Inflation and market uncertainties have forced most real estate project developers to reprice earlier-agreed building contracts, thereby slowing the pace of project delivery, Leadership has learnt.
Investigation revealed that building materials, equipment, and other components critical to the built industry and the delivery of infrastructure projects are experiencing daily price surges, causing rifts between real estate project owners and contractors. It was learnt that there have been noticeable wide margins between the quotation prices at the point of consummating a building project and the market price during execution of such projects, a cost that most developers do not want to bear and would rather pass back to the project owners.
A 2025 Nigeria Real Estate Report by Ubosi Eleh & Co. noted that economic uncertainties and persistent supply chain disruptions cause significant delays in construction projects across Nigeria, affecting timelines, budgets, and overall sector productivity.
According to the report, the volatile economic climate and increased uncertainty are discouraging both domestic and foreign investors from investing in the real estate sector.
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It stated, "Economic uncertainties and supply chain disruptions led to project delays and cost overruns, impacting the delivery timelines of real estate developments. The devaluation of the naira and rising input costs, such as cement, steel, and labour, pushed up construction costs, making it more expensive to develop new projects."
According to the report, the growing demand for affordable housing is coupled with government initiatives to promote affordable housing development opportunities for developers.
It added, "The volatile economic climate and increased uncertainty discouraged both domestic and foreign investors from investing in the real estate sector. Rising operational costs, including utility bills and maintenance expenses, forced landlords to increase rental rates, further straining tenant affordability."
Reacting to this, Senior Partner at Ubosi Eleh & Co. Emeka Eleh said the naira's devaluation and the rising prices of construction inputs, including cement, steel, and labour, have significantly increased building costs, making new developments more expensive to execute.
He added that economic uncertainties and supply chain disruptions have led to project delays and cost overruns, impacting the delivery timelines of real estate developments.
"The rising operational costs, including utility bills and maintenance expenses, forced landlords to increase rental rates, further straining tenant affordability," Eleh said. "The volatile economic climate and increased uncertainty discouraged both domestic and foreign investors from investing in the real estate sector",
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Confirming the development, the CEO of Knight Frank Nigeria, Frank Okosun, said: "We have seen a sharp rise in house prices to about 40 per cent due to inflation, both for sales and leases. Newly built properties reflect the increase due to the spike in inflation."
Okosun stated further that, on the supply side, market uncertainty, coupled with the rising cost of goods, has led stakeholders to adopt a wait-and-hold strategy, slowing, especially, capital-intensive projects, leaving capital to find its place in the market for capital-efficient projects.
LEADERSHIP's findings show that house rents have increased across all market nodes in Lagos, affecting both new and older buildings. This is why a mini-flat (a self-contained room and parlour) in a Lagos community that used to go for N400,000 yearly has risen to N600,000.
