The Influence of Macroeconomic Variables on Real Estate Investment Returns in Nigeria

Real estate investment returns in Nigeria are shaped by a complex interplay of macroeconomic forces including inflation, interest rates, exchange rates, and income growth, making macroeconomic analysis an essential tool for property investment strategy. This study investigates the influence of selected macroeconomic variables on real estate investment returns in Nigeria's four major urban markets: Lagos, Abuja, Port Harcourt, and Kano. Secondary data are sourced from the Central Bank of Nigeria Statistical Bulletin, the National Bureau of Statistics, and property market data from the Estate Surveyors and Valuers Registration Board of Nigeria for the period 2015 to 2023. The study applies a vector autoregression model and Granger causality tests to identify bidirectional relationships between macroeconomic variables and property return indices. The theoretical framework draws on the Fisher effect in real estate, the asset pricing approach to property returns, and macroeconomic transmission theory. The study examines how the 2023 naira devaluation and the removal of the fuel subsidy reshaped property market dynamics, particularly for residential and commercial properties priced partly in dollar terms. Existing literature from Nigeria and comparable African real estate markets confirms strong inflation-property return linkages, suggesting real estate serves as a partial inflation hedge, though the hedge ratio is incomplete. The study also identifies sector differentials in macroeconomic sensitivity across residential, commercial, and industrial property segments. Findings are expected to inform property investors, real estate investment trusts, and the Federal Mortgage Bank of Nigeria's market analysis function. Keywords: macroeconomic variables, real estate returns, property investment, Nigeria, inflation hedge