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Rent, inflation push low-income Nigerians to suburbs

Rent, inflation push low-income Nigerians to suburbs %Post Title

A growing number of low-income tenants are leaving the city centres in Nigeria for the suburbs as house rent and inflation continue to surge, adding to the pain of rising cost of living in the country.

The migration is putting more pressure on the already inadequate infrastructure in these locations, many of which lack good road network, portable water, electricity, and good drainage systems.

In most cities, especially those of Lagos, Abuja and Port Harcourt, some locations that were affordable in terms of rent are no longer so as they have gone out of the reach of low-income renters, hence the move to the suburbs.

Property conversion, which changes the use of many properties from residential to commercial, and the high cost of building materials that are limiting the ability of developers to put more properties on the market have combined to reduce the supply of residential accommodation.

These factors, coupled with rising inflation, are putting pressure on landlords to increase their rents to enable them to pay bills, maintain their houses and respond to the rising cost of living generally.

Over the years, rents normally rise as a result of limited supply and high demand for both residential and commercial properties, while high inflation follows a poor economy, unfriendly economic policy and inadequate employment, which reduces productivity and erodes the earning power of many Nigerians.

According to the latest figures released by the national bureau of statistics (NBS), the yearly inflation rate in Nigeria accelerated to 21.91 percent in February from 21.82 percent in January.

House rent, soaring food prices and weaker currency were some of the main drivers of the further rise in inflation rate.

With many workers living in city centres because of accessibility to companies and government’s offices where they work, urban locations tend to have a higher demand for rented accommodation. Available records show that this has driven up prices in recent times.

Because the cities are centres for higher cost of living, higher property taxes, building materials and utility costs, landlords are finding it difficult to offer affordable rents, more so when the costs of building materials such as cement, reinforcements, finishing and paints, have risen by over 150 per cent in recent years.

For these reasons, young, middle-class professionals, who often live in costly accommodation within highbrow areas such as Ikeja, Ikoyi, Lekki, Victoria Island, Gwarinpa and Asokoro, are rethinking their accommodation needs and settling for the suburbs.

In Lagos, for instance, while these young professionals are leaving places like Surulere, Ilupeju, Gbagada, Festac Town, those in these locations are also moving to places like Okota, Idimu, Ejigbo, Oko-Afa, and in some cases, Ikotun, and Agbara in Ogun State.

BusinessDay findings reveal that in Abuja, many of those living in the city centres of Kubwa, Jabi, Wuse and Utako districts have relocated to nearby states of Niger, Nasarawa and Kogi to find alternative and affordable accommodation for their families, since they can no longer afford the rents in the city centres.

“The interesting thing in all of these is that property developers are taking advantage of the situation by acquiring large expanses of land and launching new housing schemes in these suburbs such as Arepo, lkorodu, Mowe, Ibafo, Abule Egba, Agbara and Lafuwape in Ogun State, Kubwa, Karo in Abuja and other such locations,” Yemi Madamidola, an estate manager, told BusinessDay.

According to him, suburbs are generally cheaper alternatives to cities as rents within the cities rise faster. “Average rent per square metre in the suburbs is about 30 percent cheaper than in urban areas. These cheaper living options are part of the reasons many Nigerians are moving to the outskirts,” he said.

Talking in terms of rents, vendors say that in Abuja city centres, two-bedroom ranges from N2 million to N3 million, if the building is in a good state, whereas in places such as Karu and Kubwa and neighbourhoods of Niger, rents range from N600 to N1 million per year.

Findings revealed that the median cost of renting a two-bedroom apartment in the city areas has hit a new high of N850,000-N1 million per year, while a well-furnished one-bedroom apartment can go for as high as N500,000 or N600,000 per year.

A two-bedroom flat, which is often in high demand in the outskirts, now costs between N400,000 and N650 000 per year for a moderately furnished apartment.

These costs explain why both low- and mid-income earners find it convenient to settle for these areas.

According to Adebayo Ojo, who was living in Oke Afa but has relocated to the Ijanikin area of Lagos, that move has saved him and his family about 40 percent of what they used to pay as rent.

“The cost for my two-bedroom apartment in my previous location was N650,000, but in my new location, the same size of accommodation costs about N350,000 per year,” he said.

Madamidola confirmed that there is a surge in movement to the suburbs as many Nigerians have discovered that it is cheaper to have good accommodation outside the city’s metropolis. (BusinessDay)

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