Nigeria’s expanding real estate market is increasingly shaping how wealth is stored, measured, and compared, with economist Bismarck Rewane arguing that the trend is effectively making the naira “functionally convertible” through asset channels rather than formal foreign exchange reforms.
Bismarck Rewane, who is the founder of financial derivatives company limited noted the current situation reflects a deeper structural shift in Nigeria’s macroeconomic environment, where inflationary pressures, exchange rate volatility, and global investment comparisons are steadily reconfiguring how economic value is determined.
He stated this during a recent interview with Arise Television.
Real Estate as a Bridge Between Local Wealth and Global Value
Bismarck Rewane pointed out the growing role of real estate as a bridge between naira-denominated wealth and global capital valuation systems as wealth is typically accumulated in naira but increasingly deployed into property, where its value is assessed through dollar benchmarks rather than purely domestic price signals.
This he says creates a dual valuation structure in which the naira remains the medium of transaction, while the US dollar becomes the dominant reference currency for pricing, comparison, and investment decision-making.
Functional Convertibility Rather Than Formal Currency Reform
Rewane’s use of the term “convertibility” does not refer to legal or institutional FX liberalisation. Instead, it describes what can be understood as functional convertibility: the ability of domestic currency wealth to be indirectly transformed into globally comparable value through asset markets.
In this framework, investors do not need direct currency conversion to participate in global capital logic. Instead, they:
earn and accumulate wealth in naira
allocate it into real estate assets and evaluate returns using dollar-based global comparison
This process links local economic activity to international valuation systems without requiring full capital-account convertibility.
The Dollarisation of Nigeria’s Property Market
A key driver of this shift Rewane notes is the increasing dominance of the US dollar as a universal unit of account in Nigeria’s property sector. Even when transactions are conducted in naira, pricing decisions are frequently influenced by dollar expectations.
In premium segments of markets such as Lagos and Abuja, rents, land values, and development costs are often expressed in dollar equivalents or adjusted according to exchange rate movements. Investors and developers increasingly benchmark returns against global cities such as London, New York, and Frankfurt, reinforcing the dollar’s role as the dominant valuation anchor.
Functional Convertibility Not Equal to Naira Stability
The growing reliance on dollar-based valuation is closely tied to persistent macroeconomic conditions. Inflation and exchange rate instability have weakened confidence in long-term naira-denominated savings, encouraging investors to shift toward tangible assets.
Real estate has become a preferred store of value because it provides:
protection against inflationary erosion
exposure to asset appreciation
and alignment with global investment benchmarks
In the absence of deep and liquid financial markets, property functions as a primary mechanism for wealth preservation.
Rewane also highlights the convergence of diverse investor groups within the property sector. These include long-term investors, speculative buyers, diaspora participants, and in some cases, opaque capital flows seeking asset exposure.
This convergence intensifies demand pressures and reinforces pricing dynamics that are increasingly detached from local income levels. It also contributes to the strengthening of dollar-based valuation logic across different segments of the market.
Implications for the Naira’s Role in the Economy
One of the broader consequences of this shift Rewane notes is the gradual weakening of the naira’s role as a stable unit of account. While it remains Nigeria’s legal tender, its function as the primary measure of value is increasingly challenged in asset markets.
As dollar-based benchmarking becomes more widespread, the naira risks evolving primarily into a transactional currency, while valuation and wealth measurement increasingly follow external reference points.
Asset Inflation and Affordability Pressures
The increasing alignment of property values with global benchmarks contributes to asset inflation, particularly in urban housing markets. Property prices may rise in line with dollar expectations even when domestic wages remain relatively stagnant.
This dynamic has significant affordability implications, widening the gap between property values and income levels, especially for salaried workers whose earnings are denominated exclusively in naira.
Emergence of Dual Valuation Economy
Rewane’s argument ultimately points to the emergence of a dual-valuation structure within Nigeria’s economy. The naira continues to function as the official currency of exchange, but the US dollar increasingly dominates the way value is measured, compared, and preserved.
Real estate sits at the centre of this transformation, serving as the conduit through which domestic currency wealth is translated into global financial terms.
The outcome is not formal dollarisation or full currency convertibility, but a more nuanced shift: the growing integration of Nigeria’s asset markets into a dollar-referenced global valuation system, with real estate acting as the key transmission channel.
