Lagos rents have risen by as much as 120 per cent in two years, far outpacing wage growth of between seven and nine per cent, as the state’s housing market faces an estimated annual capital shortfall of about N6 trillion, a new report by GTI Investment Group has revealed.
The
report, “Beyond Rent: Mapping Lagos’ Housing-Led Capital Expansion”,
produced by GTI Group, was presented at a forum themed “Housing, Capital and
the Future of Lagos” held in Lagos.
Presenting
the report, Head of Research and Strategy, GTI Group, Abiodun Ogunniyi, said
the estimated annual housing capital gap was about three times Lagos State’s
N2.337 trillion 2026 capital budget.
The
report, based on more than 3,200 rental listings across 15 zones, said Lagos’
property price-to-income ratio had risen to 19.2 times, above Cairo’s 18.4,
Nairobi’s 11.5, Cape Town’s 5.4 and Durban’s 4.2.
GTI
said a ratio above five was generally considered severely unaffordable, adding
that more than 70 per cent of Lagos households were effectively priced out of
home ownership. The report attributed much of the increase in property prices
to infrastructure and location premiums, rather than income growth.
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Delivering
the keynote address, Director of the Centre for Housing and Sustainable
Development, University of Lagos, Prof. Timothy Nubi, said Nigeria’s housing
challenge was largely a capital problem rather than a shortage of buildings.
“We do
not have a housing crisis; we have a capital architecture problem. Design
the system and the city will build itself,” Nubi said.
He
said real estate contributed only about 0.5 per cent to Nigeria’s Gross
Domestic Product, compared with between 18 and 20 per cent in the United States
and United Kingdom.
Nubi
also pointed to the country’s pension industry, whose assets have exceeded N31
trillion, as a largely untapped source of housing finance.
According
to the GTI report, regulators allow up to 30 per cent of pension assets to be
invested in instruments such as Real Estate Investment Trusts (REITs),
mortgages and asset-backed securities, but actual exposure to real estate is
about five per cent.
Nubi
illustrated the affordability challenge with the case of a 46-year-old
University of Lagos lecturer with 10 years of service who was offered a
two-bedroom apartment in Badagry for N28 million despite earning less than
N250,000 monthly.
He
warned that rising demand would put further pressure on the housing market as
Lagos’ population is projected to increase from about 20 million to 40 million
over the next 25 years. He called for reforms in land administration, mortgage
financing and infrastructure delivery to address the problem.
The
Permanent Secretary, Lagos State Ministry of Housing, Abdulhafiz Toriola, said
government could not meet the state’s housing needs alone and called for
greater private sector participation.
Toriola
said government needed to provide land and infrastructure, streamline approvals
and introduce investment incentives to attract more private capital into
housing. He said the Lagos State Real Estate Regulatory Authority had
helped improve the investment environment but stressed the need for faster land
title processing and stronger public-private partnerships.
GTI
proposed a four-part capital reform framework involving micro-title
regularisation, an infrastructure value capture authority, land equity trusts
and a rental-equity REIT.
The
report estimated that the proposed measures could close between 45 and 65 per
cent of the housing funding gap. It also identified 10 entry points for retail
investors, including cooperative societies and NGX-listed REITs, with some
requiring an initial investment of as little as N5,000.
The
forum brought together developers, investors, regulators and financial
institutions, with speakers stressing the need to improve access to long-term
capital if Lagos is to bridge its growing housing affordability gap.
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