Pension fund investment in real estate balloons by 418% to N77.8bn
yarkarkara
By Peter Egwuatu
Pension Fund’s investment in Real Estate Investment Trusts, REITs, increased astronomically to N77.8 billion in the first half of 2025, H1’25. This is massive 417.8 percent jump from N15.028 billion recorded in the same period of 2024, HI’24, a reflection of improved interest in the trust.
Meanwhile, direct investments of pension funds by Pension Funds Administrators, PFAs, in real estate declined by 7.4% to N255.9 billion from N276.4 billion in H1’24.
These are contained in the report on pension funds industry portfolio released by the National Pension Commission, PenCom.
This decline reflects PFA’s low risk appetite towards non-corporate real estate portfolios.
Vanguard findings revealed that the increasing apathy to direct real estate investment by PFAs is due to many factors mainly, arbitrary revocation of Certificate of Occupancy, CoO, by state governments, regulatory bottlenecks, among others.
It will be recalled that efforts to address the housing gap by enhancing investment in the real sector, led to the introduction of REITs in 2007 by the Securities and Exchange Commission, SEC.
Commenting, David Adonri, analyst and Vice Executive Chairman at Highcap Securities Limited, said: “REITs are trusts that use the pooled funds of investors to purchase and manage income property and/or mortgage loans. By investing in a REIT, investors benefit from the rental income generated by the properties without the burden of directly managing them”.
According to him : “Key advantages of REITs include access to finance for investment in real estate, professional management of real estate assets or projects and an opportunity for investors to participate in real estate financing without getting involved in the day-to-day management of real estate processes.
As a result, REITs became attractive and major sources of real estate investment channel for PFAs. This has led to upward trend in PFAs investment in REITs in H1’25.
Commenting as well, Ambrose Omordion, analyst at InvestData Consulting Limited said: “REITs are traded on Nigerian Exchange Limited, NGX just like stocks; you can buy or sell REITs through your stockbroker as with other types of shares. Real estate investments are a significant asset class on pension fund books as they help to hedge against long-term inflation and ensure developers have a source of long-term capital to tap from”.
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