REITs in Nigeria: Promise or Pipe Dream?

REITs in Nigeria have sparked curiosity among investors looking to tap into the country’s real estate market without the headaches of direct property ownership.

As Nigeria’s middle class grows and more people seek smart ways to build wealth, real estate remains a go-to option.

But buying land or buildings is costly, complex, and often out of reach for many.

That’s where Real Estate Investment Trusts (REITs) come in, offering a simpler way to invest in property.

They promise steady income, diversification, and a piece of Nigeria’s booming real estate sector.

Yet, years after their introduction, REITs in Nigeria are still struggling to gain traction.

Are they a golden opportunity or just a pipe dream?

Let’s dive into the world of REITs in Nigeria, exploring their potential, challenges, and what the future holds.

 

What Are REITs in Nigeria and Why Should You Care?

Real Estate Investment Trusts, or REITs, are companies or trusts that own, manage, or finance income-generating real estate.

Think of them as a way to buy shares in a portfolio of properties, office buildings, malls, or apartments without needing to own the buildings yourself.

In Nigeria, REITs are regulated by the Securities and Exchange Commission (SEC) and traded on the Nigerian Exchange (NGX).

They’re designed to pay out at least 90% of their taxable income as dividends to shareholders, making them a popular choice for income-seeking investors.

So, why do REITs in Nigeria matter?
They offer several benefits:

• Liquidity: You can buy and sell REIT shares like stocks, unlike physical property, which can take months to offload.
• Diversification: REITs give you exposure to various property types, spreading your risk.
• Accessibility: You don’t need millions to invest—some REITs let you start with as little as ₦1,000.
• Income: Regular dividends from rent or mortgage payments provide a steady cash flow.

Despite these perks, REITs in Nigeria haven’t taken off as expected.

With only a handful of listed REITs and limited investor interest, the sector is still in its infancy.

Let’s explore why.

The Current State of REITs in Nigeria

As of 2025, Nigeria’s REIT market is small, with just three SEC-registered REITs:

• Union Homes REIT
• Skye Shelter Fund
• UPDC REIT

These REITs in Nigeria have a combined Net Asset Value (NAV) of about ₦50 billion, a drop in the bucket compared to global markets like the U.S., where REITs boast a $1.5 trillion market cap.

Even South Africa, a closer peer, has over 30 REITs listed on the Johannesburg Stock Exchange.

In Nigeria, REITs make up a tiny slice of the capital market, and their performance has been lackluster.

For instance, UPDC REIT has seen declines in both market price and NAV due to asset devaluation and stagnant rental yields.

While these REITs have paid dividends in the past, their total returns combining dividends and share price growth have been disappointing.

This raises the question: what’s holding REITs in Nigeria back?

Challenges Facing REITs in Nigeria

Several roadblocks are keeping REITs in Nigeria from reaching their full potential.

Let’s break them down.

Low Awareness Among Investors

Most Nigerians have never heard of REITs.

Unlike stocks or mutual funds, which are widely discussed, REITs in Nigeria fly under the radar.

Asset managers and brokers rarely market them aggressively, leaving retail investors in the dark.

Without widespread education, many potential investors stick to familiar options like savings accounts or direct property purchases.

Regulatory and Tax Hurdles

REITs are supposed to enjoy tax benefits, like exemptions on income and capital gains, to make them attractive.

However, inconsistent tax policies and regulatory bottlenecks in Nigeria create uncertainty.

Valuation methods for REIT assets are unclear, and lengthy approval processes discourage new REITs from entering the market.

This lack of clarity dampens enthusiasm among issuers and investors alike.

Illiquid Property Markets

REITs in Nigeria depend on stable, income-generating properties.

But Nigeria’s real estate market is far from stable.

Low tenancy rates, unpredictable rental cycles, and underdeveloped valuation standards make it hard for REITs to generate consistent income.

When properties sit empty or rents fluctuate, dividends suffer, eroding investor confidence.

Foreign Exchange Risks

Many properties in REIT portfolios rely on imported materials like steel or technology, exposing them to naira devaluation.

With Nigeria’s inflation and currency volatility, the real returns from REITs in Nigeria often take a hit.

This makes it harder for REITs to compete with other investment options.

Limited Institutional Support

In markets like South Africa, pension funds and institutional investors play a big role in REIT growth.

In Nigeria, institutional participation is minimal.

Without heavyweights like pension fund administrators or insurance companies, REITs struggle to scale.

How Do REITs in Nigeria Compare Globally?

Globally, REITs are a powerhouse in real estate investing.

In the U.S., over 200 REITs manage a $1.5 trillion market, offering investors access to everything from skyscrapers to shopping malls.

South Africa, with its 30+ REITs, benefits from strong governance, transparent valuations, and robust pension fund involvement.

These markets show what REITs in Nigeria could become with the right support.

In contrast, Nigeria’s REIT market lacks:

• Transparency: Property valuations are often inconsistent, making it hard for investors to trust REIT pricing.
• Liquidity: The secondary market for REIT shares is thin, meaning it’s harder to buy or sell large volumes.
• Institutional Backing: Without big players like pension funds, REITs in Nigeria struggle to attract capital.
• Tax Clarity: Unlike South Africa’s clear tax exemptions, Nigeria’s tax policies remain murky.

Despite these gaps, there’s still hope for REITs in Nigeria to catch up.

Signs of Progress: Is There Hope for REITs in Nigeria?

While challenges persist, recent developments suggest REITs in Nigeria could be on the cusp of a breakthrough.

Here’s what’s fueling optimism:

• FMDQ Private Markets: This new platform is designed to streamline real estate financing, making it easier for REITs to raise capital.
• SEC Reforms: In 2022, the SEC updated its REIT framework to align with global standards, aiming to boost transparency and investor confidence.
• Institutional Interest: Pension funds and insurance companies are starting to explore REITs as a diversification tool.
• Fintech Innovation: A new wave of fintech platforms is experimenting with tokenized REITs and fractional property funds.
  These digital-first models could make real estate investing more accessible to younger Nigerians.

For example, platforms like Risevest and Wealth.ng are exploring ways to let users invest in real estate with small amounts of money.

Tokenized REITs, powered by blockchain, could further democratize access by allowing investors to own fractions of properties transparently.

While these innovations are still in their early stages, they signal a shift toward a more inclusive real estate market.

What Needs to Change for REITs in Nigeria to Thrive?

To unlock the full potential of REITs in Nigeria, stakeholders must tackle the following:

Clear Tax Policies

REITs need unambiguous tax exemptions on income and capital gains to compete with other investments.

A stable tax regime would encourage more companies to launch REITs and attract investors seeking tax-efficient returns.

High-Quality Assets

REIT sponsors should focus on income-generating properties in resilient sectors like retail plazas, logistics hubs, and hospitality.

These assets are more likely to deliver steady cash flow, even in tough economic times.

Investor Education

Massive awareness campaigns are crucial to demystify REITs for retail investors.

Brokers, asset managers, and fintech platforms should educate Nigerians on how REITs work, their benefits, and how to invest.

Webinars, social media campaigns, and partnerships with influencers could help spread the word.

Regulatory Alignment

The SEC, NGX, and state authorities must streamline approvals and dispute resolution processes.

Faster approvals would encourage new REITs to enter the market, while clear dispute mechanisms would build investor trust.

Technology Integration

Blockchain and tokenization could revolutionize REITs in Nigeria.

By enabling transparent ownership tracking and fractional investing, technology could attract tech-savvy millennials and Gen Z investors.

Collaboration with Institutions

Pension funds and insurance companies should be incentivized to allocate more capital to REITs in Nigeria.

Their involvement would provide the scale and stability the market needs to grow.

REITs in Nigeria – FAQs

Here are answers to five common questions about REITs in Nigeria, based on what people are asking online:

Are REITs in Nigeria profitable?

REITs in Nigeria have had mixed results.
While they offer steady dividends from rental income, many have underperformed due to asset devaluation and weak rental yields.However, with improving market conditions and reforms, their profitability could improve.

How can I invest in REITs in Nigeria?

You can invest in REITs through a registered stockbroker or investment platform listed on the NGX.
Some fintech apps, like Bamboo or Trove, are also introducing REIT-like products, making it easier to invest digitally.

Are REITs in Nigeria safer than direct property ownership?

REITs reduce risks like fraud, illiquidity, and high entry costs associated with physical property.
However, their returns can be volatile due to market fluctuations and currency risks.
Always research the REIT’s portfolio before investing.

What’s the minimum amount needed to invest in REITs in Nigeria?

You can start investing in REITs with as little as ₦1,000 per unit, depending on the REIT.
This low entry point makes REITs more accessible than buying property outright.

Will REITs in Nigeria replace traditional real estate investing?

REITs won’t replace direct property ownership but offer a complementary option.
They’re ideal for investors who want exposure to real estate without the hassle of managing properties.

 

REITs in Nigeria – Conclusion

REITs in Nigeria hold immense promise as a way to democratize real estate investing.

They offer a chance for everyday Nigerians to own a slice of the property market without needing millions of naira or navigating complex deals.

Yet, the market’s growth has been stunted by low awareness, regulatory hurdles, and economic challenges.

Despite these setbacks, recent reforms, growing institutional interest, and fintech innovations are breathing new life into REITs in Nigeria.

For REITs to truly thrive, Nigeria needs clearer tax policies, better-quality assets, and widespread investor education.

Technology, like blockchain and fractional investing, could also make REITs more appealing to younger generations.

While REITs in Nigeria aren’t yet the wealth-building powerhouse they could be, they’re far from a pipe dream.

 

With the right reforms and a push for awareness, they could become a cornerstone of Nigeria’s financial future, helping millions build wealth through real estate.

So, are you ready to explore REITs in Nigeria?

The opportunity is there, it’s just waiting to be unlocked.