Nigeria’s Reit Market Benefits from Accelerating Urban Growth

Nigeria’s REIT market, while still developing, is attracting growing investor interest as rapid urban growth and population expansion fuel demand for income-producing real estate, according to a report by Knight Frank Real Estate.

The report noted that Real Estate Investment Trusts have become a major investment instrument worldwide, offering investors exposure to property markets without the complexities of direct ownership. Across Africa, REITs are gradually gaining traction, supported by increasing urbanisation, demographic growth, and the need for diversified investment options.

It explained that although Africa’s REIT market remains relatively small compared to global benchmarks, this gap presents both obstacles and significant growth opportunities. The global REIT market is estimated at about $4 trillion, with the United States accounting for nearly 80 per cent, or roughly $3.2 trillion. Africa represents only a small share of this total, with South Africa leading the continent at over $20 billion in market capitalisation. Despite its size, the African REIT market has recorded steady growth over the past decade, driven largely by South Africa, Nigeria, and Kenya.

Nigeria’s REIT sector was described as still emerging but highly promising, given the country’s large population and fast-paced urbanisation. The report revealed that South Africa currently dominates the African REIT landscape with a market capitalisation of about $8.5 billion, followed by Nigeria and Kenya at approximately $600 million and $300 million, respectively, despite having introduced regulatory frameworks around the same period. Other countries, including Ghana, Morocco, and Egypt, have enacted REIT legislation and are exploring the market, although they are yet to launch fully operational REITs.

The report highlighted that Ghana, Morocco, and Egypt are increasingly viewing REITs as tools for real estate development and foreign investment attraction. For instance, Ghana’s Affordable Housing REIT is designed to help address the nation’s housing shortage, while Morocco and Egypt are positioning REITs to draw international capital.

Emerging trends across African REIT markets include growing interest in niche segments such as student accommodation, healthcare facilities, and affordable housing. Examples include Kenya’s Acorn Student Accommodation REIT, which has successfully leveraged rising demand for student housing in urban centres. Sustainability and green building practices are also gaining prominence, as environmentally responsible properties that meet environmental, social, and governance standards are attracting more investors due to lower long-term costs and improved returns.

The report further pointed to the increasing adoption of technology in property management, with proptech solutions such as smart building systems and digital management platforms being incorporated to improve efficiency and tenant experience. Cross-border investment is another developing trend, as African REITs seek portfolio diversification and risk mitigation. South African REITs such as Growthpoint and Redefine have already expanded into other African markets and parts of Europe.

For investors aiming to tap into Africa’s REIT potential, the report identified several promising focus areas, including affordable housing, which is in high demand due to rapid urbanisation and the expansion of the middle class. It also projected rising demand for offices, retail centres, and industrial properties as African economies grow.

Additionally, niche sectors such as student housing, healthcare facilities, and logistics hubs were highlighted as less crowded markets with the potential for higher returns. REITs that emphasise sustainability and green development are expected to attract stronger investor interest over time, as ESG-aligned assets continue to gain global relevance.

Overall, the report concluded that although the African REIT market is still at an early stage, it holds substantial growth potential. South Africa, Nigeria, and Kenya remain key drivers, while emerging markets such as Ghana and Egypt are showing increasing promise. Trends around niche assets, sustainability, technology adoption, and regional expansion are expected to shape the future of African REITs, offering diverse opportunities for investors.