What began as a geopolitical confrontation over nuclear ambitions between the United States – Israel alliance and Iran, has evolved into something far more economically consequential – a global energy shock reverberating across global markets and industries. From disruptions in the Strait of Hormuz to damage to Gulf energy infrastructure and rising freight and insurance costs, the conflict has exposed how tightly the global economy remains tied to energy security.
The first tremors appeared in the oil market. Early supply disruptions withheld over 140 million barrels of crude from global markets – roughly two days of global demand, as traffic through the Strait of Hormuz became increasingly choked. Brent and WTI crude, trading near $70 per barrel before hostilities escalated, have since surged past $100, with some projections placing prices at $200 should the conflict persist.
For an oil-exporting nation like Nigeria, this should be a windfall. The reality, however, is paradoxical. In fiscal terms, Nigeria’s government revenue is projected to grow by approximately 15%, reaching an estimated ₦22Trn by the end of 2026. Yet oil wealth in Nigeria has a well-documented habit of failing to trickle down. Despite the Dangote Refinery’s processing capacity of over 650,000 barrels per day, the inability to consistently supply adequate volumes and grades of crude under the crude-for-naira arrangement has left the refinery reliant on international sourcing – priced in dollars and often carrying a significant premium. The refinery’s predicament is a microcosm of a broader pattern – oil revenues accumulate in state coffers while the cost-of-living burden falls disproportionately on households with little buffer against rising prices.
The macroeconomic backdrop reinforces this concern. In its April 2026 World Economic Outlook, the IMF revised Nigeria’s 2026 growth forecast downward by 0.4 percentage points to 4.1%. The Central Bank of Nigeria, responding to the surge in inflation and external shocks arising from the conflict, has retained its benchmark interest rate at 26.5%.
This matters profoundly for construction and real estate sectors as inflation transmits gradually across the value chain. Nigeria’s heavy reliance on imported construction inputs, diesel-powered logistics, and energy-intensive building operations means that rising oil prices quickly translate into higher development and operating costs. Developers who rely on incremental procurement during construction are particularly exposed. Supply disruptions have pushed up freight and shipping costs, compressing margins on projects that were priced in a different market environment. Labour costs have followed suit, rising as workers attempt to keep pace with the cost of living. The result is a broad-based increase in construction costs, forcing developers to reprice projects, phase developments more cautiously, or postpone speculative schemes all together. Mid-income residential developments, where affordability remains highly sensitive to cost increases, are likely to face the greatest strain.
At the operational end of the value chain, energy costs are compounding the problem as diesel prices now hover around ₦1,900 per litre in some locations. This has further raised the cost of running serviced apartments, commercial and mixed-use buildings that are less reliant on the national grid. Consequently, occupiers in these properties are likely to face higher service charges.
Yet within the disruption lies the outline of a structural opportunity. Rising geopolitical uncertainty and tighter financial conditions are accelerating a pivot towards import substitution and domestic industrialisation. Industrial assets, logistics parks, storage facilities, and manufacturing-linked real estate are likely to attract growing interest as capital rotates toward sectors tied to domestic production capacity. Port modernisation projects are gaining momentum alongside warehousing and local manufacturing. The investment signals are already concrete: a $400M Stellar Steel Plant in Ewekoro, the $300M Galvanising and Fabrication Plant in Ikorodu, and a $1Bn MoU with Indian conglomerate, Rashmi Metaliks Group, collectively signal a meaningful expansion in domestic manufacturing capacity.
For developers grappling with volatile exchange rates and rising import costs, the economic case for locally sourced building materials and alternative construction methods is strengthening. Given that materials account for 40% of development costs, a sustained shift away from import dependency could meaningfully ease construction-cost pressures and ultimately improve housing affordability.
On the demand side, property owners facing higher energy costs are turning to solar panels, battery storage and energy-efficient systems to reduce diesel dependence. Properties that offer lower operating costs through energy efficiency are commanding rental premiums, and as the market matures, should achieve higher valuations. The gradual adoption of electric vehicles is adding a new layer, creating demand for EV charging hubs, purpose-built logistics facilities, and mobility-linked commercial assets.
What this moment makes clear is that geopolitical shocks can no longer be treated as temporary disruptions to be waited out. They are recurring variables that are actively shaping construction pricing, investment strategy, and development viability. The longer-term opportunity for Nigeria’s real estate market depends on whether policy makers, developers, and investors, can convert an external shock into a domestic industrial moment.