Evolution of REITs in the Nigerian real estate market

Purpose - This study aims to examine the performance of real estate investment trusts (REITs) in emerging property markets. The paper used the Nigerian REIT (N-REIT) as a case study of an African REIT market, to provide information for investment decisions. Design/methodology/approach - Seven years quarterly returns data (from 2013 to 2019) were obtained and used to analyse the holding period returns, return–risk ratio, coefficient of variation and Sharpe ratios of N-REIT, All Share Index of stocks (ASI) and the Federal Government Bonds (FGB) in Nigeria. Findings - The study reveals that N-REIT outperformed stocks but underperformed bonds. Concerning risk, stocks provided the highest level of risk (7.69), followed by bonds (2.78), while N-REIT provided the lowest risk (2.7). The Sharpe ratios showed that N-REIT is the second-best performing asset, while bond is the first and stocks the last on the risk-adjusted basis. Practical implications - N-REIT is the second-largest REIT market in Africa with a market capitalisation of about US$136m. The N-REIT market has provided investment benefits to institutional and individual investors such as liquidity, transparency and ease of transaction. This study shows the peculiarity of N-REITs; this can guide investors in making informed investment decisions. Originality/value - This study is one of the first to empirically analyse in a comparative context, the risk-adjusted performance of N-REITs, ASI and FGB. The study will add to the limited research in this field and equip investors with valuable information for informed investment decisions.