Nigerians ditch big retailers as neighbourhood stores win daily spending – Report

Nigerians are increasingly turning to neighbourhood stores for their daily shopping needs, according to Knight Frank's Africa Report 2026/27. The report, which analyzes trends in Africa's real estate markets, highlights the growing preference for convenience-led and hyper-local retail formats over large-format stores. Brands like Bokku Mart are capitalising on this shift, as consumers increasingly favour retailers located within residential areas for everyday purchases.

This trend can be attributed to factors such as income constraints, mobility considerations, and a preference for proximity. As a result, neighbourhood-focused retailers are gaining ground, while traditional large-format retailers face a more selective consumer environment. Nigeria's retail market currently experiences an average prime retail rent of about US$25 per square metre per month, with retail yields at approximately 9.50%.

Despite international interest in the sector, exemplified by Sinomart International's presence at Lekki Palms Mall, the report suggests that Nigeria's real estate market is undergoing significant changes driven by higher costs and evolving economic conditions. In the office market, Lagos remains tenant-led, with prime office rents averaging US$55 per square metre per month.

Demand is shifting towards smaller, more efficient housing types, such as studio and one-bedroom apartments, as households navigate economic pressures. However, the construction costs in Nigeria have risen by 20% between December 2025 and May 2026, adding to cost pressures across the real estate market. These rising costs are starting to impact broader real estate pricing, potentially affecting rents, affordability, and investment yields in major urban markets.

The real estate sector in Nigeria is currently entering a consolidation phase, influenced by high interest rates, elevated construction costs, and limited access to structured finance. These factors are contributing to the affordability challenges faced by developers, as they grapple with increasing costs while households and businesses become more sensitive to rents and operating expenses.