In the first half of 2025, Nigeria’s pension fund investment in Real Estate Investment Trusts (REITs) surged to ₦77.8 billion, a staggering 417.8% increase from the ₦15.028 billion recorded within the same timeline in 2024.
This followed a 7.4% dip in the direct real estate holdings by pension fund investments, caused by arbitrary revocation of certificates of occupancy, prolonged regulatory delays and bureaucratic bottlenecks, according to the National Pension Commission.
Notwithstanding, the spurt indicates that REITs, which come without the risks of managing property directly, are becoming a more appealing model for investment.
The Real Estate Investment Trusts (REITs) were introduced in 2007 by the Securities and Exchange Commission (SEC) to close the deficit in housing. But they offer more promise.
REITs pool investors’ funds to acquire and manage profitable properties or mortgage loans, effectively removing the operational risks of direct ownership. This is largely because of their capacity to provide professional asset management, ensure steady rental income distribution and grant investors both individual and institutional access to high-value property markets.
In Nigeria, the Pension Fund Administrators (PFAs) manage workers’ retirement savings, some of which are invested in real estate. With the growth of REIT investments, PFAs are increasingly embracing a financial platform that protects pension funds from political land policy shocks while also ensuring that they contribute meaningfully to real-estate financing.
The versatility of REITs further adds to their appeal. Like ordinary stock, they are traded on the Nigerian exchange, enabling PFAs to trade with relative ease.
More importantly, these investments can be used as a hedge against inflation, safeguarding contributors’ savings from volatility in the naira. This feature perhaps makes REITs even more attractive. For PFAs, it balances security with growth, turning potential risk into sustainable returns.
Beyond the REIT structure, other solutions are taking shape to address the issues and loopholes in Nigeria’s real estate sector. Several Nigerian states, such as Lagos, Ogun, Abuja and Enugu, are embracing digital land registries to arrest fraudulent land claims and accelerate certificate of occupancy (C of O) issuance.
Additionally, federal policymakers are exploring legislation to protect investors against arbitrary land revocations. Housing sector stakeholders are also pushing for tax incentives for long-term institutional real estate investors in a bid to make direct property investment less cumbersome.
These measures are poised to restore confidence in traditional real estate portfolios while ensuring a balanced investment landscape by complementing the rapid growth of REITs.
Adaptation in Nigeria’s investment climate can explain the REIT investment milestone. Faced with systemic uncertainties in land governance and property rights, PFAs are leaning towards financial structures that safeguard value while still fulfilling their mandate to grow the wealth of contributors.
The growth spurt in REITs shows how investors are navigating regulatory turbulence without abandoning critical sectors like housing and infrastructure. Backed with robust policy reforms, these trends could position Nigeria on top of a real estate investment model that fills a housing gap and hauls in profits for pension contributors.
In the first half of 2025, Nigeria's pension fund investments in Real Estate Investment Trusts (REITs) witnessed a dramatic increase to ₦77.8 billion, marking a 417.8% rise from ₦15.028 billion during the same period in 2024. This shift is attributed to a 7.4% decline in direct real estate holdings due to issues like certificate revocations and regulatory delays. REITs have become appealing as they eliminate the direct property management risks, offering professional management and steady income.
Introduced in 2007 to address housing deficits, REITs pool investor funds to manage properties or mortgage loans, providing access to high-value markets. As a financial platform, REITs protect pension funds from political land policy shocks while contributing to real estate financing. They can be traded on the Nigerian exchange, offering a hedge against inflation, which secures contributors' savings amid naira volatility.
To address real estate challenges, Nigerian states like Lagos and Abuja are implementing digital land registries, while federal initiatives aim to protect investors against land revocations and introduce tax incentives for long-term real estate ventures. These reforms aim to boost confidence in real estate investments and complement the growth of REITs. Overall, the surge in REIT investment reflects a strategic adaptation to regulatory challenges, promising robust returns for pension contributors while addressing the housing gap.
