Rent growth strengthens case for larger residential investments
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Analysts say persistent rental growth across cities is strengthening the case for patient capital to invest in larger residential assets, with mid-market multifamily properties emerging as a focus.
Opportunity is beckoning for investors with patient capital to put more money into larger residential assets, as continued rent growth strengthens the case for developing or acquiring such properties in cities.
Analysts note that persistent rental growth supports income potential and property valuations, suggesting demand has remained durable over multiple market cycles. They advise investors to monitor the mid-market multifamily segment, observing that two- and three-bedroom apartment blocks meet demand from civil servants, healthcare workers and regional non-governmental organisation employees seeking secure and reasonably priced housing.
Ayo Ibaru, chief investment officer at Panterra Real Estate Group, said rent growth is sustainable only if household incomes can continue to support it. "When rent exceeds 30 percent of household income, default rates rise, properties stay vacant, and yields drop," he said.
Ibaru added that investors should be mindful of economic and demographic shifts, explaining that employment, migration, infrastructure investment and household formation will ultimately determine whether demand remains strong enough to sustain further appreciation.
He cited Djougou, the largest city in northwestern Benin, where rents for four-bedroom homes rose every year between 2020 and 2025, from $210 to $240. The consistency of the increase, he said, may indicate that housing supply has not kept pace with demand.
Analysts argue the multi-unit structure of apartment blocks provides diversified rental income and reduces the impact of individual vacancies, while warning that sustained growth is not a guarantee of future performance.