Nigerian Pension Fund Administrators (PFAs) have grown their investment in real estate over the last five years by N267.93 billion, indicating a growth of 52, 004.85 percent.
The figure rose from N5.13 billion in 2020 to N273.06 billion at the end of 2024, according to data compiled by pension fund operators Association of Nigeria (PenOp).
However, investment in Real Estate Investment Trusts (REITs) dropped by over N219.22 billion in the same period due to shortage of instrument in the capital market, paying the way for private equity deals to thrive.
Data shows that investment in REITs dropped from N239.28 billion in 2020, to N20.06 billion in 2024.
Analysts at PenOp says PFAs in Nigeria have always invested in real estate, stating that there are two ways pension funds invest in real estate, one is direct investment and the second is through Real Estate Investment Trusts (REITs).
They noted that although the investment regulation prevents active pension funds from investing directly in real estate, these funds are in REITs.
REITs are regulated investment vehicles that enable collective investment in real estate, where investors pool their funds and invest in a trust.
They however noted that the gradual drop in investment in REITs is due to the dearth of available products in the market. However, active funds have shifted to investing in real estate through Private Equity Funds.
Unlike active funds, Closed Pension Funds (CPFAs) invest directly in real estate and have invested nearly N300bn in direct real estate in 2024, they noted in analysis of the data from the National Pension Commission (PenCom).
“Real Estate investments are a significant asset class on pension fund books. The help to hedge against long-term inflation and ensure developers have a source of long-term capital to tap from.”
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