A report by Residential Auctions Company (RAC) has revealed that 60-65 percent of business professionals in Lagos live in rented accommodation due to the high cost of home ownership and the unavailability of suitable mortgage products. The rental market is highly cyclical, like the buying market.
The report, published on globalpropertyguide.com, noted that the Lagos Island market has experienced continuous rises in average asking prices over the last three years, with surging demand for luxury houses, particularly from investors and high-income individuals. The Lagos mainland, on the other hand, exhibited marginally decreasing prices in 2013.
Asking rents have been rising. After a lackluster year in 2011 asking rents in both the Lagos markets bounced back in 2012 with double-digit growths. While asking rents are much higher on the Lagos Island, rental yields are generally higher in the mainland due to the surging prices in the Island market. Yields are moderate at 4.3 percent for the Lagos Mainland and 3.64 percent for the Lagos Island.
According to the RAC report, in 2012, Lagos Island asking rents rose significantly, with rents for a 4-5 bedroom single family unit climbing 28.4 percent to N7,158,333 ($44,201), while the average rent for a 3 bedroom multi-family unit was up 17.7 percent to N6,889,167 ($42,539).
In Ikoyi, the average asking rent on a 3 bedroom apartment rose by 13 percent in 2012, to N10,167,500 ($62,782). The average asking rent on a single family unit was N10,525,000 ($64,989), a rise of 50.4 percent. In Victoria Island, the average asking rent on a 3 bedroom apartment increased by 28.3 percent to N7,700,000 ($47,546) in 2012. But rents on single family units inched up only 4.2 percent. In Lekki Phase 1, the average asking rent on a 3 bedroom apartment rose 9.6 percent in 2012 to N2,800,000 ($17,289). In contrast, average rents on a 4-5 bedroom single family unit were only up 3.9 percent to N4,700,000 ($29,021).
These rent rises were however a rebound. In 2011, Lagos Island rents had plummeted – with single family unit asking rents falling 25.0 percent and multi-family rents falling 8.8 percent.