Rental properties seen dominating real estate market transactions in 2025

Rental properties, including residential and commercial, will dominate transactions in the Nigerian real estate market in 2025, market analysts have predicted.

The prediction, which is based on persisting adverse macro-economic conditions, rising unemployment levels, growing population and fast-paced urbanization, takes a retrospective view of market transactions or performance in 2024.

Though some analysts foresee a surge in market demand going into the future, economic uncertainties reflected in high inflation rate, which peaked at 34.6 percent in November last year, high interest rate and volatile exchange rate, are the reasons for the present price dip and low demand.

Inflation has eroded consumer purchasing power and that means many people cannot afford house prices. But because they have to live somewhere, they have to resort to renting, thereby sustaining the demand for rental properties in the new year. The market was very active last year with over 50 percent rise in some locations, mostly outside the city centres.

Unemployment is also another factor that will drive up demand for rented accommodation in the cities. Though the rate declined a bit in 2024, analysts predict a slight rise again in 2025. These jobless folks can only resort to renting where possible as their lack of capacity to buy is absolute.

Again, it is tough for the fewer people having stable jobs to secure mortgages to buy homes, which means fewer real estate transactions are happening at the sales market, meaning that everyone is renting.

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In Lagos, the heightened activities in the city’s rental market are driven by population and urbanization. The city is a hotspot for job seekers, and this is shaking up the rental market. People also come into the city for opportunities in other areas including trading. With its population, estimated at 20 million, the demand for real estate assets generally is always high.

A report on the city’s real estate market, which was confirmed recently by the state’s commissioner for housing, Moruf Akinderu–Fatai, says that about 80 percent of the city’s population are renters.

Lagos urbanization rate is such that, every day, about 6,000 new residents arrive into the city, putting even more strain on the housing situation. Many of these newcomers are drawn by the city’s job opportunities and have to rent pending when they are able to build or buy their own homes.

Akinderu–Fatai noted, in his keynote speech at a real estate event, that even though the rent situation in the city is a huge challenge for the state government, it, however, creates investment opportunities for private developers who can go into partnership with the state government to provide housing.

In Abuja, the federal capital territory, renting is also projected to lead transactions in the 2025 market transactions, notwithstanding federal government’s affordable housing initiatives aimed to lessen the pains of buying or renting housing in the city whose population is said to be expanding exponentially.

Comparatively, Abuja is said to be better than Lagos in terms of housing supply. For instance, in 2023 and 2024, Abuja experienced a boom in construction and development projects. The government and its agencies like the Federal Mortgage Bank of Nigeria (FMBN), rolled out plans to make housing more affordable.

With more homes being built, the market saw a rise in available properties, giving tenants more choices and landlords more competition. Also, new housing estates and apartment complexes were completed, adding to the property pool and leading to an oversupply. But residents still worry that this has not led to cheap rents or house prices, even in the suburbs.

Despite the economic realities, analysts bet on positive outlook for the sector for both sales and rental markets. Wale Akinola, CEO, Earthbound Real Estate, says the sector in 2025 will offer massive opportunities for investors, developers, and first-time homeowners.

“With the combination of government-backed initiatives, rising urbanization, technological advancements, and growing interest from both local and diaspora investors, the sector is primed to deliver unprecedented returns.

As the country strives to bridge its housing deficit currently estimated at over 20 million units, 2025 promises to be a pivotal year for the industry, setting a foundation for long-term growth and wealth creation,” he posited.