Anyone who has tried to find a rental apartment in Lagos knows the heartbreak. The outrageous rents, the waiting lists, the hopes of finding a decent place at a decent price, only to discover it’s an uninhabitable and indecent dump. The contributory factor in this regard could either be the popularity or otherwise the eliteness of the desired neighborhood, habitation or even over-hype. Yes. Factors can be as crazy as an over-hyped neighborhood only to move in to the rental apartment to find how bad it is.
Focusing on surging rental price; there’s no question that it’s a landlord’s market. There’s big money to be made if you have an apartment to rent out — and yet Lagos seems strangely reluctant to meet the skyrocketing demand by building more buyable apartment buildings. On the individual side, people seem more reluctant to instead build themselves a befitting house or better yet, buy one.
Come to think of it, the fact is that, only a tiny percentage of residential properties being built in Lagos are designed as befitting rental buildings. The rest are either offices, warehouses, shops and malls. Luckily the competition is a the option to altogether buy the house on presale bases or otherwise.
The reason, understandably might be, Lagos has one of the hottest quick-money property markets in the country, and when developers have the choice between making their investment back almost instantly through shop or office rentals and warehouse presales — versus a slow trickle of rental income over decades — they will almost always choose to build quick-money cashback property.
Surge in rental is because buildings designed as rentals take longer to bring developers any income; in most cases, it can be years until the building is ready for rent-paying tenants. It is quite clear that fast money is the reason Lagos developers prefer presaleble to rentals. It is Keith Reading that puts it correctly saying: “If you’re looking at this as an investor, you can get a return now rather than waiting two years. A lot of investors like condos, because they can get in, make their money, and get out quickly, rather than waiting,”. “It’s lucrative, and I don’t see it changing any time soon.” He continues; Making things worse for renters, the handful of rental buildings which are being built aren’t exactly budget-friendly, either.
Part of the problem is that the presalable market is hotter in lagos than most other places. In other cities where complete sales are slowing, developers are more likely to consider building for rental purpose rentals.
Another factor pushing demand for buyable housing property is that people who built them never had the intention of staying in them.
Dent even thinks “A lot of people are using them as a speculative investment. They’ll buy them and then flip them a couple of years later. Sometimes they don’t even rent them out to tenants. It’s easier to just keep them empty,”
Stop Feeding monstrous rentals and buy that house now
the lack of new housing — especially of the affordable variety — is becoming a crisis is why people still want to swim in the pull of the surging apartment rentals in Lagos. Now, Because there are so few rental buildings, they get really expensive, especially in popular neighborhoods. And for investors looking for a longer-term investment, that’s an income stream.
Final note: It’s harder to ignore the fact that by renting you’re literally throwing away tens of thousands a year. So is it better to keep paying the outrageously high price to rent in Lagos or should you use those same funds towards your very own home instead? The truth is, there’s no right or wrong answer — it really depends on the individual.