Gallium nitride nanofilms grown within nanochannels of Na-4 mica structure, exhibit ferromagnetism even at room temperature due to the presence of gallium vacancies at the surfaces of the nanofilms. These nanofilms also show a ferroelectric behavior at room temperature ascribed to a small distortion in the crystal structure of GaN due to its growth within the Na-4 mica nanochannels. A colossal increase in 338% in dielectric constant was observed for an applied magnetic field of 26 kOe. The magnetoelectric effect is ascribed to magnetostriction of magnetic GaN phase.