By Kola Ashiru-Balogun

Nigeria’s real estate market is one of the most dynamic in Africa. Driven by population growth and rapid urbanization, the sector had a growth projection of 7.24% in 2024, reaching a value of $2.14 trillion. Maintaining a similar trajectory, demand for real estate, particularly in key cities have remained high. In 2025, stakeholders, investors, and homebuyers are curious about what the future holds for Nigeria’s real estate market.

I have decided to take a closer look at the shifts, opportunities, and challenges that will shape the property market this year. I consider them as the trends that will have significant impact on Nigeria’s property market. These are ten top trends every Nigerian developer and prospective real estate investor must look out for in 2025.

‘Dettier’ December is coming!

December in Lagos has transformed into something magical. The sleeping giant is woke! Entertainment Tourism became the big deal and the numbers are staggering. Several reports say about a million Nigerians in the diaspora came back for entertainment and reconnection with families last December. In a rather conservative outlook, FlightRadar24.com shows at least 300 international flights came into Lagos within the first 20 days of December. If those flights were as chuck-a-bloc as we heard, just imagine; with an average of 200 passengers per flight, over 60,000 people arrived Lagos in the first 20 days of December 2024.

Now let’s talk money. If each person spent a conservative $500 during their stay, that’s a whopping $30 million (₦48 billion) injected into the economy in just one month. And guess where most of it went? Ikoyi, VI, Lekki, and parts of mainland, Lagos. The tailors, caterers, and barbers were fully booked. Restaurants and night clubs? Overflowing. Airport staff probably had their best season ever.

Is Lagos becoming another Mardi Gras? Most likely. Lagos is slowly becoming what New Orleans is through the annual Mardi Gras parades that brings in 1.4 million visitors with an economic impact of over $1 billion within a one-week period! The vibe is electric, the energy palpable, and the demand for accommodation sky-high.

But there’s a catch.  Location is key. Those who hated our three-hour Lagos traffic, won’t settle for anything outside a 30-minute radius. That means similar to the French Quarter in New Orleans, anywhere between Dolphin Estate in Ikoyi to Ikate in Lekki is prime real estate and will be the new tourism zone.

Smart developers and discerning real estate investors are already smiling to the banks. If Eko Hotel for example, charged over 600k a night for rooms in 2024, expect similar or higher rates for shortlets in 2025. This coming season, there is no reason why we developers and apartment owners won’t charge half of that rate for more spacious 2-bedroom units. It’s no wonder the short-let market is booming. For as long as you are within the new Lagos tourism zone, and your unit is properly managed, your bankers will feel it.

So, for investors who are looking to cash in, it is simple. Focus on properties within this new tourism zone. Anything outside Ikoyi, VI, or Lekki? Still of course not a bad investment, but probably too far and not for the December crowd. In Abuja, the dynamic is the inverse of Lagos as it is still predominantly a transient city. The market to target remains those that fly in on Mondays and return home on Fridays between the 2nd week of January, and the 2nd week of December. So short-lets work best in neighborhoods like Maitama, Asokoro, Wuse 2, and now Guzape. These areas are seeing a wave of single-family homes converted into smaller, more profitable units, and generally enjoy higher occupancy rates than other neighborhoods. As for rentals, they remain a no-brainer. Real estate always adjusts to inflation, and with housing demand far outstripping supply, rents are not coming down anytime soon.

Mortgages: The one trillion Naira game plan

Last year, in November, the Federal Government approved a N250 billion real estate investment fund aimed at providing affordable, long-term mortgages to Nigerians. The plan is to push N1trillion into the mortgage sector. N150billion has already been secured through the Federal Government and another N100billion is expected from the private sector. The approval, the government explained, was part of the efforts to tackle Nigeria’s severe housing deficit and stimulate long-term economic growth. The Minister of Finance, Wale Edun, explained that the initiative was designed to address the country’s critical 22-million-unit housing gap while creating jobs and boosting private sector investment in the housing sector.

The new initiative, known as the Ministry of Finance Incorporated (MOFI) Real Estate Investment Fund, is expected to offer low-cost mortgages to individuals seeking to own homes, with interest rates targeted at single-digit or low double-digit figures. The Minister explained that the fund’s unique structure will make it possible for Nigerians to access mortgages with interest rates ranging between 11% to 12%, a significant reduction from the current market rates that often exceed 30%. The loans will have longer repayment tenures, potentially spanning 20 years or more, to make homeownership more accessible. The Program also provides off-take guarantee to select developers thereby increasing confidence in the market. This no doubt will be a major game-changer for the real estate sector.

Trump 2.0

As US President Elect Donald Trump takes the mantle of leadership of the most powerful Nation in the world again as the 47^th POTUS, economic experts think his policies will be consistent with higher domestic economic yields, a stronger dollar and continued strength in US equities. Without doubts, I expect general economic activities to increase in the US as he would likely borrow more and increase government spending.

However, there will be two potential impacts on Nigerians living in the US. If US residential prices increase, they would likely spend their excess income on acquiring more real estate in the US as opposed to investing in Nigeria. On the flip side, Trumps troubles against immigrants and people of colour may see some Nigerians returning home and start really considering where the real home is. There is no place like home.

Interest rates – all things that go up, must…?

The economic projection for 2025 is clear. Government intends to push interest rates down, especially as 2025 is the last year before proper electioneering starts in 2026 ahead of the general elections in 2027. It’s a period for the government to make a real statement around its economic policies. The Federal Government has announced its intentions to fight inflation. The idea is to drop headline inflation from 34.6% to 15%.  Also reduce food inflation significantly from 40% to around 20%. I will be expecting to see a proper convergence of monetary and fiscal policies of the Government this year. All eyes will be on Yemi Cardoso the Central Bank Governor. Will he budge? I think so.

The CBN Governor recently acknowledged the fact that increase in the interest rate to 27.25% was “painful” for borrowers, but said the decision was necessary to reduce excess money in circulation and effectively control inflation. Economic experts think Cardoso may now have to find a way to tailor his monetary policies to align with fiscal policies of the Government. If the he budges, the real estate sector will be a major beneficiary. Developers will be more comfortable to take bank loans for more developments. 

But prices aren’t coming down

Property prices are not going to come down in 2025. The provision of cheaper mortgages, reduced interest rates, availability of funding will still take a few years before it can start to significantly affect real estate prices. Demand is still too strong and far ahead of supply due to increased urbanization. Limited infrastructure in areas people want to live, and slow and inadequate supply of new homes in these areas would continue to marginally push property prices up this year or at best, keep it stable.

Commercial banks are back – over N500 billion firepower !!

In the push for a $1trillion economy, the Central Bank of Nigeria (CBN) announced a new recapitalization policy of the banking sector last year. The policy directed commercial, merchant, and non-interest banks in Nigeria to increase their minimum paid-in common equity capital to between N500billion and N10billion. Following the CBN directive, six Deposit Money Banks (DMBs) are already racing to raise a total of N1.047 trillion to meet the new rule. Fidelity Bank Plc, Nigeria’s 6th largest bank has since raised about N150billion. Similarly, Guaranty Trust Holding Company (GTCO) announced last year that it will raise N500 billion through a public offer of its shares.

First City Monument Bank (FCMB) Group revealed plans to raise N150 billion through the issuance of new securities last year, according to a filing by the bank with the Nigerian Exchange Limited (NGX). Reports have it that the bank is already over N100billion. Stanbic IBTC has a current capital base of N109.3 billion based on its audited full-year 2023 financial results. This means the bank is in the market to raise N90.7 billion to meet national requirements of N200 billion. About N40 billion has been sourced by Wema Bank Plc from capital market investors in the first tranche of its capital raise programme last year. Wema Bank, which has a national license, is expected to have at least N200 billion as a capital base to offer banking services to customers across the country.

These banks will most likely be pushed to consider real estate sector. They will focus on mortgage products to support the government programs. They will also provide more capital to real estate developers.

Tinubu’s huge infrastructure spending

Last year, N1.32trillion was approved for infrastructure in the budget. In a more ambitious approach to fixing the infrastructure deficit in the country, the budget for infrastructure has been raised to N4.06trillion about 10% of the entire 2025 budget. In Lagos, more than 10% of the N3.366 trillion state budget for 2025 has been dedicated to infrastructure.  Make no mistake that this is what President Bola Ahmed Tinubu does best. He will spend a lot on roads, rails and general infrastructure. His spending pattern is already being felt in Abuja. Minister Wike is already upgrading infrastructure in the Abuja city center and also opening up new towns and cities. This would open up new markets for real estate developments.

The Gen Xers are coming back home

Nigerians living abroad who are already in their 50s/60s are likely going to start the wave of ‘Japada’ not just due to the return of Trump to the White House, but also as they are now empty nesters and have excess cash. They will be looking for retirement estates, homes to live in. Homes in Nigeria would become more affordable and attractive to them. Location, security, neighborhood infrastructure and functionality of the homes in terms of services and spaces will be the major point of attraction.

Building the 2027 political war chest

Political activities will peak by 2026 ahead of the 2027 general elections. Political gladiators will be using the better part of 2025 to build their war chest. Government spending will go up. When government spends, those that have access to the funds would want a safe place to store their wealth – real estate. They will start picking up blocks of Ikoyi and Lekki flats that can be easily monetized when they need the funds in 2027. The properties will be acquired with the desire to flip easily when the need arises. Political spending on real estate will be significant in 2025.

I know I said 10, but let’s add a few more – Micro Apartments, Secondary Cities, and Secondary Submarkets

The concept of micro apartments will become more popular in 2025. Due to high rents and limited infrastructure, areas like Chevron, Ajah would see an increase in room rentals. For example, flats that share services like kitchens, security and other services will be in high demand. The tenants will only lease a small room and toilet. Living rooms and master bedrooms will even be converted and rented at higher rates.

Secondary cities are today more accessible. Increase in property prices and rents in cities such as Lagos will push buyers to other affordable and accessible cities like Ibadan. Oyo’s state upgrade of it’s infrastructure made some developers wonder how they missed the opportunity to acquire properties before this current increase in prices.  A lot more commuters will take the cheaper rents in these secondary cities and weekly-commute to cities that pay higher wages. Cities like Enugu and Uyo due to stability and good infrastructure will also continue to experience a surge in real estate development.

Developers would also migrate to new submarkets. Typically, the less than N100m price tags will be hot cake. I expect developers to densify areas between Chevron/Ajah by building blocks of flats.  On the Mainland, areas such as Ogudu GRA Phase 2, Oworonshoki that has been abandoned for years will likely see a lot more activities from developers as buyers have been priced out from Ikate, Ogudu GRA etc.

Our approach at Terra to these trends

At Terra Developers, we are not just watching this trend – we are acting on it. Our Hailie project in is designed for investors who want a lace of this booming market without hassle. Here’s what we are offering:

Managed Aparthotel Units: Own a unit, earn year-round income, and use it whenever you’re in town. Think of it like a modern twist on timeshares.

Flexible Options: Prefer to go your own way? Our 1-bedroom lofts, 2-bedroom maisonettes, and studios give you the freedom to manage your property as you wish.

Luxury Amenities? Check. We have them: Rooftop restaurant and pool, a spa, workspaces, meeting rooms, and more – everything you’d expect from a high-end hotel, but in your own property. And the best part? We’ve strategically positioned these units in the heart of Lagos’ new tourism hub – Lekki Phase 1, so you’re set to benefit from the December rush and beyond!

Ditto for those interested in Abuja: Our Harbor House mixed-use project in Guzape presents the opportunity to own 1, and 2-bedroom maisonettes. Now this is top secret, (*wink*) a government parastatal has taken all the offices within the development. Imagine what that means for those who own short-lets within the center.

Looking for mortgages? We have those at affordable rates too. Our Olivia series presents an affordable option to acquire homes through several mortgage products like the NHF that offers rates as low as 6.5%. The FHF Help To Own which is as high as 14% is sometimes faster to process and has a higher loan amount than NHF. We work with buyers determine which program works best for their objectives through our specialized mortgage brokers.

Let’s face it, the market is shifting, and the opportunities are endless. So why not position yourself ahead of the curve? Share your thoughts and feedback too.

Kola Ashiru-Balogun, is the MD/CEO of Terra Developers, www.terradevelopers.com.ng, a trusted and innovative real estate development company in Nigeria