High demand for safe locations push up rental values in Northern states by 60%
Rental prices across the Northern states of Nigeria have soared over the last year, with some major cities experiencing average price hikes of up to 60 per cent. The situation has forced many home seekers to move to other locations or pay more from their limited income to remain in their present locations.
The Northern part of the country has been battling insecurity, a high rate of joblessness, illiteracy, early/child marriage and maternal mortality.
The massive jump in house rent, industry experts attribute to an increase in the prices of building materials, especially essential components such as cement, iron rods, sanitary wares, roofing sheets and paints, which were impacted by the nation’s inflationary trends.
Besides, the urban inflation rate increased to 16.17 per cent year-on-year in January 2022 from 17.03 per cent recorded in January 2021, while the rural inflation rate increased to 15.06 per cent in January 2022 from 15.92 per cent in January 2021.
The nation’s inflation rate climbed to 15.92 per cent in March 2022, from 15.70 per cent in the prior month, making it the fastest rise in consumer prices since last October.
The exchange rate, crude oil prices, energy cost, local taxes and charges, high running costs, high prices of raw materials, cost of transportation and high cost of labour have impacted the price increase of building materials.
Cement, which is a key component of the building construction, has remained high after retail prices increased from N2, 700 to N4, 500 depending on the location. The development has triggered a ripple effect in the open market, with prices of sandcrete blocks ranging from N350 and N400 for a six-inch and nine-inch block respectively.
Regrettably, the soaring cost has wiped out any wage gains experienced by low-income residents, as prices were already far outpacing the earning power of the people.
Nigeria is in want of estimated 20 million housing units but the soaring demand is compounded by dwindling supply. While the mass movement of people to more secured locations and activities of some non-governmental agency is impacting rent adversely, the high cost of construction materials have forced landlords and some property owners to consider an upward review of rentals.
For instance, in Kano, Adamawa, Taraba, Borno, Bauchi, Gombe, Kaduna and others, a two-bedroom apartment is as high as N800, 000 and a three-bedroom flat goes for N1.5 million, while a five-bedroom duplex that was previously within the range of N2.5 million now N2.7 million are rented for N4 million in some locations.
The Chairman, NIESV Bauchi/Gombe States, Jambil Suyudi Zubairu told The Guardian that there had been an upsurge in rent in the areas from 2020 to date, especially for two-bedroom and three-bedroom apartments.
However, he said in Bauchi and Gombe States, the climb in rent has been alarming, while in others, the increase in rental values was obvious.
Zubairu said: “There was an increase in rental values of two and three-bedroom apartments due to high demand for these classes of property. But on a one-bedroom apartment, a room and self-contained are in the market, if you find them, room and parlour with kitchen and toilet, they are rented at N200, 000, whereas it should not be more than N80, 000 or at most N100, 000. What brought about the high demand for two-bedroom is because of the increase in the number of young people and newly married couples.
“In a place like the Government Reserved Area (GRA) and new GRA in Bauchi, where you have newer apartments that are well-finished with tiles and Plaster of Paris (POP), price is as high as N750, 000 to N800, 000 for two-bedroom yearly. Three-bedroom in the same location is within the range of an N1million to N1.2 million. In some cases, you will pay N1million as an agency fee.
“In some mini-estate, you will still pay the service charge and in the end, you may end up paying N1.2 or N1.5 million. The case of Gombe is not as high as that of Bauchi. Two-bedroom in Gombe is within N600, 000 to N700, 000 in good locations, three-bedroom is between N800, 000 and N1 million.”
While in other areas like Sabon Kaura with old buildings, two-bedroom flats are rented out at N300, 000 or N400, 000, but the services and the kind of construction/finishing in such types of buildings are below standard and there are no good access roads. This, he said, affects rental values.
Zubairu, who is also a member of the national council of the institution, said some operators in the areas are thinking of an upward review of their service charges in the next rental term.
“There is also high demand for housing, shortage supply of those kinds of apartments, good location, finishing, cost of maintenance and building materials are outrageous. What we used to buy at N1, 000 last year is about N2, 000 now. The prices for plumbing materials have also doubled. The migration of people from Borno, Yobe and other parts of the North East has really affected the supply of real estate stock in Bauchi, demand has increased and price also increased,” he said.
According to the Chairman, NIESV, Kano State chapter, Abdulaziz Abdullateef, the real estate sector is critical to the economy, adding that when inflation affects the economy, the sector will not be exempted, as there will be an increase in prices and value of the real estate as well.
He observed that because of security in certain locations for non-indigenes, “there is high demand for housing and this had forced prices to increase.
“You don’t sell below what it costs to produce goods. It is not usual that rents in the region have been climbing up. Mostly, luxurious buildings, residential and even commercial have been affected.
“In GRA (Nassarawa and Bompai GRA) locations in Kano, we have seen like 40 per cent increase in rent across various types of properties. For three bedrooms around this time last year, it was N2million but now is about an N3million. It is only in areas like Sabon Gari, No-man’s-land, Ashton Road and Jaba that you don’t see an increase.
“A two-bedroom can be rented out at N300, 000 but within the same compound, the main building because it is new and with fancy finishing can go for N500, 000. A five-bedroom duplex as of January 2021 was N2.5million yearly but rent in some locations commands about N4 million per year. Areas with a high sense of security, which are also closer to military formations command high rent,” he said.
The chairman of, NIESV Adamawa/Taraba branch, Idowu Oyeyemi, said with the insurgent activity in the area, there has been increasing in the number of staff of local and international humanitarian organisations providing relief for victims of Boko Haram insurgency.
He noted that property owners and landlords in the city prefer to have humanitarian organisations as tenants instead of locals because of the high rent being charged. He attributed the increase in rent in some of the locations to the development as well as the rising cost of living and building materials.
“Some of the bungalows can be rented out as much as N5 million per year in Yola. They use it as residentials and offices. Before two-bedroom is not more than N250, 000 but in new locations that are not even popular, such apartment is let out at N600, 000. Like in Karewa, hardly can you get a two-bedroom at N500, 000. There have been about 100 per cent increase in rent in recent times,” Oyeyemi said.