Real GDP growth. Source: National Bureau of Statistics
Nigeria’s property sector has emerged as a key pillar of national economic performance, with real estate accounting for 13.10 per cent of real gross domestic product and the construction sector expanding by 6.38 per cent year-on-year in the first quarter of 2026.
According to Knight Frank’s H1 2026 Lagos Market Update released on Monday, this strong macroeconomic output is being shaped by rising residential costs, ongoing infrastructure investments, and increasingly selective occupier demand across major urban hubs, including Lagos, Abuja, and Port Harcourt.
The broader national economic background reflects steady stabilisation, with headline inflation easing to 15.91 per cent in June from 25.29 per cent a year earlier. However, high development costs and housing affordability remain critical factors influencing investment choices and occupier strategies as the construction boom unfolds.
In Lagos, the high contribution of real estate to the economy coincides with an acute shortage of formal housing supply, driving up residential rents. Prime locations such as Ikoyi, Victoria Island, Banana Island, and Lekki Phase 1 have seen rents more than double since 2023.
In response, tenant demand is shifting significantly toward lower-cost options on the mainland, such as studios, mini-flats, and two-bedroom units.
Transport infrastructure projects, including rail expansions and upgrades along the Lekki-Epe corridor, are expanding the property footprint into emerging suburban growth areas like Ajah, Sangotedo, and Ibeju-Lekki.
Commercial property performance across the country remains selective despite sector growth. In Lagos, Grade A office rents have stabilised at approximately $55 per square metre monthly, with landlords using fit-out contributions, concessions, and flexible lease structures to maintain occupancy.
Industrial Grade A space in Alaro City and the Lagos Free Zone commands $4 to $6.5 per square metre monthly. Meanwhile, retail demand is favouring convenience-led and neighbourhood shopping formats, with investors monitoring potential tax modifications in Free Trade Zones.
Capital value growth is also evident in Abuja, where districts such as Guzape I and II recorded increases of 20 to 30 per cent. Saturated prime zones including Maitama, Asokoro, and Wuse 2 are undergoing urban regeneration, driven by diaspora investment and sustained demand for modern office environments, which lifted commercial rents by over 10 per cent in the first half of the year.
In Port Harcourt, real estate expansion remains backed by the oil and gas industry, driving demand for modern housing, commercial hubs, and industrial facilities, while pressuring older commercial assets to refurbish.
Commenting on the sector’s trajectory, the Senior Partner and Chief Executive Officer of Knight Frank Nigeria, Frank Okosun, said, “The market is showing resilience, but performance is increasingly location- and asset-specific. Infrastructure can unlock new opportunities, yet investors and developers must also respond to affordability pressures, operating costs and clearly demonstrated demand.”
Explaining occupier trends driving market activity, Knight Frank’s Lead Research Analyst, Daniel Fabi, noted, “Across the three cities, occupiers are prioritising value and functionality. Quality offices and well-located industrial assets remain relevant, while residential demand is splitting between prime properties and more affordable options. Understanding these differences is essential to sound investment decisions.”
The Head of Marketing and Corporate Communications, Lanre Sonubi, added, “The H1 2026 report provides market participants with a practical view of how infrastructure, changing occupier needs and affordability are shaping real estate opportunities. Our aim is to support clients with evidence-led insights as they assess risk, and position for growth across Nigeria’s key urban markets.”