By Grace Udeh

The real estate sub-sector of the Nigerian economy has emerged as a key pillar of national economic performance, according to a recent report released on Monday by Knight Frank’s H1 2026 Lagos Market Update.

The report stated that real estate accounted for 13.10 per cent of real gross domestic product while the construction sector expanded by 6.38 per cent year-on-year in the first quarter of 2026.

The report said the strong macroeconomic output was being shaped by rising residential costs, ongoing infrastructure investments, and increasingly selective occupier demand across major urban hubs, including Lagos, Abuja, and Port Harcourt.

The broader national economic background reflects steady stabilization, with headline inflation easing to 15.91 per cent in June from 25.29 per cent a year earlier. However, high development costs and housing affordability remain critical factors influencing investment choices and occupier strategies as the construction boom unfolds.

In Lagos, the high contribution of real estate to the economy coincides with an acute shortage of formal housing supply, driving up residential rents. Prime locations such as Ikoyi, Victoria Island, Banana Island, and Lekki Phase 1 have seen rents more than double since 2023.

In response, tenant demand is shifting significantly toward lower-cost options on the mainland, such as studios, mini-flats, and two-bedroom units.

Transport infrastructure projects, including rail expansions and upgrades along the Lekki-Epe corridor, are expanding the property footprint into emerging suburban growth areas like Ajah, Sangotedo, and Ibeju-Lekki.

Commercial property performance across the country remains selective despite sector growth. In Lagos, Grade A office rents have stabilised at approximately $55 per square metre monthly, with landlords using fit-out contributions, concessions, and flexible lease structures to maintain occupancy.