In a significant reshuffling towards more liquid and diversified investment frameworks, Nigerian pension fund administrators have pushed their holding in Real Estate Investment Trusts (REITs) to a record 168 percent gain within the last year.Â
Pension investment within REITs increased to N69.73 billion as of March 2025, up from N6.14 billion during the same period of 2024.
This latest leap is a tactical realignment of pension assets in the face of Nigeria’s changing economic environment. With pressure from both chronic inflation and volatile interest rates, Pension Fund Administrators (PFAs) are on the lookout for assets that combine predictable income with liquidity. REITs, providing exposure to income-yielding real estate with the convenience of not having to worry about asset management issues, is a preferred asset class.
Agudah Oguche, Chief Executive Officer of Pension Fund Operators Association of Nigeria (PenOp), observed that the March 2023 to March 2025 timeframe saw pension payments to REITs and direct real estate investments exhibit a discerning two-pronged approach. While REIT investment recovered remarkably in 2025 from a decline in 2024, direct real estate assets continued to rise steadily from N218.3 billion in 2023 to N281.56 billion in 2024 before easing to N259.08 billion in 2025. This remains an overall two-year growth of close to 19 percent.
This diversification is a conscious move by pension fund managers to balance liquidity with long-term portfolio stability, states Oguche. “REITs are becoming popular, and direct property continues to offer an inflation-hedging anchor,” he adds.
Echoing this sentiment, Chika Onwunali, a partner at Premium Debate, further noted that PFAs are more optimistic now about the ability of the REIT market to provide consistent returns, especially with the prevailing high-interest-rate climate. He emphasized that this action reflects a grander game plan by institutional investors to gain entry to real estate returns without assuming the operating risk of property ownership.
The steady flow of capital into REITs is a testament to the resilience of REITs as long-term offsets in pension portfolios,” said Onwunali, noting that REITs offer access to rental income, asset value appreciation, and enhanced portfolio liquidity.
REITs function by aggregating investor capital in an effort to buy and own income-generating properties like malls, office buildings, and residential complexes. Their appeal is that they promise stable dividends and modest appreciation in price, perks that suit the long-term objectives of pension funds.
Nigerian-listed Real Estate Investment Trusts made N2.26 billion rental income in 2024 as increased occupancy and pent-up demand for commercial real estate boosted earnings, industry data showed. Mixta Africa analysts also said that REITs are still an affordable and effective means by which investors can access the real estate market without actually dealing directly with properties.
This change in strategy among pension funds indicates increasing faith in REITs as a solid source of income, but real estate still offers the stability and long-term appreciation required by retirement-oriented portfolios.
