Despite N285.5bn Boom, High Damage Costs Threaten Short-let Market Sustainability – Operators

Despite that, Nigeria’s short-let apartment market is racing toward an estimated N285.5 billion in revenue in 2026. Operators have raised concerns over the rising incidence of guest misconduct, property damage, and utility abuse, which are eroding profits and threatening the long-term sustainability of the business model.

While demand for flexible, short-term accommodation continues to grow, investors and property managers warn that high occupancy no longer guarantees strong returns once repair bills, replacement costs and operational risks are factored in.

Operators in Lagos, one of Nigeria’s biggest short-let markets, said frequent guest turnover was exposing properties to higher maintenance and replacement costs, with some investors forced to spend millions of naira repairing damaged furniture, appliances, fittings and other facilities.

The development is raising fresh concerns about the sustainability of the business model, particularly as intensifying competition is already forcing operators to spend more on furnishings, power supply, internet, security, housekeeping, and other amenities to attract guests.

The concerns were brought into sharper focus by Nigerian-born registered nurse, public health consultant, professional chef, entrepreneur and social media influencer, Nancy Umeh, who recently shared her experience inspecting some of her short-let properties in Lagos.

Umeh, who operates a number of short-let properties on the Lagos Island axis, said her experience underscored the need for property owners to personally inspect their investments rather than depend entirely on managers or caretakers.

According to her, some property managers had repeatedly assured her that the apartments were in good condition, but a physical inspection revealed significant deterioration and evidence of activities that violated the rules governing the properties’ use.

“Managers will tell you everything is fine, but you need to be checking on your properties,” Umeh said in a video shared on social media.

She said she decided to inspect some of the properties after receiving reports about their condition, despite having handed them over to managers several years earlier with access codes and other operational responsibilities.

Umeh said one of the apartments had suffered damage to furniture and other facilities, which she associated with smoking inside the property despite restrictions against such behaviour.

“Customers are adhering to the smoking rule,” she said, recounting what she had been told by managers, adding that she subsequently entered the property and found evidence of cigarette use.

She said the condition of one of the apartments was particularly disappointing because she had personally decorated the property.

“I just was tired,” Umeh said, describing her reaction to the state in which she found the apartment.

According to her, the experience forced her to shut down operations at the affected property and ask occupants to leave.

“I literally had to shut down everything. I told everybody to get out because they damaged my property,” she said.

In a separate social media post accompanying the video, Umeh highlighted the financial exposure faced by operators, citing a N100,000 caution fee and a N1 million liability for damages, while questioning whether some investors might eventually reconsider the short-let model in favour of conventional annual rentals.

Her experience highlights one of the major challenges facing the rapidly expanding sector: profitability is increasingly determined not only by occupancy and nightly rates but also by the cost of maintaining properties after each guest stays.

A Lagos-based short-let operator, Joseph Osemeke, told LEADERSHIP that guest misconduct had become one of the biggest operational risks confronting operators.

He said weekend bookings, particularly for birthdays, bridal showers and get-togethers, accounted for a significant proportion of property damage.

“People book a 1-bedroom for 2 guests, but 15 people will show up for a party. By morning, you meet broken glass tables, burn stains on the couch from shisha, missing towels, stained bedsheets, spoilt ACs vent, leaving doors open all night, and bathrooms clogged with wigs and wipes,” he said.

Osemeke said he recently had to replace a 55-inch television that was smashed during a fight in one of his apartments.

He added that within the previous 30 days, he had repaired bulb fittings, replaced a chandelier and spent N280,000 to re-upholster a three-seater couch and replace duvets stained with palm oil and wine at a property in Lekki Phase 1.

In another case, he said occupants used the kitchen extractor to fry fish for about 20 people in a non-smoking, no-cooking apartment, leaving oil stains on the ceiling and forcing him to repaint the property.

The operator identified over-occupancy, unauthorised parties, inadequate insurance cover and utility abuse as some of the major risks confronting short-let businesses.

According to him, some guests leave air conditioners running for 24 hours with the windows open, while others use excessive water, increasing electricity and water bills for operators.

Osemeke also identified what he described as “reputation blackmail” as another challenge confronting operators.

“If you complain about damage, they threaten you with a 1-star review and say they’ll tell people your apartment is dirty. So many operators just absorb the loss,” he said.

He advised new investors not to be deceived by social media images showing fully booked apartments, warning that high occupancy does not necessarily translate into high profit.

According to him, operators should budget a significant portion of their monthly revenue for maintenance, repairs and replacement of damaged items.

The pressure is coming at a time when Lagos’ short-let market is expanding rapidly.

A report by Edala Development estimated that Lagos’ short-let market generated N281.03 billion in revenue in 2025, up from N264.3 billion in 2024, and projected revenue of about N285.5 billion for 2026.

The growth has been driven by rising demand for flexible accommodation, privacy, tourism and short-term stays, but increasing supply is also intensifying competition among operators.

As gathered by LEADERSHIP, operators are investing heavily in furniture, backup power, internet services, security, housekeeping, and other amenities to differentiate their properties and maintain occupancy.

However, unlike conventional residential rentals, where a tenant may occupy a property for a year or longer, short-let apartments can have several different occupants within a single month.

Higher guest turnover increases the risk of damage and makes regular inspections, inventory checks, cleaning, maintenance, and guest screening critical to the business’s survival.

Another short-let operator in Lagos, Elder Joe Akinwumi, said a two-bedroom apartment could generate significantly more revenue through short-term bookings than through an annual residential lease when occupancy is strong.

He, however, acknowledged that the higher revenue potential comes with higher operating expenses and exposure to repair and replacement costs.

For operators, the challenge is therefore to strike a balance between maximising occupancy and protecting the property’s value.

The problem is also beginning to affect the relationship between short-let operators and residential communities.

In February 2026, the Banana Island Property Owners and Residents Association prohibited short-let and Airbnb-style rentals within the estate, citing security and privacy concerns.

The development reflected a wider debate over how short-let apartments should coexist with conventional residential communities, particularly where frequent changes in occupants raise concerns about security, noise, property use, and estate management.

Industry operators said the growing risks made professional property management, effective guest screening, enforceable house rules, security deposits and regular physical inspections increasingly necessary.

For investors, the calculation is becoming more complex.

While short-let apartments can generate higher gross rental income than conventional leases, the actual return depends on what remains after electricity, water, cleaning, security, management fees, repairs, replacement of damaged items and periods of vacancy are deducted.

Umeh’s experience, therefore, offers a warning to investors entering the market: a fully booked apartment may look profitable from the outside, but guest misconduct and rising maintenance costs can quickly erode the returns.

“Short-let business is not for the weak,” she said, summing up the operational realities of the business.

As Lagos’ short-let market continues to expand, operators may increasingly need to treat the business not as a passive real estate investment but as a closely managed hospitality enterprise, where every booking carries both revenue potential and financial risk.