Challenges of housing in terms of quality and quantity appear to be the same all over the world, but in Nigeria, it is a complex case. A professor of political economy, Wale Babawale, recently posited that the primacy of the housing question had spurred the United Nations to promote the programme of housing for all by the year 2000. Babawale, in a paper, stated that good quality housing, as a basic need, is lacking for a sizeable number of Nigerians.
He argued that the medium and low income segments of the population, most of who live in urban centres, suffer severe housing crisis.
The World Bank, (TWB) in a recent publication, estimated that the cost of bridging Nigeria’s 17 million housing deficit is N59.5 trillion, underlining the vast and untapped investment potential of the country’s real estate sector.
In what appears to be a sort of corroboration, the Nigerian President, Dr. Goodluck Jonathan, in November 2013, admitted that Nigeria had housing deficit and that the country needed a minimum of N56 trillion to be able to bridge the country’s 17 million housing units deficit postulated by the World Bank.
The President’s statement is, however, not too far from the estimates of the Federal Mortgage Bank of Nigeria (FMBN), which stated that it would take about N56 trillion to adequately meet the housing needs of Nigerians. The Managing Director of the Bank, Mr. Gimba Ya’u Kumo, said the figure was based on a conservative cost of construction at N3.5million per unit.
He explained that, “fundamentally, the nation needs 16 million housing units to bridge the housing deficits in the country, and providing these houses will cost N56 trillion at a conservative cost of N3.5million per unit. This,” he continued, “is a colossal amount which cannot be funded only through the NHF, but requires urgent injection of funds from both the government and the private sector. That is why we are as well exploring offshore funding to boost financing for mass housing which the nation urgently needs.”
However, experts have identified the Land Use Act of 1978 which resides ownership of land in state governors, and a cumbersome property registration process as major barriers to housing development and home-ownership, leading to the country’s huge housing deficit.
According to Fortune Ebie, former Managing Director of the Federal Housing Authority (FHA), until the Act was reviewed or amended, improved housing development would continue to remain a pipe-dream.
Real estate and financial experts who agree with the World Bank’s submission also explained that the real estate sector, remains a viable option for investors seeking guaranteed returns on investments, saying that several opportunities exist in the sector.
In the estimation of the World Bank, some of the numerous opportunities available in the sector include private equity players who are capable of making big investments; financial institutions that can float real estate funds and pension regulators who can build a robust framework for real estate funds investment. Other opportunities enumerated by the World Bank are the adaptive re-use of properties by banks in the form of converting properties and taking stakes in new deals. Opportunities for hotels, events and recreational centres, shopping malls, estates, among others are also available.
The World Bank also observed that for now, Nigeria’s mortgage industry remains underdeveloped with interest rates on mortgage funds ridiculously high, making the mortgage business in Nigeria unattractive. Currently, Nigeria’s real estate industry accounts for between four and five percent of total Gross Domestic Product (GDP), growing by 10.48 percent in the second quarter of 2010.
It is expected that the review of the Land Use Act, which is currently on the floor of the National Assembly, will bring the needed improvement and growth in both the housing and mortgage industry in the country.
Moreover, the expected growth of Real Estate Investment Trusts (REITs) and Real Estate Investment Companies (REICOs) as some form of mutual real estate investment is being advocated. Currently, REITs are highly regulated by the Securities and Exchange Commission and the Commission has already set specific rules on how they should operate.
However, the huge housing deficit is being fingered as the main reason adduced by Mutual Benefits Assurance Plc for getting involved with provision of housing as an effective platform to grow insurance among those in the middle income group.
According to the Managing Director of Mutual Properties, Olujide Ojo, the company was not in property business for the sole profit of it. “We are not into it for profit. We are into it because we want to add value. The kernel of Mutual Benefits’ impressive growth is as a result of strict adherence to the company’s core values. And we pride ourselves as unrepentant sticklers to ethics and professionalism.”
In 2011, the insurance company decided to venture into real estate development as a means of reinvesting accumulated premiums they have been collecting from their customers into incorporated Mutual Homes and Properties Ltd which it wholly owns.
Mutual Alpha Courts, a residential estate is made up of 56 terraces and four semi-detached duplexes, according to the company’s managing director, and had its facilities fully sold out at a revolutionary nine per cent per annum interest. As of today, the pilot project, (Mutual Alpha Courts) located in a quiet environment on Afric Road in Iponri area, has yielded great harvest and huge dividends.
According to Ojo, a unit of the estate has four-bedroom duplexes with an additional two-bedroom flat that could be used as home office and boys quarters. He explained that, “this housing project situated in Iponri, Lagos Mainland Local Government Area is an effective platform to grow insurance among those in the middle income group, “increase our investment portfolio, as well as, give more empowerment to the nation’s citizenry, and we commenced construction work on the residential estate development in 2011.
He said that, “the estate location within Costain area of Mainland Local Government Area of Lagos State, a suburb lying on the fringes of Surulere/Mainland Local Government borders of Lagos State is a deliberate decision, because we are out to add value to life. To live in Alpha Courts is to live in a beautiful hidden oasis of tranquility that is as desirable for anyone who wants the ease of navigating Lagos to the left or the right, because it is just right there at the centre.”
He added that, “the site places prospective occupants in a vantage position, with easy access to main arterial axis roads to the Island and the state capital, Ikeja, through Funsho Williams Avenue/Eko Bridge and Third Mainland Bridge. The neighbourhood boasts of shopping malls as found on Adeniran Ogunsanya Street, and the Iponri market is just a stone throw from the estate.
He explained that, “The project highlights flexible subscription payment plan, with mortgage available on 60 per cent of sales prices at nine per cent interest rate for 10 years tenor, and that the project is positioned as an investment vehicle.”
True, Mutual Alpha Courts occupies 27 plots of land, and apportioned four bedroom apartments on two floors with an additional two-bedroom apartment on the ground floor as service quarters or income generator, if leased to a tenant. Overall, the estate provides 20 blocks of 60 units, which is now ready to be occupied and will likely be handed over to subscribers before the end of the year.
The terraced apartments consist of three units in a block, each with a spiral service stair at the rear. The spatial arrangement encourages healthy social interaction amongst residents with services well-positioned away from the buildings. Undoubtedly, a portion of the estate is for recreational activities such as kiddies’ parties and other fun the kids would like to be involved with.
Also, of attraction to the prospective occupants is the completely new drainage systems, power supply lines, CCCTV, security-enabled fence, facility management plan and a host of other utilities assuring residents of the most modern, most effective and efficient utility service delivery systems.
Ojo described it as a ‘ready-made home’ said that, “our primary aim is to make ownership of a home in Nigeria easy, affordable and accessible for all. We will use this platform to begin a social re-engineering geared towards a better and greater Nigerian society.
“In order to deliver very high quality houses,” Ojo added, “we have had to import some of the equipment and facilities such as marine boards for concreting, security doors (with five lock positions), floor and wall tiles and sanitary. Mortgage was arranged for our subscribers at an unprecedented rate of 9 – 11 per cent.”
According to him, given a conducive operating environment, the Nigeria housing sector would grow and develop, unleashing its potential in terms of employment generation, wealth creation and national development “which is the core idea of Mutual Properties.”
Source: allAfrica.com
