In the first quarter of 2014, there were high expectations and opportunities in Real Estate on the basis that homeowners and real estate investors will have better access to housing finance due to the recapitalisation of the Primary Mortgage Banks (PMBs) and the operations of the Nigerian Mortgage Refinance Company (NMRC). Although, allocation by the Federal Government for the provision of housing was estimated to be 40% lower (from N36billion – N18.5billion) than what was budgeted in 2013 with indicated a decrease in housing delivery for the year by the government.
Additionally, the World Bank contributed $300million to NMRC amongst other contributions from stakeholders which provided the means whereby homeowners and real estate investors could access long term loans at low interest rates.
This encouraged majority of the property developers to focus their projects on providing housing for Middle Class Earners due to the demand of such income earning group. But there were no records of housing being developed for low income earners despite the income level distribution, as at 2013, by the World Bank was indicated as shown in the below:
Low Income Earners – 54%
Middle Income Earners – 25%
High Income Earners – 21%
The Labour Union were not left out as the President, Goodluck Jonathan, launched a N960bn housing scheme targeted at providing affordable housing to Nigerian workers and members of the Labour Union, which enabled the NLC enter into partnership with a Private Property Developer owing to the high housing deficit of the country.
Unfortunately, the positivity was not evident in the Retail sector, especially, for foreign companies/investors, because they faced challenges due to the difficulty in clearing goods from the ports, which could take 3 months or more. This obstacle, amongst others, discouraged more retail foreign companies/investors from entering the market to the extent that an established retail, Woolworths, with 3 outlets in Nigeria, closed business.
Also, difficulty in land perfection posed major challenges on government revenue from land transactions, acquiring mortgage facilities and housing development as analyst indicated that 90% of land transactions were unregistered due to unfavourable government policies such as land titling and perfection of mortgage facilities.
Furthermore, new Road projects were not embarked on in 2014 by the Lagos State Government because the Government focused on finishing ongoing projects and accomplish their state goals. The projects by the government had their setback due to the difficulty posed on the movement of people and the gravity of the projects, especially those which had to be done in phases.
This was not the case within Ogun State, along the Igbesa-Agbara axis, and adjoining areas, due to the Public Private Partnership between the Ogun State Government and Private Investors with the aim of constructing the roads within the axis. As a result of the road construction more businesses will be established and the employment rate will increase as well as generate income for the government. As a result there was increase in population and value of property.
By the second quarter of the year, the Federal Government commenced phase 1 of the provision of 10,000 housing units, under the Affordable Home Ownership Scheme targeted at helping Nigerians own houses through mortgage facilities.
There was increase in the retail market as major players in the industry showed interest by financing 6 projects that will considerably grow the retail market in the country, whereby a few are predicted to be completed in 2015.
Also, more commercial business opportunities were evident as the first phase of the Tejuosho Market Complex was completed with over 4,000 shops.
Regrettably, there was a down turn of rental value within Okota area of Lagos as demand for accommodation reduced due to bad infrastructure, especially the road. It is estimated to have dropped by 20% of the rent as a result of the bad state of infrastructure.
At the third quarter, Nigerite introduced Dry Construction as the solution to the housing problem facing the country and how it can provide housing quicker and at a cheaper rate. The Managing Director of the company disclosed that it could take a few months to build houses and due to the short length of time to deliver a completed house, it would save about 70% of the developer’s time and about 20% of the cost of using other building materials. Hence a considerable amount of money on labour in combination with the cheaper construction method/material would be saved.
Additionally, other alternative methods of construction were considered and tested whereby technologies such as Plasswall and Plassmolite, Hydraform and Light guage steel were employed. As a result it was evident that, using the light gauge steel technic, housing delivery of a block of 3 bedroom flat could take 5 days with an average of 8 workers. Also with an existing steel factory on site, the production of components for 2 housing units could be done within 24 hours.
It was seen that Ikorodu and Badagry axis had their share in the increase of property value due to the concentration of the government to upgrade the infrastructure in these areas. It was also noted that within the Ikorodu axis, property value increased by 50% to 100% for sales as land which used to sell between N300k – N500k now goes between N800k – N1m, while the rental value rose by 20%, as rents increased by N50k.
While, within the Badagry axis, property value appreciated by 170% to 233%, over 4 years, compared to the value before the construction started.
It is apparent that as the construction advances, there will be attraction of individuals, companies and investors to these areas that will bring about more increase in the value of property.
There was distribution of 5,000 C of O by the Ogun State Government which gave homeowners better opportunities to get mortgages due to the perfection of their property titles. This in turn will also increase the level of development in state as homeowners can confidently build with any fear of encumbrance.
Unfortunately, Road network in Nigeria was ranked low by NBRRI on the basis that, amongst other African countries, statistics show Nigeria has 35900 kilometres of paved road.
As a result of this statistics, it indicates that most places in the country are inaccessible, thereby decreasing the availability of settlements, congestion in certain areas, posing high level of health hazards and a reduction in housing delivery.
The statistics as at 2013 is shown in the diagram below.
It is evident that despite the measures in providing homes to the Nigeria populace to combat the challenge of the housing deficit facing the country, which was targeted mainly to the higher middle class earners, majority of home seekers are still in need of homes.
Indications show that the lower middle class and lower class earners were not catered for and they represent the most of the population that are in dire need of shelter.
With a percentage of over 60% of the population of the country in need of homes, 66,402 applied for the 10,000 mortgages under the Mortgage Refinance Scheme within only 33day from when the application was open to the public; whereby 92% of the applicants were in stable employments.
If the government can provide pocket friendly land transaction policies and fasten the period of titling it will go a long way in easing the availability of housing. Also if the government in partnership with private investors can put in place measures of adopting better and cheaper methods of construction as well as introducing cheaper construction materials to the market it will reduce the housing deficit considerably.
Lastly, if the low income earners can be the focus of the government in housing provision, and measures implemented to actually provide accommodation for them, the Housing Deficit facing the country will be a thing of the past. This is because, the more convenient it is for low income earners to own houses, the more easily higher income earners will be able to own houses as well.