Lagos Developers Favor Home Sales Over Rentals Amid Demand

Property developers in Lagos are increasingly choosing to sell completed homes rather than retain them as rental properties, despite a strong demand for rentals. A report by Fortren & Company attributes this trend to high financing costs, rising construction expenses, and the need for quick investment recovery.

Lagos faces a housing deficit of 3.3 million units, yet the preference for selling reflects financial pressures on developers. Selling completed homes allows for quicker capital recovery, enabling reinvestment into new projects.

The report details average land prices from 2022 to 2026, with costs per square metre reaching N2.8 million in Ikoyi and N2.63 million on Victoria Island. Additionally, rising building material costs and operational risks associated with retaining properties contribute to this trend.

While many Lagos residents cannot afford to buy homes, only about 31% are homeowners, developers are compelled to target buyers with higher purchasing power, further complicating the housing market dynamics.