A report by Knight Frank has revealed that although headline inflation eased in the second half of 2025, residential rents in Lagos continued to rise, with notable increases recorded in some locations compared with H2 2024.

According to the report, presented recently during the H2 2025 edition of the Lagos Market Update, sustained rental growth reflects resilient underlying demand in a market characterised by structurally constrained housing supply. It added that the limited availability of formal residential stock continues to underpin pricing dynamics, maintaining elevated affordability pressures across the market.

“Despite a moderation in headline inflation during the period under review, residential rents across Lagos continued to trend upwards, with significant increases recorded in select locations compared to H2 2024. This sustained rental growth reflects resilient underlying demand within a market characterised by structurally constrained housing supply”, the report stated.

Knight Frank, however, pointed out that, in response, government interventions focused on incremental supply delivery, housing finance, and regulatory reform. It stressed that public-private partnerships with the Lagos State Government facilitated the delivery of approximately 653 residential units during the period under review, while additional schemes remained within the development pipeline.

The group added that policy attention also extended to tenancy regulation, as a proposed reform bill gained legislative traction.

“On the financing front, the launch of the Ministry of Finance Incorporated Real Estate Investment Fund by the Federal Government, offering long-term loans at 9.75 per cent, alongside progress on the Federal Government’s Renewed Hope Housing Programme, with around 2,000 units nearing completion in Ibeju-Lekki, signalled continued public sector efforts to address housing shortages,” it added.

It predicted that, in 2026, rental demand will concentrate on “functional living”, with studio and one-bedroom units in mid-market hubs like Yaba and Surulere seeing the fastest absorption due to their lower entry points.

Knight Frank pointed out that supply will increasingly follow infrastructure milestones, particularly along the Lagos-Calabar Coastal Highway and Epe corridors, where improved connectivity is turning peripheral land into prime residential stock.

The group highlighted that, while rental growth will persist, the market will become more transparent as the Nigerian Tax Act 2025 pushes landlords and tenants toward formal and documented agreements to capture new tax reliefs.

“Lagos residential rents continued rising despite moderated headline inflation. Government delivered 653 residential units through public-private partnerships”, it concluded. (PUNCH)

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