Despite being the commercial hub of Nigeria, Lagos is faced with a severe housing deficit. With an estimated deficit of three million units, Lagos accounts for 62 percent of construction activities in Nigeria. However, various factors contribute to the growing shortage of affordable housing in the city.
One major factor is the yield appetite of investors. High-end properties offer higher profit margins and are perceived as more stable during economic downturns. This has led developers to prioritize luxury properties, leaving a scarcity of affordable housing for low to mid-income home seekers.
Lagos is predominantly a rental market, with more than 80 percent of the population living in rented accommodation. This demand-supply mismatch between rental and sale properties exacerbates the housing deficit. A recent report by BuyLetLive revealed that over 50 percent of residential projects listed in Lagos were for sale, while less than 40 percent were for rent. This reveals a clear paradox, as 80 percent of people seeking housing in Lagos are looking to rent, but most developments are built for sale.
The rapid population growth and urbanization of Lagos contribute to the housing deficit. As the most densely populated city in Nigeria, Lagos attracts migrants from rural areas in search of better economic opportunities. This increases the demand for housing, surpassing the rate of construction. Limited land availability within the metropolis further restricts the construction of new affordable housing units.
Land cost is a significant challenge in Lagos, with premium prices and scarcity in desirable areas. The expansion of the city has led to increasingly expensive and scarce land, making it difficult for developers to meet the rising demand. Additionally, inadequate infrastructure, such as roads and water supply, hinders new housing developments and adds to the overall deficit.
To address the housing deficit in Lagos, there is a need for increased investment in affordable housing projects and improved infrastructure. Collaboration between the government, developers, and other stakeholders is crucial to provide accessible housing options for all income levels in Lagos.
Sources:
– Real Estate Developers Association of Nigeria (REDAN)
– Pison Housing Company
– BuyLetLive
– The State of the Real Estate Market in Nigeria report