Rising Costs and Inflation: The Real Estate Market is feeling the Heat more than ever

By Onoriode Akusu

For many Nigerians, the dream of homeownership is slipping further out of reach as inflation continues to drive up property costs. Rising construction expenses, supply chain disruptions, and a devalued Naira have made it more difficult for both developers and potential homeowners to finance property investments.
The Cost of Building a Home Today
Nigeria’s inflation rate has surged from 11.25% in 2019 to over 28% in 2024, with construction inflation at over 300% drastically reducing purchasing power. The devaluation of the naira—falling from ₦360/$1 in 2019 to nearly ₦1,500/$1 in 2024—has made it even more difficult for developers who rely on imported building materials, forcing them to either halt projects or renegotiate terms with buyers.

A Lagos-based developer, who requested anonymity, described the struggle: “A project we planned at ₦250 million in 2020 now requires over ₦600 million to complete. Many developers are stuck between defaulting on delivery or absorbing losses that could collapse their businesses.”

The Ripple Effect: Refunds, Defaults, and Abandoned Projects
With rising costs, many buyers who initially invested in off-plan projects have found themselves waiting indefinitely for completion or seeking refunds. Some developers, unable to complete projects, have had to return funds, further straining their finances.

A survey of major developers in Lagos and Abuja reveals that nearly 67% of off-plan projects initiated between 2019 and 2023 remain incomplete, with several abandoned altogether.

Real estate firms that previously thrived on off-plan sales are now shifting strategies, either offering finished homes at higher prices or restructuring payment plans to accommodate inflationary pressures.

The Future of Off-Plan Real Estate in Nigeria
Experts believe that while off-plan real estate is not entirely dead, it requires innovative solutions to survive in the current economic climate. Some developers are exploring index-linked pricing models, where costs adjust with inflation, while others are adopting more sustainable local building materials to reduce reliance on imports.

Financial analyst Olamide Adeyemi believes government intervention is crucial: “Without policy support—such as lower interest rates for real estate financing or incentives for local material production—the sector will continue to struggle. Developers need relief to complete ongoing projects and restore confidence in off-plan investments.”

Conclusion
Once a beacon of investment security, the Nigerian real estate sector now faces its toughest period in recent history. Inflation, economic instability, and declining naira have made off-plan developments a high-risk venture for both buyers and developers. While some companies are finding ways to adapt, the future of off-plan sales will largely depend on economic recovery, financial innovation, and stronger regulatory frameworks.
For now, developers are bracing for what could be another challenging five years—unless drastic changes occur to stabilize the industry.

• Akusu, Digital Media Consultant, resides in Lagos