In 2020, the home-rental service nearly met its demise. As COVID-19 restrictions took tourists off the road, bookings for short-let apartments dropped sharply. Not surprisingly, Airbnb, the most popular rental marketplace, took the hardest blow. That year alone, the American company lost $4.6 billion dollars, leading it to lay off nearly 2000 of its employees and cut down on advertising expenses.
Yet, like Airbnb, home-rental service resurfaced from the pandemic with great bouncebackability. In Nigeria, short-term rentals have seen explosive growth, driven largely by platforms like Airbnb. In the five years leading to 2022, for instance, listings in Lagos alone rose by more than 40%.
This growth spurt is not exclusive to Nigeria’s commercial capital only. Cities like Abuja, Port Harcourt and Ibadan have kept pace with short-term rentals, making Nigeria one of the fastest-growing markets for Airbnb in Africa.
Short-term rentals continue to thrive amidst Nigeria’s housing shortages. Several factors explain the reason for this surge.
Start with the shift in work culture. The global shift towards remote work has given rise to digital nomads, who value the flexibility and work-friendly amenities. For many, short-let apartments are a better fit than hotels, offering dedicated workspaces, local neighbourhoods, and kitchen facilities that approximate the feeling of being at home.
There’s also a growing number of Nigerians returning home for short visits. Seasonal influxes of foreign-based Nigerians and tourists for detty December celebrations have fuelled demand for short-let accommodations.
Between mid-November and December last year, around 550,000 inbound travellers—most of whom travelled for leisure—arrived at the Lagos Airport. Seeking flexibility and convenience, many of these visitors turn to Airbnb apartments rather than pricey hotels during their stay, much to the delight of property owners.
In truth this boom has triggered a spate of new properties such as serviced apartments and condominiums in prime urban areas.
A new shift can be seen in the growing number of property owners turning their properties into short-term rentals in a bid to maximise profits on their assets.
Compared with traditional leases, Airbnb allows property owners to cash in on the higher margins from short-term rentals. For a country notorious for its frequent power outages, these apartments come furnished with a consistent power supply and modern amenities to cater to their guests.
But for all its progress, the rise of short-term rentals in Nigeria presents some hurdles. For one, it puts a strain on the country’s housing market. As demand grows, rents for long-term housing options follow in this trend, rising over the roof and worsening the national housing crisis.
Also, the absence of a national framework regarding short-term rentals raises concerns about security and safety standards. To buck this trend, the Lagos State government is looking to enforce regulations on tax obligations and customer verification processes.
While the home-rental market continues to expand in Nigeria, the surge in new listings on platforms like Airbnb points at a market that’s increasingly becoming saturated, slashing income for property owners.
In sought-after locations like Lagos and Abuja, there’s a glut of short-let units with less demand. The short-term rental market may seem like a gold rush, but it’s not exactly fast money, as new investors can attest.
In 2020, Airbnb, a leading home-rental service, experienced a significant downturn due to COVID-19, losing $4.6 billion and laying off a substantial number of employees. However, by 2022, the industry, particularly in Nigeria, witnessed rapid growth. Short-term rentals in cities like Lagos, Abuja, Port Harcourt, and Ibadan soared, driven by the rise in remote work and digital nomadism, which favor accommodations that offer flexibility and home-like amenities over traditional hotels. An influx of Nigerians returning for short visits and celebrations further fueled this demand.
This boom has led to the development of new properties like serviced apartments and a shift in property owners opting for short-term rentals to maximize profits, often providing consistent power supply and modern amenities—key for a country with frequent outages. However, this growth raises issues; it exacerbates Nigeria's housing crisis by pushing up rents and reduces long-term housing availability. The lack of a national regulatory framework poses security concerns, prompting the Lagos State government to consider legal regulations on tax and customer verifications.
Despite the vibrant market, there's saturation in popular areas, potentially decreasing earnings for property owners. While the short-term rental industry prospers in Nigeria, it presents challenges and opportunities for stakeholders in the evolving housing landscape.
