Short-Term Rentals and Studio Apartments Reshape the Housing Market – Report

A 2025 report by Knight Frank indicates that short-term rentals and studio apartments are reshaping Nigeria’s housing landscape, driven by rising demand for compact, flexible living options in urban centres.

The report noted that in a bid to accelerate housing delivery, the Lagos State Government is leveraging public-private partnerships across multiple levels, ranging from enabling private developers to jointly delivering specific housing projects. This approach spans new town developments such as the Ikoyi–Ibeju corridor, neighbourhood initiatives, and estate-level schemes, including Megamound’s 378-unit development and LBIC’s 64-unit maisonettes. It added that another PPP-based housing project has recently been launched in the Ibeju-Lekki corridor.

Despite these interventions, the housing deficit remains wide, increasing pressure on tenants to explore alternative living arrangements. Rising rental demands by landlords have led to more rent defaults, prompting many residents to seek more affordable accommodation. As a result, there has been a growing shift toward suburban and developing areas such as Ikorodu and Ibeju-Lekki, where rental costs are significantly lower than in prime urban locations. This movement reflects a change in tenant priorities, with affordability increasingly taking precedence over proximity to city centres.

The report highlighted that short lets and studio apartments are playing an increasingly important role in the Lagos property market. Demand for these housing types has been fuelled by the expansion of hybrid and remote work, allowing young professionals greater flexibility in choosing lower-cost accommodation. In addition, increased local and international tourism has boosted demand for short-term rental properties, further strengthening their presence in the residential market.

Beyond housing, the report observed that Lagos’s retail real estate sector is adjusting to economic pressures and reduced consumer purchasing power by aligning more closely with changing shopping habits. Consumers are increasingly favouring convenience and proximity, driving demand for smaller, neighbourhood-based retail outlets rather than large regional malls. This shift has created opportunities for agile local retailers, who are outperforming international brands in meeting hyper-local needs. Examples include Bokku! Mart, which expanded from its launch in 2022 to nearly 150 outlets across Lagos, alongside similar growth by brands such as Addide and Primemart.

On the office market, the report noted signs of recovery following several challenging years. Occupancy levels in Grade A office buildings have risen from 65 per cent to 73 per cent, indicating stronger absorption of premium office space. However, average rents for Grade A offices in Ikoyi declined by 3.5 per cent year-on-year, falling from $57 to $55 per square metre per month, highlighting a tenant-favourable market where landlords prioritise occupancy over rent increases.

Office activity is also gaining momentum in key commercial hubs such as Eko Atlantic City, supported by modern infrastructure, reliable utilities, advanced telecommunications, and a live-work-play design concept. These advantages have attracted major corporate tenants, with MTN Nigeria and First Bank relocating their headquarters to the area. MTN has secured a large parcel of land, while First Bank has commenced construction of its planned 43-storey headquarters. The presence of the United States Embassy’s diplomatic facility in the city is also contributing to its growing commercial profile.

Meanwhile, the wider office market continues to evolve as landlords respond to oversupply and shifting demand. Strategies include converting vacant office buildings into residential, retail, or hospitality uses, as well as developing mixed-use projects that integrate offices with amenities such as shops, gyms, and leisure spaces. This model allows developers to diversify income sources while meeting the growing preference for integrated work-life environments.