Abstract/Summary

Real Estate Investment Trusts (REITs) have become an increasingly important vehicle for indirect real estate investment globally, offering diversification benefits, inflation-hedging potential, and relatively attractive risk-return characteristics. While REIT markets in developed economies such as the United States, the United Kingdom, and Japan are mature and substantial in size, REITs in emerging markets remain nascent and under-researched. This study investigates the performance of Nigerian Real Estate Investment Trusts (N-REITs) from their inception in 2007 through 2016, with the aim of providing empirical evidence to guide both domestic and international investors. Employing data from the three existing N-REITs—Skye Shelter Fund, Union Homes REIT, and UPDC REIT—the study evaluates income, capital, total, and risk-adjusted returns using holding period returns, standard deviation, Sharpe index, and regression analysis. The findings reveal that N-REITs have generally underperformed when compared with their counterparts in both developed and emerging markets, with low or negative returns over much of the study period. While the income return component remained consistently positive, averaging around 4 percent, capital and total returns were weak and volatile, undermining investor confidence. The results indicate that N-REITs’ poor performance is not a global REIT phenomenon nor merely an emerging market feature, but rather specific to the Nigerian context, shaped by structural inefficiencies, market illiquidity, weak investor perception, and limited data transparency. The study contributes to the scant body of literature on African REITs by extending the timeframe of analysis and highlighting the contextual challenges facing their growth. It underscores the need for stronger regulatory frameworks, enhanced market liberalization, and institutional investor participation to unlock the latent potential of N-REITs. For investors, the findings suggest cautious engagement with Nigerian REITs, while recognizing income stability as a modest incentive within an evolving property market.