- September 10, 2021
- Posted by: admin
- Category: Real Estate
- Rent rise by over 50 per cent in major locations
Rental homes are getting more expensive in Southwestern cities as professionals and young families struggle to pay exorbitant rents demanded by landlords.The shortage in affordable homes has been the driver for high demand, leaving those that need homes at the mercy of landlords.
Many professionals struggle with high cost of living close to their offices, except high-income earners who could afford expensive rents in city centres. While most families still earn the same salary before and after the peak of the COVID-19 pandemic, the cost of living keeps skyrocketing.
With the existing payment structure, which allows landlords to collect rent up to 12 months in advance or sometimes two years, the ability of prospective tenants to pay is hindered by inflationary trends, which impact the cost of living.
Rent control has not been effective in Nigeria as market forces determine the real estate market and the private sector leading the drive for housing delivery. Thus, market forces such as demand and supply rule the market.
In Lagos, locations such as Ikeja Government Reserved Areas (GRA) and its surroundings like Maryland, Mende and Shonibare estates remain the most expensive on the mainland with rentals for three bedrooms starting from N1.9 million to over N4 million. Four bedrooms start from N3 million. Before now, landlords charged between N1 million and N1.2 million for a 2-bedroom apartment.
Rent in downtown Lagos is also increasing as the area welcomes more development projects like the ongoing Dangote Refinery, Lagos Free Trade Zone, 4th Mainland Bridge and new cities like Alaro City, which are expected to come on stream. Rentals for a three-bedroom flat in specific locations such as Southwest Ikoyi, Victoria Island and Banana Island, start from N3 million.
Banana Island still commands the highest rental values across all property categories and maintains its status as the most expensive location in Nigeria. As the cost of rent continues to soar, people living in highbrow areas are forced to relocate to Arepo, Magboro, Sango Ota, Mowe, and other sub-urban parts of the state.
A Lagos-based estate surveyor and valuer, Mr. Richard Olodo who confirmed the development stressed that in most cases there has been about 10 to 50 per cent increase.
Although, he said where some are increasing, others are bringing down rent depending on locations.
Olodo said: “If you talk about Ikoyi now, some are reducing rent so that the property will not be unoccupied. But in other areas where rents were minimal like lkeja, Maryland, Surulere, where you have people from Island coming to compete with them because they couldn’t afford rent on the Island, it is going up. I think it is general to see an increase in rentals in the Mainland. Presently, those on the lsland are being given rebates to keep them and the house occupied and if you don’t give them a rebate, there is no way you can keep them. “
He said the situation might continue as more residential development come up in these neighbourhoods.
The Chairman, Nigerian Institution of Estate Surveyors and Valuers (NIESV), Ekiti State chapter, Dr. Sunday Olajide said rent in the state especially in Ado, the state capital, is always increasing, with about 80 to 100 per cent recently, without corresponding facilities to support the increase. He said this was triggered by the fact that everybody wants to live in the capital city.
He said the problem seems compounded, as the government hasn’t demonstrated a strong interest in developing estates for the civil servants and the general public.
Olajide said: “l know of places where tenants paid N100, 000 before, now they pay between N180, 000 to N200, 000. Those who could not afford to pay rent as a result of the impact of COVID-19 and high inflation have had to relocate to their village to farm. Also, many houses are vacant because of COVID-19.”
“Governments in Nigeria are only interested in how to collect tax from residential properties. Even if you go to government estates, the roads are not there; waste disposal is at its lowest, primary healthcare is zero. That is why the little housing that the private sector can build, it is not possible for the government to exercise power over them regarding the high rent. The landlord will ask them, how many have you built?. “
He added: “The rent in an estate starts from N700, 000 to N1 million for a duplex. In medium-density locations, four bedrooms start from N 400, 000. Sometimes it is difficult to increase rent in the state due to the nature of residents, with a good number of them who are civil servants and it is not also easy to increase rents because of the housing poverty in the state.”
The immediate past chairman of NIESV, Ogun State, Salimon Shobanjo said an increase in rent is a function of demand and supply, which dictates price. He said with the sharp increase in prices of building materials, one should expect a rent increase in rent.
“Since the economy went into recession, it hasn’t been easy for tenants to meet their rent obligations. We have a lot of properties that are not tenanted because people can’t afford rent. Currently, rents depend on location and design. In highbrow areas like Abeokuta GRA and others, a duplex could go as high as N2.5 million yearly. A two bedroom apartment could go as higher as N750, 000 yearly depending on the finishing.”
He noted that since housing is a product of so many things, land must be accessible, cost of documentation and planning should be affordable while finance should be available and reasonable especially, mortgage for homes.
“The prices of building materials such as cement has risen by over 100 per cent in recent times and now is about N4, 000.The same thing with iron rods, and our local sand. Then you talk about the cost of expertise. Only very few artisans have the required expertise, it should not surprise you to know that we go as far as Benin to look for tillers, to get a good plumber and electrician is also a problem”, he said.
Also speaking, the publicity secretary, Oyo State branch of NIESV, Fisayo Alo explained that in some areas in Ibadan where apartment rents used to be N1 million, there has been an increase to about N1.5 million.
Alo said: “The cost of construction is high, even to acquire land is not easy and the construction industry is capital intensive.
Despite this rise in rent, I still pity developers because recouping capital expended on housing is not easy. Prices in some suburbs of Ibadan are even increasing. However, everybody wants to live in a secure location, not minding the high rent. The supply is limited but demand keeps increasing.”
Source: The Guardian (6/9/2021)