Increasingly, Airbnb has continued to make inroads into the Nigerian real estate market with a significant impact on rentals. This time, the online marketplace is “eating into the market” with vacation rentals.
A recent real estate market survey by Financial Derivatives Company (FDC) affirms that the online firm’s entry into the market has led to shortages in vacation rentals which has created opportunities for investors in this asset class.
The survey also reveals that rents are spiking in notable market nodes such as Victoria Island, Ikoyi, and Lekki, pointing out, however, that vacancy factor increased from 19 percent in the last quarter of 2020 to 25 percent as at the second quarter of 2021.
It adds that landlords are pricing in inflation and exchange rate in their rent charge, while housing starts have gone up 10 percent higher within this period than it was in Q4’2020 even with cement price at N4,000 per bag, up from N3,200.
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“We expect rents to soar further; security and traffic considerations are also pushing demand and rents higher,” Bismarck Rewane, FGC’s chief executive, said, adding, “We expect higher rents as interest rates on real estate loans climb.”
Originally called AirBed & Breakfast, Airbnb offers to lodge and connects travelers with local hosts. Currently, top-rated vacation rentals such as a luxury 2-bedroom shared apartment with free WiFi could be found in Victoria Island, Lagos.
This is aimed to make travelers trip a pleasurable getaway with its luxurious and quiet apartment that provides all they will need for their stay. It goes for $29 per night.
In Abuja, there is the Millenaire Studio which is a spacious 35 square meter bungalow apartment, with an additional 13.7 square meters in outdoor relaxation space furnished with modern fittings and appliances to lavish its guest with impeccable taste, it costs $60 to spend a night there.
Very Central Home Away From Home is a lovely and peaceful, fully furnished two-bedroom maisonette in the business cum residential hub of Victoria Island, Lagos. It has a fantastic view of the Island’s Lagoon from its 14th floor home. It goes for $74 per night.
Airbnb founders, Brian Chesky, Joe Gebbia, and Nathan Blecharczyk, started by hosting guests on air mattresses in their living room, effectively turning their apartment into a bed and breakfast.
They did this when all the hotels around them were fully booked before a popular conference. They sold four spots in their apartment, provided their guests with breakfast, and showed them around the local neighborhood.
According to William Okpala, Senior Partner at William & Partners Limited, Airbnb enjoys rapid growth in Africa, recording the fastest growth in Nigeria. Annual guest numbers more than doubled over the past year from 572,000 to 1.2 million.
It is, however, a curious case that Nigeria’s position as the largest economy in Africa is yet to rob off on the country’s Airbnb industry as the country has, in the last five years, lagged its peers in terms of market size.
While South Africa, Morocco, and Kenya are top on the ranking as the countries with the largest Airbnb markets in Africa, Nigeria is only able to occupy the fifth position, a recent report by Airbnb shows.
However, an analysis of the 2019 data by the Californian-based company showed that Nigeria reported the fastest growth of 325percent over the past year with effective locations at Ibadan, Abuja, and places in Lagos like Lekki County Apartments, Mixta Apartments, Urban Shelter Apartments, Lekki Gardens Apartments and many more as high yield accommodations.
Okpala pointed out that part of the company’s initial challenges was fear by Nigerians to use their debit cards to make online reservations, the lack of trust that the advertised apartments online will be the reality on the ground coupled with security challenges.
“These are issues that are daunting the growth of Airbnb in Nigeria. But the platform has continuously enjoyed rapid growth in Africa. The number of guests who use Airbnb annually in Africa more than doubled over the past year from 572,000 to 1.2 million,” he said.
“The figures show a 5th straight year of strong growth from a base of just 6,000 listings and 22,700 guests in 2012-2013,” he added,
