In a very significant way, the short-let segment of the rental market in Lagos has demonstrated strength in terms of growth, recording appreciable price increase amid economic headwinds.
The segment had a good showing with a significant price increase in previous years. In 2023, it recorded a 12.95 percent price rise. It rose further to 46.4 percent in 2024, representing a 200 percent increase. This supports market predictions which say that affordable, luxury properties are to drive growth over the next three to five years.
A recent report published by BuyLetLive, an online real estate platform, confirms this and lends credence to an earlier report by Pison Housing Company which surmised that Lagos is a very active rental market with 80 percent of its over 20 million population living in rented accommodation.
The report titled ‘Nigeria Property Price Index Report 2024’ noted that short-let apartments recorded the most significant growth in the year under review, attributing that growth to several factors headlined by inflation.
While Pison Housing Report hinged the growth on Lagos fast-paced urbanisation and expanding population, BuyLetLive fingered macro-economic conditions, notably inflation and rising development costs, which forced product suppliers to increase prices in order to remain profitable.
Read also: Short-let apartments show strong growth with 200% price rise in 12months
The report revealed that though the average price increase for short-let apartments in 2024 stood at 46.4 percent, the growth varied across different market nodes in the city. It cited Ikoyi, a highbrow neighbourhood in the city, as the node with the highest increase at 60 percent.
This was followed by Lekki Phase 1, which saw slightly lower rates. Surulere experienced about 30 percent while Ikeja, an upmarket node on Lagos mainland, saw a 42-percent rise.
Magodo, a middle-class settlement, saw an increase of over 50 percent, but not up to 60 percent. According to the report, areas like Ajah and Yaba followed closely behind, while Victoria Island experienced a slight uptick, though still below 60 percent.
The report showed further that prices in Ikate and Gbagada were a bit more modest, with increases just above 50 percent and just under 40 percent respectively.
Furthermore, the report said that key players in the market—including agents, property managers, developers, investors, landlords, tenants, estate surveyors, valuers, and research analysts—identified affordable and luxury properties as having the most promising potential for growth.
It noted that affordable housing stands out as the biggest opportunity, with 60 percent of respondents pointing to it as the key growth area.
This reflects the growing demand for affordable housing solutions in Nigeria, where the need for cost-effective housing continues to rise due to urbanisation and a rapidly expanding population.
“We also asked key players to identify the biggest growth opportunities they foresee in the real estate market over the next three to five years. Our analysis revealed that key players in the market anticipate that the most significant growth opportunities in the sector will be in the affordable housing segment,” the report read in part.
It noted that as a result of affordable housing standing out as the biggest opportunity, both private investors and the government are focusing their efforts on addressing this gap, seeing it as essential for long-term economic stability and growth in the real estate market.
Luxury real estate follows closely with 21 percent of the market players highlighting it as another area poised for growth. The demand for high-end properties is increasing, especially in major cities like Lagos and Abuja, driven by a growing number of affluent individuals and investors seeking premium homes and exclusive developments.
In addition to these primary sectors, the report noted other opportunities for growth, albeit on a smaller scale. Tech-enabled real estate solutions, shared properties, and commercial spaces are seen as emerging areas, with 12 percent, 9 percent, and 8 percent of respondents indicating potential in these categories. Meanwhile, industrial/warehouse spaces (4 percent) and green buildings (3 percent) round out the remaining opportunities.
While projections were made for the next three to five years, the report also shed light on the broader market outlook for 2025.
In the first quarter of 2025, the Nigerian real estate market is expected to experience a cautious ‘wait-and-see’ approach from investors, as they await clarity on the 2025 budget announcement and its subsequent execution. This period of anticipation reflects investor interest in understanding how fiscal policies will influence the macroeconomic landscape and impact real estate demand.
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