Lagos ranks fourth most expensive African city for renters as income-to-rent ratio hits 70%

Lagos is now the fourth most expensive African city for renting a two-bedroom apartment, according to a report by Fortren & Company. The city trails Abidjan, Cape Town, and Accra, with rents consuming about 70% of income, far above the United Nations affordability benchmark of 30%.

Rental report ranking

The report, titled “What does it really cost to rent in Africa?”, placed Lagos behind Abidjan, Cape Town, and Accra. Other cities listed include Douala, Nairobi, Kigali, Dar es Salaam, Cairo, and Casablanca.

Renting a luxury two-bedroom apartment in upscale Lagos neighbourhoods such as Ikoyi, Banana Island, and Victoria Island costs an average of $19,379, about N26.8 million, annually. Comparable apartments cost significantly more in Abidjan at $41,671, Cape Town at $27,813, and Accra at $26,299.

Why rents are surging

Analysts describe the situation as a rental surge driven by sharp and sustained price increases. Over the past two years, rents have jumped between 50% and 200%, according to Chudi Ubosi, real estate expert and Principal Partner at Ubosi Eleh + Co.

This spike has pushed the income-to-rent ratio to roughly 70%, far above the 30% affordability threshold recommended by the United Nations. The result is mounting financial pressure on households, especially in urban areas where housing demand is highest.

The situation is largely fueled by the high cost of homeownership. Inflation, expensive building materials, and steep borrowing rates have made it difficult for many Nigerians to buy property. As a result, more people are turning to rental housing, intensifying demand and enabling landlords to raise prices beyond what many tenants can comfortably afford.

The report links Lagos’ high rental costs to several factors, including limited land availability, strong demand in prime districts, rising construction expenses, speculative activity, and currency depreciation. It also highlights that many luxury properties are priced in dollars, effectively limiting access to a small segment of the population and keeping prices elevated.

Investment and policy response

While the rental crisis is straining households, it is also creating openings for investors. Analysts note growing potential in build-to-let developments, particularly smaller units like one- and two-bedroom apartments that cater to high demand.

Across major cities, rising rents are pushing residents away from urban centres toward suburban areas where housing is relatively cheaper. Even so, demand pressures are spilling over, with two-bedroom apartments in some outskirts now renting for between N1.5 million and N2.5 million annually.

The Lagos state government plans to introduce monthly and quarterly rent payment options to ease the financial strain on residents. Housing commissioner Moruf Akinderu-Fatai explained that this policy aims to make housing more affordable by providing flexible payment methods. He said a pilot phase for the initiative is currently being developed in consultation with landlords and other stakeholders.

For Nigerian tenants, the report confirms that renting is a financial commitment that demands far more planning than the headline rent suggests. With rents outpacing income and affordability, pressure is mounting on both households and policymakers to find workable solutions.