Short-Let Rentals: A Growing Trend in the Real Estate Market
ESV Effa Imoh Okim, CFE, PMP, ACIN
With the Nigerian business environment becoming tougher for all players in the economy, and the need to cut down rising travelling expenses by both individuals and corporate bodies was one of reasons that gave birth to the short-let business in major Nigerian cities like Abuja, Lagos, Port-Harcourt, Asaba, Kaduna, among others. All over the World, Short-lets are considered as credible and safe alternatives to hotels, even five-star hotels that can accommodate both low- and high-profile individuals who are tourists, business and individual travelers.
Simply defined, short-let apartments are tastefully furnished self-contained facilities that are rented for short periods as the name implies. The period of stay depends on the client(s) who are ready to pay the rate as long as they stay there. To so many individuals, especially those who do not play with their privacy, short-let apartments are the way to go. With the high level of insecurity in Nigeria, well-to-do individuals prefer to pay for short-let and provide their own accommodation. Another advantage that comes with short-let apartments is the empirical fact that it is cheaper when compared to luxury hotel accommodations, and the clients’ leaves as if they are in their own private accommodation.
Short-let apartment services started for decades in advanced economies of the World and thereby taking a larger chunk of the hospitality industry into the real estate market space. In Nigeria, the business has been operating on a very low key but received a boom following the advent of Covod-19 which led to the closure of so many hotels, and the only safe, private and available paid commotions were short-let apartments. To-tier hospitality services which are found in five-star hotels are equally available in most short-let apartments across Nigeria.
The market for Short-let services in the real estate space is globally on the increase. According to Shortlet Homes Limited, a Lagos based real estate company that specializes in short-let business predicted that the market will experience a 70% growth in short let occupancy. And this prediction was given in 2021.
Globally the market share of short-let rentals is on the increase. Forbes recently reported that short let rentals yields 30% more profit for home owners cum investors when compared to that of long-term leases or rentals. With an estimated market value of $169 billion in 2018 alone, it is quite obvious that the business of short-letting has not only come to stay, but has also come to change the narrative of real estate investment in today’s business World.
Another angle to this modern real estate business is the growing concern by investors and users of short let apartments on its legality and regulation by the government and its relevant agencies. With so many blue-chip real estate firms adding short-letting to their investment portfolios, government regulatory activities are taking its toll on this emerging market segment in the real estate space. Even for brands that are solely into short-letting business, they are registered business concerns that are adequately being regulated by the relevant government agencies. The onus is on the investors and clients to do their due diligence before patronizing the growing number of short-let businesses.
On how this business can grow and make positive impacts in the Nigerian economy, there is need for adequate regulation by the government at all levels to ensure that taxes are not being invaded by these new economic agents of change. Key actors in this sector of the real estate space should come together, form a professional association to train their members, forge a common front, and make demands from the government.
ESV Effa Imoh Okim, is a registered Estate Surveyor and Valuer, works with the Economic and Financial Crimes Commission (EFCC).
