Proptech startups are struggling to survive under Nigeria’s steep 30 per cent interest rate, which has made access to funding nearly impossible, a report by the State of Lagos Housing Market, Volume 3, has stated.
The report read, “Although general fintech and data protection laws, like the Nigeria Data Protection Regulation 2023, are in place, they do not adequately address the unique needs of proptech innovations, such as blockchain-based land registries or smart-contract-driven escrow services. This regulatory gap forces many startups to operate in legal grey areas, fuelling investor hesitancy and increasing the risk of legal disputes.
“On the financing part, proptech startups in Nigeria face significant financing hurdles driven by a high cost of capital and limited investor interest. Interest rates hovered between 26 per cent and 30 per cent in early 2025, limiting access to credit for small and medium-sized enterprises. This can be a major challenge, as studies show that 29 per cent of proptech startups fail due to running out of funds. Furthermore, in a Lagos-focused survey, over 23.85 per cent of real estate companies seeking to adopt technology identified limited access to financing as a major barrier.”
The report noted that Lagos presented a fertile yet challenging environment for proptech adoption.
It added, “These challenges include unreliable power and internet, complicated laws and regulations, difficulty accessing financing, and a lack of reliable data and digital skills. These problems are connected; for example, delays in regulations make financing harder, and poor power and internet affect digital services. This section will provide a detailed explanation of these challenges.
“Lagos faces persistent infrastructure issues that hinder the growth of proptech. Frequent power outages mean the national grid supplies less than 12 hours of stable electricity daily, forcing firms to rely heavily on generators and inverters. This dependence drives up operational costs and compromises service reliability, particularly during critical business hours. Additionally, while Lagos boasts the highest internet penetration in Nigeria at 65 per cent, network bandwidth remains inconsistent.
“These bandwidth issues persist as the state still has a deficit of 28,000 kilometres in fibre-optic installation out of the required 36,000 kilometres, resulting in download speeds as low as 0.7 mbps in some areas in Lagos, diminishing user trust in digital solutions.”
It further noted that proptech development in Lagos was hindered by a persistent lack of reliable market data and low levels of digital literacy among key user groups.
“Accurate, up-to-date information on property valuations, transaction histories, and market trends remains limited. This data gap undermines the performance of core proptech functionalities such as automated valuation models and predictive analytics. Also, digital literacy in the country remains at 60 per cent, with many buyers/renters preferring traditional agents due to limited familiarity with digital platforms.
“As a result, proptech startups are compelled to invest in user education, onboarding support, and hybrid service models that combine digital tools with offline agents. In Nigeria, the story is similar; proptech has gained its most substantial traction in Lagos State and is home to many leading proptech startups. On a national level, there are over 147 proptech startups, but approximately 70 of them are active.
“Cybersecurity threats further compound these challenges for proptech startups. While precise breach figures for real estate platforms are not publicly available, multiple incidents of data leaks across Nigeria’s tech sector highlight how vulnerable online property services can be in the absence of robust security standards.”
The State of Lagos Housing Market, 3rd Edition, is published by the Roland Igbinoba Real Foundation for Housing and Urban Development. The first and second editions were published in 2009 and 2016, respectively.
