Pension fund investments in Real Estate Investment Trusts (REITs) surged dramatically by 417.8% to N77.8 billion in the first half of 2025, compared to N15.028 billion in the same period of 2024. This substantial growth highlights a strong renewed interest in REITs as a preferred investment vehicle for pension funds in Nigeria. The data was released in the latest pension funds industry portfolio report by the National Pension Commission (PenCom).
Conversely, direct investments by Pension Fund Administrators (PFAs) in real estate saw a decline of 7.4%, falling to N255.9 billion from N276.4 billion in the first half of 2024. This drop reflects a cautious stance among PFAs toward direct real estate holdings, mainly driven by concerns such as arbitrary revocation of Certificates of Occupancy by state governments and regulatory challenges in the property sector.
The introduction of REITs in 2007 by the Securities and Exchange Commission (SEC) was aimed at bridging Nigeria’s housing gap and providing an alternative, less risky investment route into real estate. REITs pool investor funds to purchase and manage income-generating properties or mortgage loans, allowing investors to earn rental income without the complexities of direct property management.
Analysts, including David Adonri from Highcap Securities, emphasized the advantages of REITs, citing professional management, easier access to real estate finance, and an opportunity for pension funds to participate in the sector without day-to-day management responsibilities. These benefits have made REITs increasingly attractive to PFAs and contributed to the notable upward trend in their investment during H1 2025.
Ambrose Omordion of InvestData Consulting noted that REITs are traded on the Nigerian Exchange Limited (NGX) similarly to stocks, offering liquidity and flexibility for investors. Real estate investments in pension portfolios remain vital for hedging against long-term inflation and ensuring steady capital flows to property developers, reinforcing the importance of REITs as a growing asset class in Nigeria’s pension investment landscape.
Source: Vanguard