Rental properties, both residential and commercial, are expected to dominate transactions in the Nigerian real estate market in 2025, according to market analysts. This projection is driven by adverse macro-economic conditions, rising unemployment, rapid urbanization, and a growing population.
A retrospective analysis of the 2024 real estate market shows declining purchasing power due to high inflation, which peaked at 34.6% in November last year. Combined with volatile exchange rates and high-interest rates, these factors have caused a dip in property sales and low demand. However, the rental market continues to thrive, fueled by necessity rather than affordability.
Analysts explain that inflation has significantly eroded consumer purchasing power, leaving many unable to afford property prices. Renting has become the only viable option for a large portion of the population. In 2024, the rental market recorded a 50% rise in demand in some locations, particularly outside city centers.
Unemployment remains a key factor driving demand for rental housing. Although unemployment rates declined slightly in 2024, they are projected to rise again in 2025, pushing more individuals towards rented accommodation. Even for those with stable jobs, the difficulty in accessing mortgages further dampens property sales, leaving renting as the primary option.
In Lagos, the rental market is particularly active, driven by rapid urbanization and a growing population estimated at 20 million. The city attracts thousands of new residents daily, drawn by job opportunities and economic prospects. About 80% of Lagos residents are renters, according to a recent report confirmed by the state’s Commissioner for Housing, Moruf Akinderu-Fatai.
Akinderu-Fatai highlighted the strain on the city’s housing situation, with over 6,000 new residents arriving daily. He acknowledged that while the rental demand poses challenges for the state government, it also presents investment opportunities for private developers to collaborate with the government on housing projects.
Abuja, Nigeria’s Federal Capital Territory, is also projected to see a surge in rental transactions in 2025, despite federal initiatives to make housing more affordable. The city’s growing population and rising demand for housing continue to pressure both the rental and sales markets.
Unlike Lagos, Abuja experienced a construction boom in 2023 and 2024, resulting in an increase in housing supply. Government-backed projects and private developments added new estates and apartment complexes to the market, creating more choices for tenants and heightened competition among landlords. Despite the oversupply, residents note that rents and property prices remain high, even in suburban areas.
Despite economic challenges, industry experts remain optimistic about the real estate sector’s growth in 2025. Wale Akinola, CEO of Earthbound Real Estate, described the year as pivotal for the industry, with opportunities for investors, developers, and first-time homeowners.
“With government-backed initiatives, urbanization, technological advancements, and growing interest from local and diaspora investors, the sector is primed to deliver unprecedented returns,” Akinola noted.
As Nigeria works to bridge its housing deficit, estimated at over 20 million units, the real estate sector in 2025 is expected to lay the foundation for long-term growth and wealth creation.
