Lagos leads most expensive African cities in 2016 despite dip in real estate

The overflowing population – more than some countries in Europe and Africa – makes Lagos the destination of choice for dreamers, entrepreneurs and investors from within Nigeria, Africa and around the world. It also makes it the most expensive city in the entire African continent for 2016, irrespective of drop in rents, according to real estate firm Savills.

In a new report published by the firm, ‘Savills Live-Work Index,’ London, which has maintained the position of the most expensive city in the world for the past two and the half years, was replaced at the top by the city of New York. This was a result of the referendum that saw the UK vote to leave the European Union. Since the referendum, prices of properties in the UK have been on the downward slope with little signs of recovery.

In Lagos, the impact of economic meltdown engendered by forex scarcity and drop in global oil revenue, has also affected the real estate sector.

A statement released by the firm noted “Lagos has seen both a downward movement in office rent (-20%) and the effect of currency devaluation by the government (-30%). The amplification effect here significantly improves the city’s affordability for dollar-denominated companies.”

Despite remaining one of the most expensive in the world, decline rents in Lagos implies that the city now “looks 27 percent more affordable for international occupiers,” said the firm.

Yolande Barnes, director, Savills World Research, said: “Office-based businesses operating in major cities will spend one-third of their total operating costs on accommodation through a combination of commercial rents, paid directly to landlords, and demands on salaries created by the cost of employees’ living accommodation. Fluctuations in these costs will therefore have a significant bearing on how competitive a city is to employers.”

The Savills live-work index measures the annual per person cost of renting and occupying home and office per employee (and their households) in 12 world cities.