Nigeria’s property market closed 2025 on firmer ground as reform momentum, currency stability and moderating inflation combined to steady investor sentiment, according to the H2 2025 Lagos Market Update released by Knight Frank Nigeria.

The report reflects cautious optimism. While macroeconomic headwinds persist, particularly around high interest rates and oil output below budget benchmarks, structural demand, fiscal reforms and infrastructure expansion are reshaping real estate dynamics across Lagos, Abuja and Port Harcourt.

Fiscal reforms advanced with the passage of the Nigeria Tax Act 2025, effective January 2026, which is expected to formalise property transactions and encourage documented lease structures.

Despite oil production averaging 1.65 million barrels per day, below the 2.1 mbpd budget target, non-oil sectors sustained growth. Real GDP expanded by 3.98 per cent year-on-year in Q3. Following GDP rebasing, real estate emerged as the third-largest contributor to the economy, accounting for 13.36 per cent of total output and recording 3.50 per cent real growth in Q3 2025.

Residential rents continued to rise in H2 2025 within a structurally supply-constrained market. Limited formal housing stock underpinned pricing strength across prime and mid-market submarkets, intensifying affordability pressures.

Government-backed initiatives gained momentum. The MOFI Real Estate Investment Fund introduced long-term housing loans at 9.75 per cent, while the Renewed Hope Housing Programme advanced, with about 2,000 units nearing completion in Ibeju-Lekki. However, these interventions remain modest relative to overall demand.

As rents climb, Lagos’ residential geography is shifting. Tenants are prioritising cost over proximity, driving migration to peripheral growth corridors such as Ikorodu and Ibeju-Lekki.
Looking to 2026, rental demand is projected to concentrate around smaller, functional units. Studio and one- to two-bedroom apartments in mid-market hubs like Yaba and Surulere are expected to record the fastest absorption due to lower entry points. Supply is increasingly aligning with infrastructure milestones, particularly along the Lagos-Calabar Coastal Highway and the Epe corridor, where improved connectivity is transforming peripheral land into investable residential stock.

Rental growth is forecast to persist, while the new tax regime is likely to accelerate the shift toward formal, documented tenancy agreements. Lagos’ retail sector demonstrated resilience despite uneven mall performance and limited new supply. Prime mall occupancy held around 73 per cent in a tenant-led market, with prime rents steady near $55 per sqm monthly as landlords prioritised occupancy over aggressive rate growth. Prime retail rents at about $25 per sqm remain broadly aligned with regional peers.

In 2026, demand is expected to favour convenience-oriented, mixed-use formats within residential catchments. Omnichannel shopping behaviour will continue to pressure margins, benefiting agile retailers over traditional large-format operators. Supply is projected to remain restrained, keeping rental growth modest.
The office market also remained tenant-driven in H2 2025. Prime office rents hovered near $55 per sqm, with landlords offering rent concessions and flexible lease structures to retain occupiers. Leasing activity broadened beyond traditional CBD nodes, with Ikeja emerging as a key alternative hub.

Demand in 2026 is expected to tilt toward cost-efficient Grade A assets as firms prioritise operational efficiency. However, rental recovery and capital value growth will depend on sustained macroeconomic stability, particularly exchange rate direction and interest rate moderation.

Industrial real estate gained traction, particularly within Special Economic Zones. Grade A warehouse development accelerated, highlighted by TY Logistics Park FZE in Alaro City, a 29,000 sqm contract logistics hub with advanced automation. Prime industrial rents in leading corridors range between $4.0 and $6.5 per sqm, reflecting infrastructure premiums, while Grade B and C stock outside these zones remains stable near $3.0 per sqm.
Beyond Lagos, Abuja is increasingly viewed as a haven for investors, with demand shifting toward emerging “new prime” districts and satellite towns. In Port Harcourt, the market remains closely linked to oil and gas activity, though affordability trends are pushing residents toward lower-cost suburbs.

Speaking on Monday in Lagos at a media briefing to unveil the H2 2025 edition of the Lagos Market Update, the Senior Partner and Chief Executive Officer of Knight Frank Nigeria, Mr Frank Okosun, said Nigeria’s property market showed signs of increasing stability in the second half of 2025, supported by easing inflation, stronger construction output and renewed infrastructure momentum.

Okosun noted that the second half of 2025 unfolded within a “mixed but increasingly stable” macroeconomic environment. According to him, inflation moderated further during the period, construction activity outperformed broader economic growth, and strategic public infrastructure corridors recorded renewed implementation momentum, all of which directly shaped property market performance in Lagos.

“These developments have had a direct influence on how the Lagos property market evolved during the period under review,” he stated, emphasising that real estate continues to reflect broader economic shifts.

The Head of Marketing and Corporate Communications at Knight Frank Nigeria, Mr Lanre Sonubi, said that Nigeria’s commercial capital is entering a phase of measured recovery and structural realignment, with decentralised office hubs, industrial corridors and flexible residential products shaping the 2026 outlook.

He projected that in 2026, this decentralisation trend would intensify as firms seek to optimise rental costs and reduce commute times for employees. Vacancy rates in secondary business districts are expected to tighten modestly, while prime office landlords may adopt more flexible lease structures to retain and attract tenants.

The Managing Director, Knight Frank Middle East & Africa, James Lewis, formally unveiled the report, while the Lead Research Analyst, Daniel Fabi, said the 2026 projection points to a property market defined less by volatility and more by recalibration, where flexibility, infrastructure alignment and decentralisation will shape the next phase of growth across Lagos, Abuja and Port Harcourt.