Lagos is undoubtedly one of the most expensive cities in Nigeria, especially when it comes to finding offices and residential accommodation.
Interestingly enough, a recent report from Savills ranks Lagos as the 12th most expensive city in the world for startups to rent and occupy office space and housing for their employees.
The Savills report Live-Work Index report compares how much it will cost for businesses with a 7- person strong staff (typical of a regular startup) to set up in major cities around the world by measuring the annual cost of renting and occupying both home and office space per employees.
The report puts the annual cost per employee at $45, 817.89, which interestingly makes Lagos appear 27% more affordable for internationals. However, considering that local real estate prices are denominated in naira, this has an increasing effect on Lagos residents as it means that they will have to exchange more naira to match the dollar equivalent.
The activity, according to the report, is believed to have spearheaded a fall in both office and residential accommodation in Lagos.
Dubai and Moscow have also experienced a fall in the demand for rent just like Lagos, but their real estate is denominated in dollars, or related currencies and as such, not affected by currency movement against the dollar. New York ranks first on the list with an annual cost per employee of $114,009,57, while Rio de Janeiro in Brazil is ranked as the 20th most expensive city with an annual cost per employee estimated at $19,118.89.
It remains to be seen if this trend would have any long term negative impact on local startups who wish to acquire new office space for the team or employees. But it’s worrisome all the same if foreign occupiers can easily afford office rent in Lagos while local occupiers cannot or will have to pay through their nose to.