By Olumide T. Agunbiade
|Nigerian writer and Blogger
 |
| A Nigerian Estate |
IN development
terms, the last few years and first few years of the 20th and 21st
century in the Nigerian Housing Sector have been a total failure. Between 1973
and 2006, the Federal Housing Authority (FHA) built only 30,000 housing
units-nationwide.
Nigeria has a large and ever increasing housing
deficit which stood at approximately 8 million housing units in 1993 and 12-14
million in 2007. A recent estimate puts Nigeria’s housing deficit figure higher
at 16-18 million. “At an average cost of N2.5 million per housing unit, Nigeria
would require N35 trillion to fund a housing deficit of N14 million housing
units.’’ Says Olusegun Adeniji of Federal Mortgage Bank of Nigeria (FMBN) in
2007.
Several factors had been identified as responsible
for these shortages. According to Mohsin Khoda, a Land Acquisition Manager with
Kings Land Global Investment Company based in Dubai, “supply is limited while
demand is high due to increase in population.’’
In Europe, the expansion of European Union (EU), migrant
workers, increased divorce rate, longer life expectancy and overcrowding of the
major cities have been identified as the reason for the shortage. In contrast,
Nigeria’s urban housing problems manifest in overcrowding, mortgage, slum
housing, poverty and widespread institutional mediocrity.
According to the World Bank’s Doing Business 2008
report, getting a license such as construction permits or approvals in Nigeria
takes 16 procedures which require an average of 465days. These procedures are
complex, expensive and usually encourage illegal construction as well as slum
settlements with its attendant health and environmental issues as visible all
over the country.
According to London-based real estate firm, Knight
Frank’s report, prime global city markets in 2013 are likely to outperform
their mainstream national counterparts. The report concentrates on prime
residential markets in the world’s leading cities, and highlights how growing
global uncertainty and government intervention in the property market,
especially in Asia, will weigh on prices in some areas.
The report further suggest that cities such as
Moscow and Bangkok will shrug off these concerns to register growth of between
10 and 20 per cent in 2012.Paris, Kiev and St Petersburg are all expected to
rise by five to 10 per cent, with London slotting in next with a five per cent
rise. However, Shanghai, Mumbai, Manama, Hong Kong and Geneva are tipped to
fall by between 10 and 20 per cent.
In a 2013 predictions of housings industry experts
in Nigeria, a number of housing professionals expressed optimism for 2013,
after a fairly grim 2012.
Indeed, in
2012, there was surplus luxury accommodation in prime areas that softened
rentals in the sector and failure of the nation to curb its security issues
eroded investor’s confidence.
However, with all economic parameters indicating a
slowdown and large preponderance of government’s recurrent expenditure,
construction costs will go up and harden rentals in the housing industry.
Also, the subsidy removal may trigger inflationary
trend, which may impact negatively on housing. “The cost of developing houses
and property will escalate while at the same time the purchasing power of the
populace may crash to the lowest ebb in recent history,’’ says Mr. Bode
Adediji, President, Nigerian Institution of Estate Surveyors and Valuers
(NIESV).
Recently, the Federal Government appealed to the
private sector operators to increase their investment in the housing sector in
order to assist the government in housing citizens in line with Vision 2020
when Nigerian hopes to join the 20 largest economies of the world.
However, the N26 billion allocated to housing in the
2013 budget proposals could be used as intervention fund for the sector. Mr.
Chucks Omeife, the President, Nigerian Institute of Building (NIOB), while
analyzing the budget, noted that the budgetary allocation was good but must be
applied in the right direction to achieve meaniful result.
He posited that the fund can be used to strengthen
the mortgage system with very strong policy dictation and direction to the
operators so that it can serve as a revolving fund in the system and hence
provide ease of access to all.
Surprisingly, the rumpus in the banking sector
continued to impact negatively on the real estate market. Property developers
could not access funds for development and would be home owners do not have
access to mortgages. “The real estate market is universal and dependent on the
behest of government fiscal policy. Government should create the necessary
enabling environment that will ensure the influx of private sector funds and
direct foreign investments to boost the construction industry and promote
indigenous manpower, says Mr. Segun Ajanlekoko, President, Association of
professional Bodies of Nigeria (APBN).
Also,
Minister of FCT, Bala Mohammed has identified the high cost of houses as one of
the issues encouraging corruption in both private and public institutions. “A
situation that will soon force the Federal Capital Territory (FCT) to enact a
bill to check the ugly trend.”
However, the future of housing seems bright with the
merger of fringe banks and the Informal Sector Cooperative Scheme recently
initiated by the Federal Mortgage Bank of Nigeria (FMBN) to integrate low
income earners in the informal sector into the National Housing Fund (NHF)
Scheme. “It is expected that with the merger of fringe Banks and takeover of
some by the Central Bank of Nigeria, many banks will be able to resume lending
to the real estate sector this year,’ says Chief Kola Akomolede, President the
International Real Estate federation (FIABCI), Nigeria.
The World Bank’s Doing Business 2010 report also
discovered that Nigerian states have been activity reforming to encourage
business activity over the past two years. Experts believe that efficient,
accessible, simple regulations and clear property rights could unleash the
natural entrepreneurship of small and medium size firms even further.
The report suggests that if Nigeria adopted
nationwide all of its states’ best practices identified, it could rank 72nd
out of 183 countries globally – 53 places ahead of her current position in the
global Doing Business 2010 report.
Indeed, the provision of accessible and affordable
housing is one of the strategic national imperatives to guarantee the well
being and productivity of Nigerians. The goals of providing affordable housing
can be achieved, if the necessary ingredients are put in place.
Investors can work in less difficult environments in
the short term if there is convincing evidence that reforms will improve,
security issues are addressed and a friendlier investment climate is
implemented as quickly as possible.
Hence, the Subsidy Reinvestment and Empowerment
(SURE) programme could potentially contribute to closing Nigeria’s crippling
infrastructure gap and lay the foundation of strong economic growth and
diversification starting this year.
DEFICIT
SPECIFICATION
|
||||
YEAR
|
FIGURE
|
POPULATION
|
PERCENTAGE
|
CAUSE
|
1993
|
8M
|
98M
|
8.06%
|
Mortgage
|
2007
|
12-14M
|
143M
|
9.79%
|
Low
supply
|
2010
|
16M
|
156M
|
10.25%
|
Overcrowding
|
2011
|
17M
|
160M
|
10.62%
|
Population
|
2012
|
18M
|
167M
|
10.77%
|
Slum
housing
|
Poverty
|
||||
SOURCE:
REALTY MAGAZINE DATA& STATISTICS
IMF
CIA WORLD FACTBOOK
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