Real Estate Investment Trust (REIT) investments have significantly decreased over the last five years, according to the Pension Fund Operators Association of Nigeria (PenOp).
By the end of 2024, investments had dropped from ₦239.28 billion in 2020 to ₦20.06 billion. Investments hit their lowest point in 2022 at ₦14.14 billion, then somewhat recovered to ₦21.04 billion in 2023 before falling once more in 2024.
The limited number of REITs available in the Nigerian market is the reason given by PenOp for this reduction. As a result, closed pension funds still make direct real estate investments, but active pension funds have refocused on making real estate investments through private equity funds.
Pension funds’ direct real estate investments increased from ₦245.34 billion in 2023 to ₦273.06 billion in 2024. In 2024, direct real estate and REIT investments combined came to ₦293.12 billion, up 10.04% from 2023’s ₦266.38 billion.
PenOp highlights the value of real estate holdings in pension fund portfolios, characterising them as a source of long-term funding for developers and a hedge against long-term inflation.
Regulations prohibit active pension funds from making direct real estate investments, but they are allowed to make investments in REITs. Administrators of defined benefit plans and closed pension funds, however, are permitted to make direct real estate investments.
As of January 2025, three REITs are listed on the Nigerian Exchange (NGX):
- SFS Real Estate Investment Trust: Priced at ₦179.45 per unit.
- UH Real Estate Investment Trust: Priced at ₦36.60 per unit.
- UPDC Real Estate Investment Trust: Market capitalization of ₦15.21 billion, with units priced at ₦5.70 each.
