Nigeria’s REIT market remains a small share of Africa’s sector
Nigeria’s Real Estate Investment Trust (REIT) market has a combined market capitalisation of approximately $230 million, leaving it with a relatively small share of Africa’s estimated $30 billion REIT market.
The figures are contained in a report by Fortren & Company covering REIT markets in Nigeria, South Africa, Kenya, Morocco, Egypt, Zambia, Zimbabwe, Tanzania and Ghana.
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The report identified 49 operational REITs across the African markets examined, with listed REITs accounting for approximately $21 billion in market capitalisation.
Retail, office, industrial and residential properties account for about 89 per cent of the market, underlining the role of REITs in channelling investment into income-generating real estate assets.
South Africa Dominates Africa’s REIT Market
South Africa remains the dominant market in Africa, accounting for approximately 92 per cent of the continent’s REIT market value.
Its REIT market is estimated at more than $27 billion, significantly exceeding the size of markets across the other countries covered by the report.
Fortren & Company attributed South Africa’s position to the development of its capital markets, strong institutional participation, improved market liquidity and an established regulatory framework.
The report also noted that Ghana launched Africa’s first REIT in 1995, although the sector recorded limited growth for almost two decades amid weak regulation, low investor awareness and shallow capital markets.
REIT activity subsequently increased following the operationalisation of REIT regulatory frameworks in South Africa and Kenya in 2013.
Nigeria Has Five REITs
Nigeria established its REIT market framework in 2008, with the sector initially dominated by UPDC REIT, SFS REIT and UHREIT.
The launch of Chapel Hill Denham NREIT and the MOFI Real Estate Investment Fund in 2025 brought the number of REITs identified in the report to five.
Despite the increase in the number of vehicles, the combined market capitalisation of Nigeria’s five REITs stands at only about $230 million.
This leaves Nigeria with a relatively small presence in Africa’s REIT market despite the size of its population, property demand and underlying real estate market.
Pension Fund Investment Has Increased
Institutional investors such as pension funds, insurance companies and asset managers are identified in the report as important potential sources of capital for REITs.
These investors can use REITs to generate dividend income, gain exposure to real estate and diversify their investment portfolios.
The report said pension fund holdings in Nigerian REITs increased by 168 per cent to $50.9 million by March 2025.
However, the increase has not yet translated into broad institutional participation across the market.
Government Securities Compete With REITs
One of the challenges identified in the report is the relative attractiveness of alternative investments.
Nigerian REIT yields below eight per cent may appear less attractive to institutional investors when compared with government securities offering returns of up to 15 per cent.
This yield differential can influence where large institutional investors allocate capital, particularly when they are balancing returns against liquidity, risk and portfolio requirements.
For REIT managers, the challenge is therefore not simply to attract investors but to provide competitive risk-adjusted returns while maintaining the underlying quality and performance of their property portfolios.
Liquidity Remains a Constraint
The report identified deeper capital-market liquidity as one of the factors needed to expand Nigeria’s REIT sector.
Liquidity is important because investors need confidence that they can enter and exit investments efficiently. A relatively shallow market can restrict trading activity and make it more difficult for REITs to attract large pools of institutional capital.
Greater participation from pension funds, insurance companies and asset managers could potentially broaden the investor base, but the report indicates that stronger market conditions and investor confidence are also required.
Regulation and Management Need to Improve
Fortren & Company recommended stronger regulation, improved portfolio management and greater operational efficiency to support the expansion of Nigeria’s REIT market.
The report also highlighted investor-friendly tax policies and lower financing costs as factors that could improve the attractiveness of REIT investments.
For the property industry, these issues are significant because REITs provide a mechanism for investors to participate in real estate without directly purchasing and managing individual properties.
A deeper REIT market could therefore provide another channel for mobilising capital into commercial and residential property.
REITs Could Expand Real Estate Investment Access
REIT structures allow investors to gain exposure to professionally managed property portfolios rather than owning physical assets directly.
This can broaden access to real estate investment by reducing some of the capital requirements associated with direct property ownership.
For Nigeria, a larger and more liquid REIT market could also create an additional source of funding for property development and income-generating assets.
However, the report indicates that achieving greater scale will depend on improvements across regulation, market liquidity, financing conditions, portfolio management and institutional participation.
Nigeria’s Market Has Room to Grow
The contrast between Nigeria’s estimated $230 million REIT market and Africa’s $30 billion sector highlights the relatively limited scale of the Nigerian market.
The report projects gradual growth for smaller REIT markets such as Nigeria and Kenya, while South Africa is expected to maintain its leading position.
For Nigeria’s real estate sector, the expansion of REITs could provide an important link between the capital market and property market, particularly as developers and investors continue to seek alternative sources of long-term funding.
The immediate challenge remains creating the market conditions needed to make REITs more competitive and attractive to institutional and retail investors.
Conclusion
Nigeria’s REIT market remains a relatively small part of Africa’s estimated $30 billion sector, despite the country’s substantial property demand and investment potential.
With five REITs identified in the Fortren & Company report and pension fund holdings increasing, the market has shown signs of development. However, limited institutional participation, competing yields from government securities, shallow liquidity, financing costs and regulatory challenges continue to constrain its expansion.
Greater market depth, stronger regulation, efficient portfolio management and policies that encourage long-term institutional investment could determine how quickly Nigeria’s REIT sector develops and how effectively it channels capital into the country’s property market.
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