Lagos, Nigeria’s commercial nerve center, is experiencing a boom in real estate construction, accounting for 62 percent of the entire construction activities in the country. Despite this, Lagos still faces a housing deficit that is second to none in the whole country, with an estimated shortfall of three million units.
Several factors contribute to this issue. One major factor is investors’ yield appetite. Investors are more interested in high-end properties that offer higher profit margins and rapid capital appreciation. Luxury properties also enhance a developer’s prestige and brand image, attracting attention and recognition in the industry. As a result, houses for low to mid-income home seekers are scarce and largely unaffordable, exacerbating the housing deficit.
The dynamics of sales versus rent also play a role in the housing shortfall. While Lagos is predominantly a rental market, with over 80 percent of the population living in rented accommodation, the supply of rental properties falls short of the demand. A recent report reveals that more than 50 percent of residential projects listed in Lagos were for sale, while less than 40 percent were for rent. This mismatch contributes to the housing deficit, as the majority of people seeking housing in Lagos are looking to rent rather than buy.
Lagos’ rapid population and urbanization growth further compound the housing shortage. The city is home to over 10 percent of Nigeria’s population, and people from rural areas and other regions migrate to Lagos in search of economic opportunities. This influx of residents increases the demand for housing, exacerbating the supply deficit. Limited land for new construction within the metropolis further aggravates the situation.
The high cost of land in Lagos is another significant factor contributing to the housing deficit. Land is scarce, particularly in the city center, where it is most needed. As a result, land prices have skyrocketed, making it challenging for developers to build enough affordable housing units to meet the rising demand. Inadequate infrastructure, such as roads, water supply, and sanitation, also hinders new housing developments, as developers are hesitant to invest in areas with poor infrastructure.
The combination of these factors has created a deepening housing crisis in Lagos. Efforts are needed to address the housing deficit, such as promoting affordable housing initiatives, improving infrastructure, and encouraging investment in low to mid-income housing projects.
Sources:
– Real Estate Developers Association of Nigeria (REDAN)
– Pison Housing Company
– BuyLetLive
– State Commissioner for Housing, Moruf Akinderu-Fatai