and moderate prices. | Initiatives like the Renewed Hope Housing Programme launched, but supply gaps persisted and prices continued to rise. | Miss – initiatives had limited short-term impact on supply and prices. |
Insights & Lessons
Data re‑classification matters: The GDP rebasing in 2025 dramatically changed the measured size of the real‑estate sector, underscoring how statistical revisions can alter perceived market importance.
Policy initiatives take time: The launch of mortgage funds and housing programmes signals commitment but does not immediately translate into affordability or supply. High mortgage rates (18–27.5 %) and transaction costs (10–15 %) continue to hamper uptake.
Our 2025 outlook captured some of the broad structural drivers, such as robust rental yields and the introduction of mortgage‑finance schemes. However, we underestimated the sector’s revaluation following GDP rebasing, and the speed at which the office market would recover. The sector’s strong contribution to GDP and persistent demand highlight the opportunity for investors who can navigate these headwinds.
Insights for 2026
According to the CBN, the momentum of 2025 is expected to carry forward. The economy is projected to expand by 4.49% in 2026, with the real estate sub-sector remaining a key driver of growth due to continued mortgage expansion and a further moderation of inflation to 12.94%
