Nigeria Emerges As Africa’s Fourth Costliest Rental Market

A recent report titled “Average Rent of 2-Bedroom Apartments Across Africa’s Key Cities” has shed light on rising rental costs across the continent, placing Lagos as the fourth most expensive city for renters.

According to the ranking, Lagos trails behind Abidjan, Cape Town, and Accra, which occupy the first, second, and third positions respectively. Other cities listed in the top 10 include Douala, Nairobi, Kigali, Dar es Salaam, Cairo, and Casablanca.

The report, compiled by Fortren & Company, a real estate research and advisory firm, reveals that renting a luxury two-bedroom apartment in upscale Lagos neighbourhoods such as Ikoyi, Banana Island, and Victoria Island costs an average of $19,379 (N26.8 million) annually.

In comparison, similar apartments command significantly higher rents in Abidjan at $41,671 (N57.7 million), Cape Town at $27,813 (N38.5 million), and Accra at $26,299 (N36.4 million).

Despite Lagos ranking fourth, the city’s rental market remains under intense pressure, with experts describing the situation as a rental boom.

Principal Partner at Ubosi Eleh + Co, Mr Chudi Ubosi, said rental prices have surged dramatically during a recent webinar, stating that rents have increased by 50-200 per cent over the past two years. This has driven the income-to-rent ratio to about 70 per cent, far exceeding the United Nations’ recommended benchmark of 30 per cent.

While the surge in rents is placing significant strain on household incomes and creating broader socio-economic challenges, analysts suggest it also opens opportunities for investors, particularly in build-to-let housing projects focused on one- and two-bedroom units.

The upward trend in rental prices is largely linked to the affordability crisis in the property sales market. High inflation, expensive borrowing, and rising construction costs have made home ownership unattainable for many, pushing more people into the rental market.

As a result, renting has become the dominant option, with landlords capitalising on increased demand. Many tenants now struggle to keep up with payments, while real estate reports indicate that rental transactions have overtaken property sales due to affordability constraints.

Across major urban centres, rent for standard apartments has climbed sharply, forcing many residents to relocate from city centres to the outskirts, where two-bedroom apartments now cost between N1.5 million and N2.5 million annually.

The report further explains that Lagos’ high rental costs are driven by limited land availability, strong demand in prime locations, rising construction costs, speculative investments, and currency depreciation, prompting developers to raise prices as a hedge.

Martin Uche, the firm’s research director, noted that high-end residential properties in areas such as Ikoyi, Victoria Island, and Banana Island are typically priced in dollars, effectively limiting access to a narrow segment of the population while sustaining elevated rental values.

He added that certain ultra-luxury developments in Ikoyi, particularly along the Bourdillon, Alexandra, and Gerrard corridors, can command rents of up to $130,000 annually.

The report also highlights trends in other African cities. Cape Town, for instance, has experienced a steady influx of residents, including South Africans relocating from other regions and foreign nationals drawn by employment opportunities and lifestyle appeal. Since 2014, average rents in the city have risen by 68.5 per cent, partly due to a shortage of long-term rental properties as landlords shift toward more lucrative short-term and tourist accommodations.

In Accra, high rental prices are attributed to concentrated demand in premium districts such as Cantonments, East Legon, and Airport Residential Area. Ghana’s strong economic growth over the past decade has positioned the city as a hub for multinational corporations, diplomatic missions, and non-governmental organisations, all competing for limited high-end housing. Additionally, expatriate housing allowances, often paid in dollars, continue to drive up prices at the top end of the market.

Uche also pointed to structural issues within Africa’s rental systems, describing them as among the most rigid globally. He explained that about half of the continent’s traditional rental market requires a minimum of three months’ rent upfront.

In countries like Nigeria, Ghana, Sierra Leone, and Cameroon, where demand significantly exceeds supply, landlords often demand one to two years’ rent in advance.

This practice is largely driven by a low-trust environment and limited access to reliable credit data, making landlords more cautious.

According to Uche, many property owners rely on upfront payments to secure their income and build capital, further increasing the financial burden on tenants.