Nigeria targets $2.25trn real estate market this year

The real estate sector in Nigeria has been a key player in the country's economy, contributing 5.2 per cent to the GDP in 2024. The Minister of Housing in Nigeria is optimistic about the potential of the market, projecting that it could reach a staggering $2.25 trillion by the end of this year. However, despite the expected growth, the sector faces challenges in balancing affordability and profitability. Ayo Ibaru, the CEO of Northcourt, shared insights on the sector's dynamics and the efforts to attract more investments, particularly in the residential housing segment. Residential real estate holds a significant share of the market, both in Nigeria and globally. Ayo Ibaru emphasized the importance of the residential sector in driving the income-generating capacity of the middle class, which is crucial for overall economic growth. The federal government's focus on attracting investments to the residential segment through initiatives like the Renewed Hope Cities and Estates programme is seen as a step in the right direction. However, Ibaru highlighted that beyond funding, addressing legal complexities such as land titling and the Land Use Act is essential for the sector's development. One of the major hurdles in the real estate market lies in the challenges of engaging with state governments over land issues. The Land Use Act grants significant power to state governments, leading to delays in land allocation and transaction approvals. This slows down projects and negotiations between federal and state authorities, hampering the pace of development. While state governors have their own housing schemes and aspirations, alignment with federal initiatives remains a key issue that requires continuous negotiation. Despite these obstacles, there is a growing demand for luxury apartments in major cities, indicating a thriving segment of the market. The luxury real estate sector, characterized by high-end design and quality, operates independently of the pricing and affordability concerns that affect other housing categories. Trends in this segment focus more on design innovation and premium offerings, driving continuous growth in the luxury real estate market. Looking ahead, the real estate sector in Nigeria is poised for expansion and diversification, with a focus on improving efficiency, addressing legal bottlenecks, and fostering collaboration between federal and state authorities. By streamlining processes, enhancing transparency, and aligning incentives across all stakeholders, the sector can unlock its full potential and contribute significantly to Nigeria's economic growth and development.