Nigeria’s real estate sector has emerged as one of the country’s fastest‑growing industries, ranking third in economic contribution to GDP. Yet, despite this remarkable rise, the sector’s momentum is being slowed by a sharp surge in building material costs—particularly cement, steel, and sand—that threatens housing delivery, affordability, and infrastructure development.
Real Estate’s Rise in GDP Rankings
The 2025 GDP rebasing by the National Bureau of Statistics (NBS) revealed what analysts at CFG Advisory described as a “structural revelation.” Real estate output reached ₦41.3 trillion in nominal terms by 2024, cementing its position as Nigeria’s third‑largest sector.
- In Q1 2024, real estate contributed 5.20% to real GDP, ranking behind crop production (17.58%) and trade (17.42%).
- By Q1 2025, the sector’s nominal contribution surged to ₦16.42 trillion, representing 17.4% of quarterly nominal GDP.
- The sector’s ranking improved from 6th in 2022 to 5th in 2023 and 3rd in 2025.
This trajectory displaced crude petroleum and natural gas, which fell to fifth place, underscoring the growing importance of real estate in Nigeria’s diversified economy.
Cement Prices: The Breaking Point
The sector’s progress is now being undermined by skyrocketing costs. Cement, the backbone of construction, has seen a 30%+ price increase in just six months.
- A 50kg bag sold for about ₦7,500 in late 2025.
- By early 2026, prices rose to ₦9,000–₦10,000.
- Today, cement sells for ₦11,500–₦15,000 in many parts of Nigeria.
Steel prices have jumped 20%, sharp sand 25%, while wood and granite have also risen. These increases ripple through the sector, inflating housing costs and rental prices.
Rising Rents Across Nigerian Cities
Professor Timothy Nubi of the University of Lagos’ Centre for Housing and Sustainable Development confirmed that surging input costs are driving rent hikes across urban centers:
- Abuja: Self‑contained apartments now cost ₦800,000–₦1.5m annually, up from ₦400,000.
- Lagos: Rents doubled to ₦800,000–₦1m per year.
- Kano & Port Harcourt: Significant increases mirror the trend.
Urban rents have risen by over 100%, squeezing households and worsening Nigeria’s housing affordability crisis.
Developers Under Pressure
Akintoye Adeoye, President of the Real Estate Developers Association of Nigeria (REDAN), warned that rising costs are forcing developers to:
- Delay project delivery.
- Scale down housing developments.
- Suspend or abandon projects entirely.
This is particularly troubling given Nigeria’s severe housing deficit, estimated at over 20 million units. Higher costs make homeownership increasingly unattainable for millions.
Risks of Substandard Construction
Adeoye cautioned that persistent cost increases could push some builders toward substandard materials to cut expenses. This would compromise building quality and safety, raising risks of structural failures in a country already grappling with building collapse incidents.
Policy and Industry Response
REDAN has called on the Federal Ministry of Housing and Urban Development to urgently engage stakeholders in the building materials value chain. Stabilizing cement and steel prices is critical to sustaining real estate growth.
Adeoye also appealed to cement manufacturers and industry players to collaborate with the government to ensure affordability and prevent systemic shocks to the housing market.
The Bigger Picture: Urbanization and Demand
Nigeria’s rapid urbanization continues to fuel demand for housing. With Lagos, Abuja, and other cities expanding, the need for affordable residential space is intensifying. Real estate’s rise in GDP rankings reflects this demand, but without affordable inputs, the sector risks stagnation.
Structural Challenges in Construction
The economics of building in Nigeria are shaped by:
- High energy costs: Milling and construction rely on expensive power.
- Financing constraints: High interest rates limit access to credit.
- Supply chain inefficiencies: Transport and logistics add to costs.
- Market distortions: Smuggling and monopolistic practices affect pricing.
These structural issues compound the impact of global commodity price fluctuations, leaving Nigeria’s real estate sector vulnerable.
Implications for GDP Growth
Real estate’s contribution to GDP is significant, but rising costs could erode its gains. If developers scale back projects and housing delivery slows, the sector’s growth trajectory may falter. This would undermine Nigeria’s broader economic diversification agenda.
Housing Deficit and Social Impact
Nigeria’s housing deficit already leaves millions without adequate shelter. Rising costs exacerbate inequality, pushing rents beyond the reach of low‑income households. Without intervention, the dream of affordable housing will remain elusive.
The Way Forward
Experts recommend a multi‑pronged approach:
- Input Subsidies: Reduce the costs of cement, steel, and sand through targeted subsidies.
- Energy Reforms: Lower tariffs and improve power supply reliability.
- Credit Access: Provide affordable financing for developers and buyers.
- Policy Consistency: Avoid abrupt shifts that destabilize the sector.
- Innovation: Encourage alternative building technologies and materials.
Conclusion
Nigeria’s real estate sector has proven resilient, rising to become the third‑largest contributor to GDP. Yet, its progress is being held back by skyrocketing building material costs. Cement prices have doubled, rents have soared, and developers are under strain.
Without urgent policy intervention, the sector risks slowing down, worsening the housing deficit, and undermining economic diversification. Stabilizing input costs, supporting developers, and protecting consumers are essential steps to ensure that Nigeria’s real estate boom translates into affordable housing and sustainable growth.
The story of Nigeria’s real estate is not just about GDP figures. It is about homes, livelihoods, and the future of urban Nigeria.
