The prolonged crisis in the Middle East is slowing property transactions, driving up construction costs and increasing project financing expenses across Africa, with Nigeria’s real estate and construction sector among the hardest hit.

Industry experts, who spoke at a webinar titled ‘Impact of Middle East Crisis on Africa’s Real Estate and Construction Sector’, organised by the International Real Estate Federation (FIABCI-Nigeria) in partnership with Fortren & Company, said the conflict has intensified supply chain disruptions, increased shipping costs and heightened investor uncertainty.

According to the experts, nearly 70 per cent of building materials used in Nigeria are imported, making the sector highly vulnerable to global geopolitical shocks. Higher freight charges and insurance costs have squeezed developers’ profit margins, particularly in the luxury housing market, while cautious investors are delaying project commitments.

Speaking at the session moderated by Fortren’s Director of Research, Martin Uche, the Chairman of Estate Links Limited, Gbenga Olaniyan, described the period between 2022 and 2025 as one of the most volatile in the history of Nigeria’s construction industry, noting that recent developments have been driven more by market panic than by actual shortages.

“From the day the Strait of Hormuz was closed, even manufacturers operating in Nigeria immediately began citing the Middle East crisis, and prices started rising. Buyers also became more cautious, leading to longer negotiation periods than before the crisis. We are now seeing more joint venture arrangements instead of outright land acquisitions, as investors seek to share risks with landowners,” he said.

According to Olaniyan, institutional investors are carrying out more extensive due diligence and demanding higher returns before committing funds, resulting in slower investment decisions. The Principal Partner at Gbenga Olaniyan & Associates argued that many of the price increases were driven by market sentiment rather than actual production costs.

He cited a recently completed project where reinforcement steel rose from N480,000 per tonne at the commencement of construction to N1.5 million before completion. “Who do you pass this cost to? Developers first try to explain the increases and negotiate with buyers. But once a contract has been signed, if the buyer refuses to adjust, the developer bears the loss. Many developers are losing money simply because they are determined to protect their reputation.

“Developers who have adequate funding and procure critical materials early are better insulated from these shocks. You can purchase elevators and many imported components even before construction begins,” he added.

Olaniyan condemned the growing practice of lowering project specifications to offset rising costs. “Some developers who promised marble finishes at N35,000 per square metre are now substituting them with cheaper imported materials costing about N14,000. Such sharp practices should be discouraged because reputation remains the industry’s greatest asset,” he said.

Chief Executive Officer of Eximia Realty & Company, Ogunniran Hakeem, argued that the current situation is the cumulative effect of successive global disruptions, beginning with the COVID-19 pandemic. “The world had barely recovered from COVID-19 supply chain disruptions before the Russia-Ukraine war began.

That region supplies a significant proportion of the world’s steel and other critical construction materials.

“During COVID-19, reinforcement sold for around N150,000 per metric tonne. When it rose to N500,000, I raised the alarm. Since then, prices have continued climbing to unprecedented levels,” he said.

Ogunniran warned that prolonged instability in the Middle East could also reduce diaspora remittances, an increasingly important source of real estate investment across many African countries. He stressed that integrity remains the most valuable asset for developers.

“As a developer, your number one currency is integrity. You cannot afford an integrity deficit. We once sold units off-plan before the market deteriorated. Rather than compromise our promise, we sold other assets to complete the project because protecting our reputation was more important than short-term financial losses,” he said.

Speaking from the facility management perspective, Chief Executive Officer of Solid Foundation Group, Adetoun Otepola, said rising energy prices have significantly increased the cost of managing residential and commercial properties. She recalled that expectations were high following the commencement of operations at the Dangote Refinery, but renewed geopolitical tensions quickly reversed anticipated gains.

“Diesel remains the major alternative source of electricity in Nigeria. With global oil prices rising, energy has become the single largest item in facility management budgets. The national grid is still unreliable, forcing estates to depend heavily on diesel generators.

“Diesel powers common area lighting, water treatment plants, security systems and other essential services. At the same time, the costs of lubricants, spare parts and logistics have increased considerably, while workers are demanding higher wages because of inflation,” she explained.

According to Otepola, diesel accounts for the highest cost pressure, followed by maintenance and electricity expenses, making service delivery significantly more expensive. She added that many estates are now investing in alternative energy sources such as solar systems and inverters to reduce operating costs and improve energy security.

Earlier, President of FIABCI Nigeria, Akin Opatola, said the webinar was organised to help Africa’s real estate professionals, developers, investors, financiers and policymakers better understand how to respond strategically to growing geopolitical uncertainties.

The World President of FIABCI, Lily Chang, noted that geopolitical instability poses significant challenges for real estate markets across Africa and the rest of the world. “When uncertainty rises, investors become more cautious. Building materials, logistics, and financing are becoming more expensive and less predictable. We need good governance, transparency and long-term planning to continue attracting investment even during uncertain times,” she said.

Chang also underscored the importance of trust and customer relationships in sustaining the industry.

“Integrity must remain central to our business. After every sale, we should continue building relationships with our customers because satisfied clients become our strongest ambassadors. Brand reputation is ultimately the best form of marketing,” she added.