The Aftermath of High Construction Costs on Rents

In real estate parlance, construction cost is the total cost of developing a house. Real estate practitioners call it the cost of construction. Usually, the Quantity Surveyors are the ones saddled with the professional responsibility to determine the number of units or components needed to develop a property from scratch, to achieve this, they do market surveys where the current prices of building materials are known, this forms part of their data for summarizing amount for building a structure from foundation level to the superstructure.

The report quantity surveyors eventually submit to a potential developer is known as the Bill of Quantity. At the end of the day, it is the amount used to complete a house, finishing included, that is factored in determining the pay-back period and potential yield which is basically for the owners’ information.

Rents paid on new properties are based on the current full rental value or rent passing on similar properties also known as comparable which is stirred by the forces of demand and supply, where people’s preferences influence the types of properties they go for. Irrespective of the type of accommodation developed, inflation which is the main cause of sudden increments in construction costs plays a major role in the rental value of properties.

Due to the high cost of building materials such as cement, blocks, paints, reinforcing, sanitary fittings, sand, roofing sheets, tiles, and granites, major cities in Nigeria saw a substantial increase in rent between 2020 and 2023. The primary cities impacted by this increase are Port Harcourt, Lagos, Abuja, and Enugu, in that order.

In this article, the rents commanded by properties in Lagos, Abuja, Enugu, Port Harcourt and Kano are itemized. This will also show the gaps or differences between the previous rents and current rents in some selected locations in the major cities under review.

CityLocationAccommodationPrevious rentCurrent rent
LagosAgidingbiOne bedroom flatN400,000.00N600,000.00
 Ogba3bedroom flatN800,000.00N1,300,000.00
 Lekki phase 11bedroom flatN800,000.00N1,500,000.00
 Lekki phase 21bedroom flatN2,000,000.00N3,000,000.00
 Lekki phase 23bedroom flatN4,000,000.00N6,000,000.00
 Lekki phase 13bedroom flatN7,000,000.00N8,000,000.00
Port-HarcourtRumuokwuta1bedroom flatN900,000.00N1,500,000.00
 Rumuokwuta2bedroom flatN2,000,000.00N2,500,000.00
 GRA, Phase 12bedroom flatN700,000.00N1,500,000.00
 GRA, Phase 13bedroom flatN2,500,000.00N4,500,000.00
AbujaWUSE3/4bedroom terrace houseN4,000,000.00N6,000,000.00
 Maitama4/5bedroom terrace houseN10,000,000.00N25,000,000.00
 Maitama4/5bedroom terrace houseN15,000,000.00N30,000,000.00
 Ambassadorial4/5bedroom detached houseN25,000,000.00N40,000,000.00
 Ambassadorial4/5bedroom detached houseN30,000,000.00N70,000,000.00
EnuguNew HavenSelf-contained apartmentN150,000.00N250,000.00
  1bedroom flatN300,000.00N500,000.00
  2bedroom flatN500,000.00N700,000.00
  3bedroom flatN600,000.00N900,000.00
  3bedroom bungalowN800,000.00N1,200,000.00

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