The World Bank has 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.
This, is however, not too far from the estimation of the Federal Mortgage Bank of Nigeria which had put it at about N56 trillion to be able to adequately meet the housing needs of Nigerians.
Managing Director of Federal Mortgage Bank of Nigeria (FMBN), Mr. Gimba Ya’u Kumo, said the figure is based on a conservative cost of construction at N3.5million per unit.
“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 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,” he said.
Experts have however 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 is reviewed or amended, improved housing development will continue to be a pipe-dream.
Real estate and financial experts who agree with the World Bank’s submission also add 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; pension regulators who can build a robust framework for real estate funds investment; 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.
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.
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.
It is however 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 a welcome development. REITs are highly regulated by the Securities and Exchange Commission and the Commission has already set specific rules on how they should operate.
By Bamidele Ogunwusi, Correspondent, Lagos
Source: http://dailyindependentnig.com/2013/01/world-bank-puts-nigerias-housing-deficit-at-n60tr/
