Lagos’ rental market is entering 2026 with strong demand but widening lines between affordability and investment-grade housing, according to the Lagos Residential Market Report 2025, published by Edala Research.
The report makes it clear that structural housing shortages and regulatory shifts will continue to define both property values and rental outcomes in the coming year.
“If demography is truly destiny, then Lagos State stands as the ultimate manifestation of Nigeria’s future,” the report states, noting that the state absorbs about 6,000 new residents daily, many of whom arrive without formal housing arrangements.
Despite decades of public and private sector interventions, Lagos still faces a housing deficit of about 3.396 million units, a shortfall the report describes as “the primary engine driving the rent spikes” across the city.
Edala Research expects the real estate market in 2026 to be shaped by a combination of infrastructure-led growth and tighter regulatory enforcement. While inflation moderated to 14.45 percent by November 2025, the monetary policy rate remained high at 27 percent, reinforcing a capital-intensive operating environment.
“This high-interest landscape effectively raises the barrier to entry, crowding out speculators and favouring deep-pocketed investors capable of weathering the cost of capital,” the report said.
As a result, capital is increasingly shifting toward physical development rather than service-driven valuation, with construction growth outpacing real estate services.
Major infrastructure projects are expected to reinforce this trend. According to the report, the operationalisation of the Lekki Deep Sea Port and progress on the Green Line rail project are shifting the centre of gravity toward the coastal corridor.
At the same time, regulatory actions—such as pauses on certain coastal approvals and the declaration of several estates as illegal – signal a new era of enforcement.
“In 2026, the premium on title integrity will rival the premium on location,” the report warns.
At the macro level, the report situates real estate within an economy that has shown resilience after GDP rebasing. Nigeria’s GDP grew by 3.98 percent in the third quarter of 2025, but the sectoral breakdown reveals a telling divergence.
Real estate services slowed to 3.50 percent growth, while construction rebounded to 5.57 percent, indicating that capital is shifting away from speculative transactions toward physical development and asset creation
This rotation is expected to define the real estate economy over the coming years, favouring developers with execution capacity over short-term traders.
Read also: Lagos in aggressive push to contain rental market crisis
Rental market in 2025: from affordable to costly
The rental market dynamics of 2025 provide a clear preview of what lies ahead. Edala Research describes the current environment as one where rents have entered a hyper-inflationary regime distinct from the general economy.
While headline inflation eased, average rents in key Lagos nodes surged by over 105 percent, creating what the report terms a “landlord inflation gap” between rental prices and official inflation benchmarks.
At the more affordable end of the market, emerging and peripheral districts continue to act as pressure valves. The Ajah–Sangotedo axis, for instance, has evolved rapidly into a middle-income residential hub. A one-bedroom apartment that rented for about N500,000 in 2020 now averages N2 million.
“This growth demonstrates the area’s increasing popularity,” the report notes, driven by its relative affordability and steady supply of new housing stock.
Planned infrastructure, including the proposed Fourth Mainland Bridge, is identified as a key catalyst for further demand in this corridor.
Mid-market areas such as Yaba, Surulere, Ikeja, Lekki Phase I, and Lekki Peninsula II are experiencing the most intense pressure. Yaba, Lagos’ technology hub, is singled out as an extreme case.
“A studio apartment, averaging just N300,000 in 2020, has surged by 400 percent to hit N1.5 million in 2025,” the report said, attributing the jump to demand from students and young tech professionals.
In Surulere, the report notes that one-bedroom apartments have recorded sharp growth, appreciating by 300 percent, reflecting competition for compact housing close to commercial activity
At the top of the market, affordability is largely irrelevant. Prime districts such as Eko Atlantic City, Banana Island, Ikoyi, and Victoria Island continue to command some of the highest rents in the country.
According to the report, Eko Atlantic continues to command the highest absolute values, with one-bedroom units trading at N400 million and studio apartments at N285 million.
In Banana Island, the report highlights strong, unwavering demand for luxury living, supported by exclusivity, security, and premium infrastructure.
“Between 2020 and 2025, rental values for family-sized homes saw a significant climb. A three-bedroom home that was ₦11 million in 2020 now commands N27.5 million, while a four-bedroom property has risen from N18 million to N30.5 million,” it said.
What drives the divide
Edala Research attributes rising rents to a mix of rapid urbanisation, limited housing supply, escalating construction costs, and landlords’ efforts to hedge against currency volatility.
At the same time, it reported noting emerging signs of resistance. Affordability constraints and longer commute times are beginning to influence tenant decisions, particularly in outer districts where supply is more flexible.