Lagos’ residential property market remains deeply undersupplied despite more than 34,800 housing units currently in the development pipeline, according to the Lagos Real Estate Development Pipeline Report 2025/2026 by Estate Intel.
The report estimates that Nigeria’s commercial city has an existing residential stock of about 1.8 million housing units, far below demand in Africa’s most populous city. Estate Intel puts the housing deficit at over 2.7 million units, with the shortfall most severe in the middle-income and affordable housing segments.
Despite the scale of unmet demand, developers are increasingly focusing on luxury and high-end residential projects, a strategy the report says is driven by the need to protect margins in a volatile macroeconomic environment marked by high construction costs, currency depreciation and financing constraints.
“While the pipeline of approximately 34,800 units signals renewed development activity, the existing residential supply still falls significantly short of demand, particularly within the middle-income and affordable segments,” Estate Intel said in the report.
According to the report, many developers are opting for luxury and deluxe-grade developments, where pricing is often denominated in US dollars or linked to foreign currency, making them more resilient to inflation and exchange-rate shocks.
This shift, however, is widening the affordability gap in a city where population growth, urbanisation and inward migration continue to place pressure on housing supply.
Estate Intel noted that sale prices for three-bedroom apartments in prime locations such as Ikoyi, Victoria Island, Ikeja and Lekki Phase 1 have increased by between 38 per cent and 60 per cent annually over the past five years, reflecting sustained demand and limited supply.
Prices in middle-income areas, including Yaba, Ajah, Sangotedo and parts of the Lekki corridor, have risen more moderately but still show strong upward momentum due to undersupply and proximity to major infrastructure projects.
The report said rents in naira-denominated middle-income and deluxe-grade properties are expected to continue rising, as landlords adjust pricing to offset the impact of currency depreciation.
While these increases have led to tenant churn, Estate Intel said properties are typically reoccupied quickly, keeping net absorption high due to the persistent supply gap.
On the luxury end of the market, where rents are largely dollar-denominated, rental prices are expected to remain broadly stable in the near term, although vacancy levels could rise as more high-end units are delivered.
“The supply gap in middle-income and deluxe-grade housing ensures that properties are almost immediately occupied at new rental levels, despite upward price adjustments,” the report read.
Featured residential projects in the pipeline include developments such as Metropolitan Tower, Peace Tower, Halcyon Court and Quantum Luxury Towers, most of which are located in high-value neighbourhoods and cater to upper-income buyers.
Estate Intel warned that without a stronger push toward affordable and mid-market housing, the current development pattern risks reinforcing structural imbalances in Lagos’s housing market.
Government-backed initiatives such as the Mortgage Refinancing Fund were cited as steps aimed at lowering barriers to home ownership, but the report said more coordinated policy support would be required to significantly close the housing gap.
Despite the challenges, Estate Intel maintained a positive outlook for Lagos’s residential sector, citing strong demand fundamentals, population growth and rising urbanisation.
The firm expects the sector’s momentum to extend into 2026, supported by new development starts, continued rent and price growth, and declining vacancy rates in well-managed properties.
However, it cautioned that luxury housing may face softer rental performance in the medium term as supply in that segment increases faster than demand.
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