Nigeria’s real estate development market is facing increasing pressure from rising construction-input costs, with sharp increases in key materials over the past seven years putting pressure on project budgets and development margins.
Construction Costs Continue to Rise
Recent industry reporting indicates significant increases in the prices of major construction materials:
Iron rods: up approximately 410% over seven years.
Cement: up approximately 367% over the same period.
Developers are also contending with higher costs for aluminium, electrical fittings, plumbing materials, labour and transportation.
The increase in input costs is affecting project economics, particularly for developments where construction periods are extended, and developers remain exposed to price changes between project commencement and completion.
Developers Adjust Project Strategies
Industry participants report that some developers are responding to the cost pressures by reducing unit sizes, phasing developments, renegotiating supplier and contractor terms, and reviewing project specifications.
These adjustments allow developers to manage construction expenditure and preserve project viability, but they can also affect project scope, procurement requirements, contract values and delivery timelines.
Feasibility Risk Extends Beyond Project Commencement
For developers, the key challenge is increasingly the cost of delivering a project through completion, rather than simply establishing the cost at the point of commencement.
A development that is financially viable during land acquisition or early construction can face margin pressure if construction inputs increase faster than achievable selling prices or rental income.
This makes phased development, procurement planning, realistic cost contingencies and periodic feasibility reviews increasingly important components of project management.
For contractors, changing specifications and phased construction can affect bills of quantities, procurement volumes, contract pricing and construction schedules, making accurate cost monitoring critical throughout the project lifecycle.
Source: Nigerian Tribune; Independent Newspaper Nigeria.
Nomarc Projects tracks developments across Nigeria’s construction, infrastructure, engineering and real estate sectors, providing industry news and market intelligence for professionals across the built environment.
