South Africa controls roughly 95% of Africa’s Real Estate Investment Trust (REIT) market, while Nigeria, Africa’s largest economy by GDP and population, accounts for only a marginal share, estimated at about $600 million as of 2024. This disparity reflects fundamental differences in market structure, capital formation, regulatory clarity, and investor confidence. For Nigeria’s real estate sector, South Africa’s dominance is both a warning and a reference point.
REITs operate at the intersection of property and capital markets. By pooling investor funds into income-generating real estate and distributing earnings as dividends, they convert property into a financial instrument that can be priced, traded, and scaled. Where they function effectively, REITs widen access to real estate investment, deepen capital markets, and provide long-term funding for housing, retail, logistics, and commercial assets.
South Africa’s REIT market is the outcome of long-term capital-market development rather than sudden policy intervention. The country benefits from one of the continent’s deepest and most liquid stock exchanges, where property companies transitioned into REITs once enabling legislation was introduced. Clear listing requirements, consistent disclosure standards, and predictable tax treatment gave institutional investors—pension funds, insurers, and asset managers—the confidence to allocate long-term capital to property securities.
Scale reinforced this confidence. South African REITs typically hold diversified portfolios across retail centers, office parks, industrial and logistics assets, and increasingly, residential property. This diversification cushions income volatility and spreads risk across asset classes. Liquidity followed. As participation increased, trading volumes rose, valuations stabilized, and the market expanded. Capital depth, regulatory certainty, and asset quality reinforced one another over time.
Nigeria presents the opposite dynamic: strong demand but limited financial depth. The country faces a housing deficit running into tens of millions of units, rapid urbanization in cities such as Lagos and Abuja, and a rental market dominated by tenants. These fundamentals should favor pooled, income-focused investment vehicles. Yet Nigeria’s listed REIT market remains narrow, with few vehicles, modest asset bases, and low liquidity.
This is not a problem of opportunity but of structure. Nigeria’s capital markets remain relatively shallow, institutional participation is limited, and regulatory processes discourage scale. Real estate is still treated largely as a private, illiquid store of value rather than a securitized asset class. Trust compounds the problem.
Institutional investors remain cautious due to persistent concerns around valuation integrity, governance standards, and income stability. Inconsistent rental data, non-standardized leases, and weak enforcement of property rights make risk difficult to price.
The implications for Nigeria’s real estate sector are material. Where REITs are underdeveloped, funding relies on direct equity, short-term bank loans, or advance payments from buyers and tenants. These models are expensive, cyclical, and poorly suited to large-scale or long-term development. A functional REIT market, by contrast, provides patient capital capable of financing projects over extended horizons.
The imbalance also highlights how much real estate value in Nigeria remains locked and illiquid. Land and buildings represent substantial wealth, yet little of this value is translated into tradable securities that can support portfolio diversification or broader economic growth. In South Africa, property securities are integral to institutional and retirement portfolios; in Nigeria, real estate remains peripheral to mainstream financial investment.
Ultimately, South Africa’s dominance should not be read as a permanent hierarchy but as a snapshot of different stages of development. Nigeria’s constraint is structural rather than demand-driven. Bridging the gap is less about building more properties and more about building the systems that allow capital to move efficiently into them. In that sense, South Africa’s REIT market serves less as a challenge than a mirror, reflecting what becomes possible when real estate and finance mature together.
