… Revenue seen hitting N300bn this year
The short-let market in Lagos is booming as the projected revenue is set to reach N300 billion this year, driven by consistent demand for flexible accommodation from business travellers, tourists, expatriates, and local professionals.
According to the Lagos short-let market report, based on data from AirDNA (78 percent) and Edala Homes (22 percent) surveying 5,806 listings, the market is set to expand from the ₦264.3 billion recorded in 2024.
“This growth is expected to be driven by sustained demand across all submarkets, as well as notable revenue expansion in emerging areas,” said Samuel Olatunde, co-founder & COO, Edala Homes.
According to the National Bureau of Statistics (NBS), Nigeria’s gross domestic product (GDP) grew by 3.46 percent by the third quarter of 2024, with the construction sector experiencing a modest growth of 2.91 percent, indicating ongoing infrastructure projects and a strong demand for housing.
The real estate services sector, on the other hand, experienced minimal growth of 0.68 percent, indicating subdued activity amidst economic uncertainties.
Despite this, challenges in the sector persist, including rising competition and market saturation, inflation, and escalating operational costs. Increased electricity tariffs, diesel prices, and property maintenance expenses are eating into profitability.
“To navigate these headwinds, operators are encouraged to adopt energy-efficient solutions such as solar power and inverter systems and leverage bulk service contracts to reduce recurring costs,” the report said.
The Lagos market report revealed that regulatory oversight is also expected to tighten in 2025, with the Lagos State government likely to enforce stricter rules on taxation, safety standards, and customer verification protocols.
“Operators are urged to ensure compliance through proactive engagement, transparent financial reporting, and robust safety measures,” it said.
Additionally, high construction costs pose a significant challenge. Between 2023 and 2024, prices for materials like cement, blocks, and iron rods surged by 78 percent to 100 percent. For example, the price of cement doubled from ₦4,000 to ₦8,800 per bag.
Read also: Short-let apartments show strong growth with 200% price rise in 12months
Paint prices also rose with large buckets now costing ₦46,000 to ₦50,000, up from ₦23,000 to ₦25,000. This, in turn, forces property owners to raise daily rental rates, which could impact affordability for tenants and reduce competitiveness in certain submarkets.
A key trend from 2024 is the growing preference for studio apartments, which offer affordability and flexibility.
“These units are becoming a favored alternative to hotels, particularly among young professionals and individuals with minimal space needs. Operators are capitalising on this trend by converting existing properties or developing new studio configurations,” the report said.
Temidayo Oloyede, co-founder & CEO, Edala Homes, said one notable highlight of 2024 was the surge in tourism during the festive season, popularly referred to as “Detty December.”
“Lagos attracted an estimated 1.2 million tourists, with approximately 60% being local tourists from the South East and FCT, and 40 percent being diaspora visitors,” he said.
Data from Lagos Airport (MMA) revealed that around 550,000 inbound passengers arrived between November 19 and December 26, 2024, with 90% traveling for leisure and tourism.
The short-let market disclosed that Ikoyi emerged as the leading luxury destination, generating ₦37.5 billion in 2024 and it’s projected to reach ₦42 billion in 2025.
This is because Ikoyi, famed for its luxury real estate, modern infrastructure, and exclusive gated communities, stands as a haven for business moguls, expatriates, and top officials.
Victoria Island followed closely, contributing ₦19.3 billion and forecasting ₦21.6 billion in 2025, while Banana Island recorded ₦11 billion in revenue, with a 2025 projection of ₦12.4 billion.
Lekki Phase I and Lekki Peninsula II proved to be the largest contributors, with revenues of ₦94 billion and ₦70 billion, respectively. Emerging submarkets like Ikeja, Surulere, Yaba, and Gbagada also performed well, reflecting growing demand across Lagos.
“Surulere and Yaba, with their high growth potential, present significant opportunities for investors targeting the affordable segment,” Olatunde said.
“Meanwhile, established luxury markets like Ikoyi, Banana Island, and Lekki Phase I will remain stable and attractive for premium investments,” he added.
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