A 2025 report by Knight Frank has revealed that short lets and studio apartments are transforming Nigeria’s housing market, catering for rising demand for compact, flexible urban living.
According to the report, to rapidly boost housing supply, Lagos State is deploying public-private partnerships across a governance spectrum, from enabling private developers to co-delivering targeted projects.
It stated, “This multi-scalar approach spans new towns (e.g the Ikoyi-Ibeju corridor), neighbourhoods, and estate-level interventions like Megamound’s 378-unit complex and LBIC’s 64-unit maisonettes, blending direct partnership with ecosystem cultivation. Additionally, the Lagos State Government recently launched the construction of another PPP-based housing scheme in the Ibeju-Lekki Corridor.
“Despite these efforts, the housing gap remains significant, increasing the need for alternative solutions for tenants. Soaring rental demands from landlords have led to a surge in rent defaults, pushing tenants to seek more affordable housing options. This trend has resulted in a noticeable migration towards suburban and developing areas like Ikorodu and Ibeju-Lekki, where rental rates are considerably lower than in urban centres. This shift underscores a strategic adjustment in tenant priorities, with affordability now outweighing the traditional locational advantages of urban living.
“Short lets and studio apartments are increasingly transforming the Lagos property market.
The growing demand for these options can be attributed to several factors. The rise of hybrid and remote work models has enabled young individuals to opt for more affordable housing solutions, leveraging these types of properties to manage housing costs. Furthermore, the influx of both local and international tourists into the country has significantly contributed to the increased demand for short-let apartments. These combined factors have elevated the prominence of short-term rentals within the Lagos residential market.”
According to the report, amidst a difficult economic climate and reduced purchasing power, Lagos’s retail real estate market is finding stability and targeted growth by reshaping itself around evolving consumer preferences.
It added, “Shoppers are increasingly prioritising convenience and proximity, fuelling demand for smaller, hyper-local shopping destinations rather than large regional malls. The shift has opened a crucial opportunity. Agile local players are now thriving in this space, outpacing international brands in meeting hyper-local needs. For example, Bokku! Mart, launched in September 2022, grew to over 70 branches within its first 18 months and now operates close to 150 outlets across Lagos, alongside peers like Addide and Primemart, whose small-format stores thrive where larger chains have retrenched.”
Addressing the office market, the report noted that it was showing resilience after a few challenging years.
It stated, “Occupancy rates in Grade A properties have climbed from 65 per cent to 73 per cent, showing a significant increase in the absorption of these premium office spaces. However, despite this rise in occupancy, average rental rates for Grade A office spaces in Ikoyi dropped by 3.5 per cent year-on-year, decreasing from $57 to $55 per square metre per month. This clearly indicates a tenant-led market, where landlords favour higher occupancy over rent hikes. Office activity has also picked up in key hubs. For example, Eko-Atlantic City is experiencing a significant surge in commercial activity, driven by its modern infrastructure. This includes excellent road networks, top-notch telecommunication facilities, reliable electricity and gas infrastructure, and a sustainable design that promotes a live-work-play ecosystem. These features have attracted leading businesses to establish their offices in the city.
“In particular, MTN Nigeria and First Bank are relocating their headquarters to the city. MTN has already acquired a large plot of land, while First Bank has broken ground on its proposed 43-storey headquarters. This follows the recent establishment of the United States Embassy’s diplomatic facility in the city. These developments are set to transform the corporate landscape of the prime office market.
“On the other hand, a continuing trend in the broader office market is witnessing landlords adopting innovative strategies to address the oversupply and sustained demand for office spaces. This includes repurposing vacant office buildings into residential, retail, or hospitality uses. Furthermore, developers introducing new office projects are increasingly exploring mixed-use development styles. These offer experiential spaces by incorporating amenities such as retail shops, gyms, and bars. This approach helps developers diversify their income streams while catering to the growing preference for integrated work-life environments.”
