Asset valuations in Nigeria will begin to rise in response to the improved environment, indicating that acquisition pricing seen in 2024 and 2025 will be the lowest entry point over the next 10-year real estate cycle, a recent report by Estate Intel has stated.
The report, referenced by The PUNCH on Wednesday, stated that if the ongoing economic recovery maintains its momentum, major commercial segments such as office and retail, having moved past periods of oversupply and recession, are expected to enter a recovery phase.
The report explained that, on average, cap rates for recently completed trades have pushed above the 10 per cent mark, higher than the sub-10 per cent levels noted for select trades in the past decade.
“Should the current economic recovery continue at its current pace, key commercial sectors, including office and retail, that have passed through hyper-supply and recession phases, will begin to head into recovery. At this point, asset valuations will begin to rise in response to the improved environment, indicating that acquisition pricing seen in 2024 and 2025 will be the lowest entry point over the next 10-year real estate cycle. On average, cap rates for recently completed trades have pushed above the 10 per cent mark, higher than the sub-10 per cent levels noted for select trades in the past decade,” the report stated.
The report stressed that in Lagos specifically, strong demographic dynamics continue to underpin investment activity in residential building, adding that it has been on a bull run since 2020, and there are no major signs that this will slow down in the short term.
“For the office market specifically, during periods of economic recovery and growth, it is typically the first real estate sector to benefit as businesses expand their footprint or make their first entry. Other sectors, including industrial and data centres, have experienced far more favourable conditions in recent times,” it added.
The report noted that the reforms implemented to stabilise the economy and reinstate investor confidence have shown strong signs of success, especially in recent months.
“Following four months of relative currency stability, the naira has begun to strengthen against the United States dollar, reaching N1,422/$ at the end of October 2025 in the official window. Foreign reserves have grown in lockstep, now at $42.1bn, the highest levels since August 2019,” the report stated.
It highlighted that the recently rebased gross domestic product data places real estate services at 13.3 per cent of GDP in 2024, making it the third-largest sector after Trade (18.2 per cent) and Crop Production (17.5 per cent).
The report added that since the pandemic amplified the case for data centres as a resilient property sector in 2020, the stock within Nigeria has grown by an average of 21 per cent every year.
“It is expected to continue doing so till 2030, leveraging the increased attention from key global data centre players. While other sectors have struggled in recent years, the data centre segment has noted consistent growth,” it stressed.
It emphasised that the market has historically been dominated by local players and investors.
“Between 2020 and 2024, a total of 14 data centres were completed, each with a median capacity of 1.5 MW. Between 2025 and 2030, however, Nigeria is expected to grow from 56.1 MW in data centre capacity to 218+ MW, representing a growth of over 3.7x,” it added.
The report predicted that over the next five years, the median capacity of data centres delivered will grow to 4.5 MW, larger than the 1.5 MW noted in the preceding five-year period. “While the median capacity is expected to reach 4.5 MW, larger capacity projects exist. Major pipeline projects such as Airtel’s 38MW Nxtra Data Centre in Eko Atlantic and OADC’s 24MW Centre along the Lekki Corridor are currently under construction,” it stated.
