Empirical Analysis of Real Estate Investment and Economic Growth Linkages in Nigeria

This study empirically analyses the linkages between real estate investment and economic growth in Nigeria, examining whether construction and property investment activity is a significant driver of GDP growth, and whether economic growth causally stimulates real estate investment demand. The relationship between real estate activity and economic growth is theoretically complex, involving both supply-side construction multiplier effects and demand-side wealth and income effects, and its empirical characterisation in the Nigerian context contributes to a gap in the African property economics literature. Quarterly time series data spanning 2005 to 2022 are assembled for real estate and construction sector GDP contribution, total property investment volume from NIESV market reports, mortgage loan volume from Central Bank of Nigeria data, and key macroeconomic variables including real GDP, inflation, exchange rate, and interest rates. Vector autoregression and Granger causality analysis examine the bidirectional relationship between real estate variables and GDP. Impulse response functions track the dynamic response of each variable to shocks in other series. Results reveal bidirectional Granger causality between construction sector GDP and overall economic growth, consistent with both supply-side multiplier and demand-side income effects. The magnitude of the construction multiplier effect is estimated at between 1.8 and 2.3 in the short run. Real estate investment volume shows a weaker and less robust causal relationship with GDP growth than construction sector output, suggesting that financial real estate transactions contribute less to growth than physical construction activity. The study recommends policies that prioritise construction-linked real estate development over speculative investment. Keywords: real estate investment, economic growth, Granger causality, construction, Nigeria.