Rising Building Material Costs and Insecurity Are Driving Up Rents in Nigeria

Nigeria is experiencing a critical shift in its residential real estate market. With the cost of building materials soaring and security concerns prompting migration into safer districts, rental rates are climbing and for property professionals the implications are significant.

The Materials Cost Surge

Reports from Abuja and other major cities indicate that a 50 kg bag of cement is now selling for around N10 000, more than double its price a short time ago. Metal reinforcement, roofing sheets, paint and other finishing materials are similarly showing steep increases. Those cost pressures are translating into higher construction and maintenance expenses for landlords and property developers.

When construction costs increase sharply, landlords respond either by reducing new supply or by raising rents on existing stock to offset their costs. In many urban centres the result has been upward pressure on rental rates, even where the housing supply is already constrained.

Insecurity and Migration into Urban Rental Markets

Another contributing factor is internal migration triggered by insecurity. As residents move from higher-risk areas to safer neighbourhoods in cities such as Abuja, the demand for rental homes in those safer zones rises. That increased demand can push rents up independently of broader economic factors.

In neighbourhoods perceived as secure, well-serviced and connected, landlords are finding more tenants willing to pay a premium for safety and convenience. This creates a rental-premium effect that adds to the pressure from rising input costs.

Supply-Side Constraints and Their Rent Impact

Rising input costs and security risks also affect developers’ ability to deliver new housing stock. Projects are delayed or cancelled when material costs escalate beyond budget, when labour becomes hard to secure or when sites are deemed insecure. With fewer new units coming to the market, rental supply tightens even as demand expands.

When supply is constrained and demand remains strong, rental rates naturally increase. This dynamic can be especially acute in markets with limited oversight of rental price adjustments and with high levels of informal land and property transactions.

What This Means for Real Estate Professionals

For developers: controlling input costs is now more critical than ever. Sourcing materials early, locking in agreements, using local suppliers and managing construction timelines tightly can help preserve margins and control rents.

For brokers and asset managers: the changing cost and demand dynamics mean that rental yield expectations need careful review. In many cases rising rents may improve yield in the short term but also bring risk in the form of tenant churn, affordability issues and regulatory exposure.

For investors: the commercial proposition remains compelling but more complex. Areas with strong security infrastructure, good services and stable neighbourhoods are better positioned. But entry costs may be higher and the operational environment requires greater due diligence.

Strategic Takeaways

1. Rising material costs are likely to persist for the medium term. Real estate firms should plan accordingly rather than assume a return to previous input cost levels.
2. Location is increasingly important. Neighbourhoods with better security, services, amenities and connectivity are seeing stronger rental growth.
3. New supply through traditional methods may struggle to keep pace. There is space for innovation in construction methods, alternative materials and modular systems.
4. Transparency in contracts and rental escalation is becoming a differentiator. Tenants and investors alike are more aware and less tolerant of unchecked rental hikes.
5. Collaboration with government and industry associations to monitor cost indices, standardise tenancy agreements and professionalise the market will improve long-term sector stability.

The rising cost of building materials and shifting migration patterns due to insecurity are converging to intensify rental pressure in Nigeria’s urban markets. For real estate professionals the challenge is to respond strategically by managing costs, focusing on strong locations, ensuring supply meets demand and maintaining affordability. Those who adapt will find significant opportunity in a market with deep structural demand.