A new assessment by Estate Intel says rising diesel costs are increasing construction expenses and forcing developers to raise property prices as operating margins shrink.

In its report examining how the United States-Iran crisis is affecting Nigeria’s economy, the firm explained that higher global oil prices have translated into inflation across energy, logistics, and building materials used in the real estate sector.

The study noted that diesel, a major energy source for construction sites and material transport, has recorded a sharp price increase in recent months.

As a result, developers now face higher costs moving raw materials, powering equipment, and running site operations, expenses that are being reflected in final property sale prices.

Figures referenced from the Nigerian Midstream and Downstream Petroleum Regulatory Authority showed a drop in petrol consumption between February and March, highlighting how fuel price increases are already affecting energy use patterns.

Estate Intel stated that beyond fuel, freight charges and insurance premiums have also risen due to instability in global oil routes, leading to delivery delays and extended project timelines across the construction industry.

Commenting in the report, John Oamen, CEO of Cutstruct, said although Nigeria’s supply chain has not been severely disrupted, war-risk surcharges and cautious shipping routes are increasing logistics costs and creating uncertainty for developers.

He added that the pressure is not limited to construction alone, as service charges in offices and multi-tenant residential buildings, especially in prime locations, are likely to increase due to rising maintenance and operational expenses.

While higher oil revenues may boost interest in property investment, the report warned that increasing borrowing costs and debt-servicing obligations could slow down the pace of real estate development in the country.