Lagos’ residential housing market remains significantly undersupplied despite more than 34,800 housing units currently under development, according to the Lagos Real Estate Development Pipeline Report 2025/2026 released by Estate Intel.

The report estimates that Lagos has an existing residential housing stock of about 1.8 million units, a figure that falls far below demand in Nigeria’s commercial capital. Estate Intel puts the city’s housing deficit at over 2.7 million units, with the shortage most pronounced in the middle-income and affordable housing segments.

Despite the scale of unmet demand, the report noted that developers are increasingly prioritising luxury and high-end residential projects. This strategy, it said, is largely driven by the need to protect profit margins in a challenging macroeconomic environment characterised by rising construction costs, currency depreciation and limited access to long-term financing.

According to Estate Intel, while the development pipeline of approximately 34,800 units suggests renewed activity in the residential sector, it is still insufficient to bridge the housing gap, particularly for low- and middle-income earners.

The report explained that many developers are favouring luxury and deluxe-grade developments, where pricing is often denominated in US dollars or indexed to foreign currencies. This approach, it said, makes such projects more resilient to inflationary pressures and exchange-rate volatility.

However, the shift toward high-end housing is widening the affordability gap in a city already under pressure from rapid population growth, urbanisation and steady inward migration.

Estate Intel revealed that sale prices for three-bedroom apartments in prime locations such as Ikoyi, Victoria Island, Ikeja and Lekki Phase 1 have risen by between 38 per cent and 60 per cent annually over the past five years. The price increases reflect sustained demand, limited supply and the concentration of new developments in high-value neighbourhoods.

In middle-income areas including Yaba, Ajah, Sangotedo and parts of the Lekki corridor, prices have increased at a more moderate pace. Nonetheless, the report said these locations continue to experience strong upward pressure due to persistent undersupply and their proximity to major infrastructure projects.

The report added that rents for naira-denominated middle-income and deluxe-grade properties are expected to continue rising, as landlords adjust prices to offset the impact of currency depreciation and higher operating costs.

While rising rents have led to increased tenant turnover, Estate Intel noted that most vacated properties are quickly reoccupied, keeping net absorption levels high due to the deep supply gap in the market.

On the luxury end of the market, where rents are largely dollar-denominated, rental prices are expected to remain relatively stable in the near term. However, the report warned that vacancy levels could rise as more high-end units are completed and delivered to the market.

“The supply gap in middle-income and deluxe-grade housing ensures that properties are almost immediately occupied at revised rental levels, despite upward price adjustments,” the report stated.

Featured residential projects in the current development pipeline include Metropolitan Tower, Peace Tower, Halcyon Court and Quantum Luxury Towers. Most of these projects are located in premium locations and are designed to serve upper-income buyers and expatriates.

Estate Intel cautioned that without a stronger policy and investment push toward affordable and mid-market housing, the prevailing development trend could further entrench structural imbalances in Lagos’ housing market.

Although government-backed initiatives such as the Mortgage Refinancing Fund were identified as efforts aimed at easing access to home ownership, the report said more coordinated and sustained policy support would be required to significantly reduce the housing deficit.

Despite the challenges, Estate Intel maintained an optimistic outlook for Lagos’ residential property sector. It cited strong demand fundamentals, continued population growth and rising urbanisation as key drivers that are expected to sustain momentum into 2026.

The firm projected continued rent and price growth, new project starts and declining vacancy rates in well-managed properties, while warning that the luxury housing segment may face softer rental performance in the medium term as supply begins to outpace demand.

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Lagos has kept its crown as Nigeria’s luxury property hub. A new report by Diya Fatimilehin & Co. shows that Eko Atlantic, Old Ikoyi, Banana Island, and Victoria Island remain the country’s most expensive residential areas.

In Ikoyi, a four-bedroom apartment now sells for about ₦1.5 billion, highlighting strong demand in the city’s upscale enclaves.

The report also points to Ogun and Oyo as emerging alternatives. With lower entry costs and better infrastructure, areas such as Alalubosa and Iyaganku GRAs in Ibadan, and Laderin Estate in Abeokuta, are gaining traction. Annual rents in these estates reach up to ₦3 million.

Infrastructure projects are driving this shift. The Lagos Blue and Red Line metro rails, the expanded Lagos–Ibadan Expressway, and the planned Fourth Mainland Bridge and Lekki International Airport are opening new growth corridors.

Beyond Lagos, housing demand is rising in regions like the North-West and South-South. Cities such as Kano, Kaduna, and Sokoto are seeing opportunities from industrial growth and agriculture. Despite security challenges, established districts like Barnawa in Kaduna and Nasarawa GRA in Kano remain resilient.

In the South-South, urban renewal and major road projects are reshaping Uyo, Asaba, Port Harcourt, and Benin City. A 169-room Radisson Hotel nearing completion in Benin highlights renewed investor confidence.

The report concludes that Nigeria’s housing market is evolving. From Lagos’ dominance to new frontiers in emerging cities, urbanisation, reforms, and infrastructure continue to shape where Nigerians live and invest.

Source: Punch

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