Nigerians hit by rent hike as vacancies dwindle
The real estate sector in Nigeria is currently facing challenges, including a decrease in available rental properties, rising rents and home prices, increased mortgage rates, and inflation. According to recent data from the National Bureau of Statistics (NBS), Nigeria's yearly inflation rate reached its highest level since September 2005, driven by soaring food prices and a weak naira. As a result, the cost of building materials has increased, leading to project delays and reduced portfolios for developers.
The effects of inflation and rising costs are particularly felt in affordable, mid to low-income areas, where vacancy rates are at a record low. In Lagos, for example, rental prices have increased by 25 to 40 percent in certain locations over the past three years, and some high-density residential segments in the hinterlands have seen almost double the rental growth over the same period. Demand for housing in city centers, especially from students, young professionals, and millennials, remains high, but supply has been slow due to the rising cost of construction.
Private developers, who account for a significant portion of urban housing in Nigeria, tend to focus on high-end neighborhoods with higher capital values, such as Ikoyi, Lekki, Victoria Island, and Ikeja, rather than affordable housing options. This has contributed to the increase in rents and home prices in these areas. In other cities like Abuja, areas such as Jabi, Wuse, Utako, and Gwarimpa have also seen low vacancy rates and increased residential development.
Overall, the real estate sector in Nigeria is facing challenges due to inflation, rising costs, and supply-demand dynamics. Renters are experiencing higher rents and reduced availability of affordable housing options, while developers are grappling with increased construction costs and delayed projects. It remains to be seen how the real estate market in Nigeria will evolve in the face of these challenges and changing economic conditions.