Have you ever wondered or been involved in a conversation about why properties are so expensive in Lagos, unlike other cities in the country?
What answers did you come up with?
If you have, then you are not alone as the rising cost of property in Lagos has remained a topical issue in Lagos over the years.
What makes this topic even more crucial is the accommodation need of the constantly rising population of residents in the state.
The population of Lagos in 1991 was 5 million, but currently stands at a staggering 23 million.
Below are 6 reasons properties in Lagos remains largely expensive:
Commercial Nature of Lagos
Nigeria has 36 states but Lagos stands out as the city with the most expensive neighborhoods to live in.
A good point in reference is Banana Island in Lagos, which was ranked by wealth and finance magazine, Forbes as being the most expensive neighborhood in Nigeria.
The sheer population of Lagos State and the level of commercial activity it plays host to have fused to form an alliance that has driven up the cost of property in the state.
The transformation of Lagos into a mega city has also seen properties within the state remain expensive with a strong inclination to rise even higher in the future.
Foreign Currency Influx
The Nigerian real estate market has apparently felt the direct impact of money from rich foreigners who buy property in the country. A good chunk of this money comes mostly from rich Asians, Lebanese and Indians.
The acquisition of these properties is usually for both residential and commercial use.
Toyin Street situated in Ikeja in Lagos is a good example of an area with most properties being owned by foreign nationals.
There are several examples of this all around Ikeja, Lekki, and Ikoyi.
On this trend, Lagos has become similar to what many have christened the Pacific Rim ‘gateway cities.’ Such cities include Hong Kong, Singapore, London and Sydney.
The market in these cities is propelled by other things beyond just owner-occupiers. This is not just for new immigrants but investors. These investors include offshore investors.
Lagos is a grand example of how much globalization can affect the local housing market.
Untamed Industry Expansion
As people continue to troop into Lagos, the same has happened to the real estate industry in Lagos.
A typical search on Vconnect for real estate agents in Lagos turns up a total of 13,796 property agents.
A similar search on Businesslist came up with 853 companies in total and of course, there are thousands of others.
What this basically means is that the anomalies, rising cost of property and the expansion the real estate industry are born out of inconsistent regulation and failure of industry stakeholders to raise the bar.
READ ALSO: 7 Most Exorbitant Homes In Nigeria Currently
We believe that one of the ways to guarantee public protection is to have raised the existing standards required to get a license as a real estate agent.
Perceived High Status
Despite not being the capital city of Nigeria, Lagos State has over the years, become synonymous to phrases like ‘expensive urban real estate’ and popularly known as the center of excellence.
Also, be reminded that Lagos State was once the capital city before Abuja became the capital city.
Lagos currently host the headquarters of most top notch businesses and organisations in Nigeria; a fact that drives up the prestige attached to the state and its residents.
The state’s entertainment industry remains one of the largest in Africa with its movie industry, Nollywood remaining one of the biggest in the world.
According to Al Jazeera, Nollywood is the second biggest producer of films in the world and is now priced at $5 billion.
Nollywood makes more films than Hollywood in the U.S, but less than the largest film industry, India’s Bollywood.
These are just a few of the factors that give Lagos a personality that has held and sustained the attention of the rich and powerful over the years.
Supply and Demand
Lots of people, and not many houses.
One of the first lessons in any economics course will explain the connection between supply/demand and price. The supply of houses in the Lagos is constrained, but at the same time demand is extremely high therefore it is no surprise that property prices are high and rising.
READ ALSO: Is the Cost Of Living In Lagos Too High?
Cost of building
Another way of looking at why properties are expensive in Lagos is to consider the of cost of building it.
Whether a particular house or flat is relatively expensive to build depends on a number of factors, such as:
- Location – houses in city center locations are relatively expensive to build.
- Quality and type of materials – luxury or non-luxury finishes, etc
- Design innovation – novel or special features and innovative component materials tend to be costly
- Level of technology – top-end homes are likely to include expensive technological systems
- Labor – Whether skilled or unskilled, labor expenses in Lagos can be relativity costly as opposed to what is obtainable in other states.
From your personal experience, why are properties expensive in Lagos?
Written by: Ayeotan Shola