Why 34,800 New Housing Units Aren't Enough for Lagos’ Growing Demand
Lagos Housing Deficit Persists Amid 34,800-Unit Development Pipeline
Lagos’ residential housing market continues to face a significant supply deficit despite the active development of over 34,800 units across the state. According to the Lagos Real Estate Development Pipeline Report 2025/2026 by Estate Intel, the current housing stock of 1.8 million units remains insufficient to meet the demands of the commercial capital, leaving a deficit exceeding 2.7 million units.
Market Disparity and Luxury Concentration
The report highlights a growing disconnect between market demand and developer focus. While the housing shortage is most acute within the affordable and middle-income segments, developers are increasingly prioritising luxury and deluxe-grade projects. This strategic shift is largely a defensive measure against Nigeria’s volatile macroeconomic climate. By targeting high-end developments often priced in US dollars or indexed to foreign exchange developers seek to mitigate the risks associated with currency depreciation and soaring construction costs.
Major projects currently in the pipeline include the Metropolitan Tower, Peace Tower, Halcyon Court, and Quantum Luxury Towers. These developments are primarily concentrated in prime locations such as Ikoyi, Victoria Island, and Lekki Phase 1, serving upper-income earners and expatriates rather than the broader population.
Escalating Costs and Rental Trends
The concentration of supply in high-value neighbourhoods has led to sharp increases in property values. Estate Intel data reveals that sale prices for three-bedroom apartments in prime areas have surged by 38% to 60% annually over the last five years. While price growth in middle-income corridors like Yaba, Ajah, and Sangotedo has been more moderate, these areas still face significant upward pressure due to infrastructure development and persistent undersupply.
In the rental market, landlords are adjusting rates upward to offset inflation and operational costs. Despite these hikes, net absorption remains high in the middle-income segment, as vacated properties are quickly reoccupied due to the scarcity of available units. Conversely, the luxury segment may face increased vacancy rates in the medium term as new supply begins to outpace the limited pool of high-net-worth tenants.
Policy Implications and Outlook
Estate Intel warns that the current trend of luxury-led development could deepen structural imbalances within the Lagos property market. Although government initiatives, such as the Mortgage Refinancing Fund, aim to improve homeownership access, the report suggests that more coordinated policy intervention is required to incentivise investment in affordable housing.
Despite these structural challenges, the outlook for 2026 remains optimistic. Sustained urbanisation, rapid population growth, and strong demand fundamentals are expected to drive continued momentum in the sector, even as the affordability gap widens for the average Lagosian.
