Nigeria among Africa’s most expensive rental markets as rents surge in major cities

NIGERIA has emerged as one of the most expensive rental markets in Africa, with rents in major cities rising at a rapid pace and putting increasing pressure on household incomes.

A recent report on the average rent of two-bedroom apartments across key African cities ranks Lagos as the fourth most expensive city on the continent. The city trails Abidjan, Cape Town, and Accra, which occupy the top three spots, respectively. Other cities on the list include Douala, Nairobi, Kigali, Dar es Salaam, Cairo, and Casablanca.

According to the report by Fortren & Company, a real estate research and advisory firm, the average annual rent for a luxury two-bedroom apartment in high-end areas of Lagos, such as Ikoyi, Banana Island, and Victoria Island, stands at about $19,379 (N26.8 million).

The sharp rise in rents is largely driven by an affordability crisis in the housing sales market. High inflation, elevated borrowing costs, and soaring construction material prices have made home ownership unattainable for many, forcing more people into the rental market.

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As a result, rental demand now dominates real estate transactions, giving landlords significant pricing power. In many cases, tenants are being squeezed as their incomes struggle to keep up with rising housing costs.

Across major Nigerian cities, rents for standard apartments have also surged, pushing many residents to relocate from city centres to outskirts where two-bedroom apartments now cost between N1 million and N1.5 million annually.

The report attributes high rental costs in Lagos to limited land supply, strong demand in prime locations, rising construction costs, speculative investments, and currency depreciation. In premium areas, many properties are priced in dollars, further restricting access and sustaining elevated rents within a narrow segment of the market.

In some ultra-luxury developments in Ikoyi, annual rents can reach as high as $130,000, highlighting the widening gap between high-end and mass-market housing.

Analysts note that while the rental surge is worsening socio-economic pressures, it also presents opportunities for investors, particularly in the development of smaller, build-to-let apartments targeted at Nigeria’s growing urban population.

Across Africa, structural issues in rental systems are also contributing to high costs. In Nigeria and several other countries, landlords often demand one to two years’ rent upfront, reflecting supply shortages and a lack of trust in tenant credit systems.

Experts say without significant investment in housing supply and reforms in rental practices, affordability pressures in Nigeria’s housing market are likely to persist.

Lagosians ask House of Assembly to outlaw house agents

In Lagos, residents are asking the state House of Assembly to ban the activities of real estate agents to cut the cost of rents and living in Nigeria’s most populous state.

Investopedia, a leading online resource for financial education, defines a real estate agent as “a licensed professional who arranges property transactions, connects buyers and sellers, and represents them in negotiations.” In Lagos, like in other parts of Nigeria, real estate agents – mainly unlicensed – influence the cost of rents as they collude with landlords to exploit residents.

“I was seeking a 2-bedroom flat at Oke-Afa in Lagos. When I saw one at N1 million, the real estate agent asked me to pay N500,000 for ‘agent and agreement,’ which I still do not know what it means till today. I had no option but to pay,” said a tenant, Mr Ugochukwu Nzeribe.

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A resident of Iyana-Ipaja, Ms Bola Hamzat, narrated how house agents influenced her landlord to double her rent within two years. “I parked into my 1-room apartment two years ago at the cost of N300,000. The real estate agent collected N150,000 from me for the so-called ‘agent and agreement fee’ and also took another N50,000 as ‘lawyer’s fee.’ So, I paid a total of N500,000 for 1 room. Early this year, the agent came to me to tell me that the lawyer would call me. I was wondering why the lawyer was going to call me. In the end, it was the landlord who called to tell me that my rent had increased to N650,000. We Lagosians can no longer bear this mess,” he said.

At the Ojo area of Lagos, a reident, Mr Chinedu Ogendi, said the cost of his three-bedroom rent jumped from N900,000 to N1.6 million – nearly 80 percent – in one year, no thanks to real estate agents.

“I used to pay N900,000 for a 3-bedroom flat. Suddenly, a popular house agent here told the landlord that he was a fool to be charging the amount for the flat. That is what he regularly does. One day, the landlord brought a letter to me, asking for a rent of N1.7 million. The letter said I can park out if I wasn’t interested in paying the new rent,” he lamented.

Lagosians say house rents have risen by 50 percent in some areas of Lagos and by over 200 percent to 300 percent in others. In Oke-Afa, Ejigbo and Ikotun area, the cost of renting a 2-bedroom flat has risen from N600,000 to N700,000 to N2 million to N1.5 million in one year. A 3-bedroom flat costs up to N2 million to N2.5 million to rent, from N900,000 to N1.2 million early last year.

In Oshodi, Cele, Gbagada and other parts of the Lagos Mainland, rents have risen by the same pace, depending on whether the house in question is new or old.

Many Lagosians say that despite the high of rents, the conditions in some of the houses are not conducive for living. In many of the houses, water and other basic necessities are hardly available.

“The reality for a graduate in a mid-level job in Lekki or Ikeja means finding a one-bedroom apartment for anywhere between N950,000 to N1.5 million annually. Even then, the conditions are often manageable, with little access to basic amenities like consistent water supply, proper sanitation, or reliable electricity,” an expert in Entrepreneurship and Business Management, Dr Timi Olubiyi, wrote for Business Post on September 5.

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Lagosians say thousands of house agents in the state are neither registered nor monitored, noting that the government has failed in its regulatory duties in the real estate sector.

“The government should tell itself the truth: Real estate agents have taken over the industry and the state – to the detriment of Lagosians. They charge whatever they want even when many of them own no houses. The House of Assembly must summon the courage to outlaw house agents in the state if it is serious with reducing the cost of rents and the cost of living, which have been rising fast in the last 3 years to 4 years,” said Mr Ogendi, quoted earlier.

A lawyer, Mr Ajagba Omale, agreed that the state legislature should ban house agents but was particular about illegal house agents. He said real estate agents have begun playing the role of legal practitioners in Nigeria’s most populous state, urging the government to limit their powers.

“The government should immediately arrest and prosecute unlicensed house agents because the law already outlaws their activities. Those whose job is solely to loiter the streets in search of vacant houses and offices should have no place here,” he said, but was coy on whether all house agents should be banned in the state.

But a resident of Itire area of Lagos, Mr Segun Ademola, said: “We can’t continue to tolerate the house agents in the state. Lagosians are tired of them because they are the main reason why landlords increase rents every two years. They influence the landlords to increase the rents so that they can bring in new tenants when old tenants can’t pay the new rents. So, I am of the opinion that the state House of Assembly should ban them. Lagos State government should ban them,” he noted.