The real estate market is about numbers—rental income, occupancy rates, and long-term value. While Lagos remains a familiar and lucrative playground for Nigerian investors, the UK, particularly London and Birmingham, offers unique advantages such as stability, security, and consistent returns.

In Lagos, rental prices have surged 91% in five years, with two-bedroom apartments in choice areas exceeding ₦1 million annually. The short-let property market has seen remarkable progress in recent times, recording a massive ₦264.3 billion in 2024, but a closer look reveals a market heavily dependent on peak seasons.

Meanwhile, London’s rental market has hit record highs in 2024, with the average rent at £2,627 per month (₦5.1 million at ₦1,979/£1). Birmingham, a rising star in the UK’s short-let sector, climbed from 7th to 4th place in the UK’s top 10 cities for short-term rentals by November 2024, based on the number of nights reserved.

So, which market offers the best returns? Let’s break it down.

Lagos vs. London: A Tale of Two Rental Markets

Lagos: Rising Rents, Rising Risks

The Lagos rental market continues to see robust price appreciation, with landlords reaping the benefits of the city’s housing shortage and inflation-driven rent hikes. In prime areas like Ikoyi, Victoria Island, and Lekki, annual rental costs for a 2-bedroom apartment range from ₦5 million to ₦12 million on a property that costs between ₦250 million to ₦1 billion, depending on the location.

While rental yields remain attractive, affordability is declining, and many tenants struggle to keep up with rising prices. However, rental income in Lagos is vulnerable to economic instability and currency depreciation. The naira lost 40.9% of its value in 2024 according to Nairametrics, meaning that while landlords are charging more in local currency, the real value of their earnings is shrinking.

London: High Entry Costs, Steady Returns

London’s rental market remains one of the most stable in the world, with rents increasing 8% year-on-year in 2024. A £500,000 (₦989.5 million) 2-bedroom property in London can generate £2,500 in monthly rent, totaling £30,000 annually (~₦59.3 million at ₦1,979/£1). The biggest advantage? Pound-denominated income shields investors from Naira volatility, ensuring consistent returns.

Unlike Lagos, where rental income can be erratic, London offers predictable cash flow and long-term capital appreciation, providing a sense of stability and security for investors.

Beyond Traditional Rentals: The Short-Let Market in Lagos vs. Birmingham

While long-term rentals provide steady income, short-let properties can yield even higher returns—if managed properly. Investors often turn to short-term rentals for higher nightly rates and flexibility, but the success of such investments depends heavily on occupancy rates, demand cycles, and operational costs.

In this space, Lagos and Birmingham are two cities with growing short-let demand but vastly different market dynamics.

Lagos: High Earnings but Seasonal Demand

The Lagos short-let market is thriving, with Lekki Phase I generating ₦94 billion and Ikoyi ₦37.5 billion in 2024. In Parkview, Ikoyi, a 2-bedroom short-let unit priced at ₦250 million or more, charging ₦221,000 per night and booked for 15 nights per month, can yield an annual revenue of ₦39.78 million. Likewise, a 2-bedroom unit in Lekki Phase I, valued at ₦150 million, with a nightly rate of ₦156,000, can generate ₦28.08 million annually.

However, the major challenge in Lagos is seasonality. Demand surges during festive periods like December, but drops significantly during off-peak months. In December 2024, occupancy rates reached 85% in Ikoyi (up from 48% in 2022) and 87% in Lekki Phase I (previously 63%), reflecting strong seasonal demand.

Rising operational costs like diesel, maintenance, flooding due to poor drainage channels and security further reduce profitability.

Birmingham: A Stronger Year-Round Market

Birmingham has become the fourth most popular UK city for short-term rentals, surpassing Bristol in Q4 2024. A 2-bedroom short-let unit in Birmingham City Centre, with an average property price of £200,000, charging £99 per night and booked for 18 nights per month, can generate £1,782 monthly (~₦3.5 million). Annually, this adds up to £21,384 (~₦42.3 million). With a steady 58% occupancy rate, Birmingham provides investors with a consistent and reliable income stream.

In summary, while Lagos rentals are constrained by declining affordability, rising operating costs, and lower yields, London offers stable, pound-denominated rental income, steady rental demand, and higher yields despite the high entry costs.

In the short-let market, Lagos is more prone to seasonal fluctuations in demand and higher running costs. Birmingham, on the other hand, provides a consistent income stream and higher occupancy rates at 58%. Ultimately, Lagos offers high short-term gains during peak periods but with higher volatility, while London and Birmingham provide a steady income stream and higher demand in a stable currency.

At PariVest, we’re making UK real estate investments accessible for Nigerians. With fractional ownership, you can start small and enjoy the benefits of pound-denominated income and asset appreciation. Whether diversifying your portfolio or securing a reliable passive income stream, UK real estate is the smarter choice for long-term wealth building.

Ready to get started? Book a free consultation with PariVest today to explore how UK real estate fits your wealth-building strategy.

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P.S. Lagos or London? Lagos or Birmingham? We're eager to hear your thoughts. Share your views in the comments below.