Diaspora investment fuel Nigeria's real estate surge amid affordability challenge

Nigeria’s real estate market is at a turning point. Fueled by urban expansion, diaspora investment, and technological innovation, the sector is growing rapidly, as homeownership remains elusive for millions.

With property values climbing and foreign capital flowing in, developers are reshaping the landscape, as they streamline acquisitions, expand luxury offerings, and tap into digital platforms to drive efficiency. Meanwhile, affordability challenges persist, compounded by high mortgage rates, inflation, and regulatory bottlenecks.

In this deep dive, we examine the forces shaping Nigeria’s property sector, valued at over $2 trillion in 2025, according to German business data service Statista.

From the surge in diaspora-led purchases to emerging proptech solutions and government-backed initiatives like bamboo-based construction, we explore the opportunities, risks, and the evolving dynamics that will determine whether Nigeria can achieve a more inclusive and sustainable real estate market.

Let's dive in.

Nigeria’s real estate sector is experiencing robust growth, fueled by surging urbanization, rising property values, and a significant influx of foreign investment, particularly from the Nigerian diaspora.

According to Statista, the market is projected to reach $2.61 trillion by 2025, with the residential segment accounting for $2.25 trillion. The sector is forecast to grow at a compound annual rate of 6.87% through 2029, reaching $3.41 trillion.

Major cities such as Lagos and Abuja are expanding rapidly, driven by a youthful, increasingly urban population.

According to United Nations projections, Lagos population, currently estimated at 23 million, is expected to nearly double in size by 2050, intensifying demand for both residential and commercial properties. However, this rapid expansion is aggravating Nigeria’s housing shortage, which now exceeds 22 million units, according to the Lagos State government.

Diaspora capital reshapes demand amid developer-led growth and market shifts

The COVID-19 pandemic accelerated a trend already underway: Nigerians living abroad have become the dominant force in property purchases, particularly in Lagos.

In August 2021, Noah of Novarick Homes told me in a report for Voice of America’s Africa 54 that as much as 70% of real estate purchases in Lagos were made by diaspora Nigerians, with a growing preference for short-let apartments—one-, two-, and three-bedroom units—offering investors 100% to 150% higher returns compared to traditional annual rentals.

At the time, Nigeria’s economy was still grappling with a prolonged downturn. Professor Ndubuisi Nwokoma, Director of the Center for Economic Policy Analysis and Research at the University of Lagos, explained in the same 2021 report that declining domestic incomes had reduced real estate demand, making it more attractive for foreign-based investors to buy properties at lower prices before the market stabilized.

"The only critical money in the market is coming from abroad," Prof. Nwokoma told me. "With reduced local demand, property prices have fallen, creating a buyer’s market for Nigerians in the diaspora."

Three years later, diaspora-driven investment remains significant, as developers simplify the homebuying process for a new generation of buyers amid the construction boom.

The Central Bank of Nigeria reports that diaspora remittances grew 8.9% to $20.93 billion in 2024, reinforcing the ongoing trend of foreign-based Nigerians driving real estate purchases. Much of this influx has been directed toward property investment, particularly in key urban centers like Lagos and Abuja, where developers have tailored projects to suit diaspora buyers seeking stable, high-yield assets.

In May 2025, Omolade Igiebunu, co-founder of Pemjolad Paints and Chemicals Ltd, told me in a market report for West Africa’s paint and coatings industry that many new housing developments in Lagos and Abuja are financed by Nigerians abroad, fueling strong demand for construction materials, including decorative and protective coatings.

"Owning new houses seems to be the ‘ish’ of the moment. Nobody wants to go through the hassle of figuring out if land is genuine. The developer takes off that burden from you. You just pay your money and move in," Igiebunu said. "That sector is booming, especially in this part of Nigeria (Lagos), and I think it’s going to expand much more into the Southwest and then… up into the country as more developers spring up."

But she cautions that the current boom is largely shaped by diaspora buyers. "With FX rate fluctuations, it’s mostly Nigerians from abroad who are buying. Most of the people purchasing property are not spending naira—and that’s why developers have, unfortunately, started to (seemingly) overprice."

Barriers to affordability and market access

Despite the influx of capital and new construction, homeownership remains elusive for most Nigerians. Mortgage rates remain elevated at around 18% and above, while inflation and currency volatility continue to erode purchasing power. Bureaucratic inefficiencies, such as land acquisition delays and title registration bottlenecks, further hinder the expansion of affordable housing.

Government-backed mortgage programmes like the Federal Mortgage Bank of Nigeria’s National Housing Fund exist, but access remains limited due to high eligibility thresholds, making it difficult for lower-income earners to qualify. Experts estimate that Nigeria must deliver 550,000 new housing units annually over the next decade to close the deficit, requiring investment of more than ₦5.5 trillion per year.

Meanwhile, efforts to introduce alternative housing solutions could be gaining traction. The Federal Ministry of Innovation, Science, and Technology recently announced plans to utilize bamboo-based construction for affordable smart homes targeted at low- and middle-income earners.

At an event in Abuja last week Wednesday, Permanent Secretary Esuabana Nko Asanye stated that bamboo, when combined with other green technologies, offers a scalable, durable, and environmentally friendly solution to Nigeria’s housing shortage.

The Nigerian Building and Road Research Institute, an agency under the ministry, is spearheading the initiative to integrate bamboo into the country’s affordable housing framework, signaling a shift toward sustainable materials in large-scale development projects.

Technology and Innovation

Proptech adoption is also transforming Nigeria’s real estate landscape. Digital platforms now facilitate property transactions, while blockchain-based land registries and AI-powered rental apps are improving transparency and efficiency.

Nigeria’s recognition as AfCFTA’s Digital Trade Champion is attracting further fintech and proptech investment, broadening financing options for both buyers and developers. The country’s fast-growing digital economy is creating new pathways for home financing, particularly through peer-to-peer lending and fractional ownership models.

Investment outlook: opportunities and risks

Despite persistent challenges, real estate remains a favoured asset class for both local and foreign investors.

Lagos and Abuja led states in attracting foreign and domestic capital in Q3 2024, with inflows of $650.42 million and $600 million, respectively, according to the Nigeria Capital Importation Report. The figures signal growing investor confidence in Nigeria's fastest-growing cities.

However, risks persist. Land disputes, corruption, and infrastructure deficits form part of the issues that continue to deter some investors.

"There is demand, and there will always be demand for luxury apartments," says Professor Austin Otegbulu of the University of Lagos, in a February report on The Guardian newspaper "but high costs and economic uncertainty mean the market’s future depends on regulatory improvements, infrastructure upgrades, and more accessible long-term financing."

Sustaining growth and opportunities

Nigeria’s real estate boom is sustained by diaspora investment and urban expansion, but long-term growth will depend on addressing affordability, regulatory reform, and infrastructure development.

If these barriers can be overcome, the sector is well positioned for continued expansion and deeper integration with global capital flows.