Chairman of Exclusive Estates, Peter Adobamen, discusses the challenges facing Nigeria’s real estate sector and possible solutions in this interview with ANOZIE EGOLE What are the major challenges preventing the private sector from addressing Nigeria’s housing deficit, which is estimated to be in the millions of units?
The major barriers include high construction costs, expensive land acquisition processes, limited access to long-term financing, inadequate infrastructure, regulatory bottlenecks, and low purchasing power among citizens. Developers often finance projects through short-term commercial loans with high interest rates, while homebuyers lack affordable mortgages.
The result is a mismatch between housing supply and effective demand. Although demand for housing is enormous, the number of people who can afford newly built homes remains relatively low. What impact have rising inflation rates had on construction expenses, property values, and housing affordability for ordinary Nigerians?
Inflation has significantly increased the cost of cement, steel, roofing materials, electrical fittings, labour, and transportation. Developers are forced to transfer these additional costs to buyers, leading to higher property prices and rents. For average Nigerians whose incomes have not grown at the same pace as inflation, housing affordability has worsened considerably.
Consequently, many people have moved from homeownership aspirations to rental accommodation. In what ways have recent naira volatility and currency shifts affected development costs and confidence among real estate investors? The depreciation of the naira has increased the cost of imported construction materials, machinery, lifts, finishing materials, and technical services.
Development budgets prepared a year ago often become obsolete within months. While local investors generally remain active because real estate serves as a hedge against inflation, foreign investors tend to be more cautious due to exchange rate uncertainty and difficulties in projecting future returns.
What effect have elevated interest rates had on mortgage accessibility and the appetite for residential properties? High interest rates have made mortgage financing inaccessible for many Nigerians. Most commercial mortgage products remain too expensive for middle-income earners.
As a result, mortgage penetration remains extremely low compared to global standards. Many buyers prefer instalment payment plans directly from developers, while others postpone homeownership entirely. This limits demand for formal housing and slows market growth.
Which government policies do you believe would be most effective in driving investment and expansion in Nigeria’s real estate sector? Several policies could significantly transform the sector. The government should simplify and digitise land registration and title processes, reduce consent fees, registration charges, and transaction taxes, expand access to affordable mortgage financing, provide tax incentives for affordable housing developers, and encourage local production of building materials.
It should also improve infrastructure in emerging development corridors, establish a more transparent and predictable regulatory environment, and strengthen public-private housing partnerships. These measures would reduce development costs and attract greater investment.