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Exploring new source of growth for real estate market

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Exploring new source of growth for real estate market

Issues affecting real estate investment were, again, brought to the fore by stakeholders recently with  a resolution to rethink business strategies for the growth of the sector. DAYO AYEYEMI reports

Leaders in real estate sector are not taking anything for granted as they have all agreed to rethink their business strategies for growth.

This, according the experts, will allow them to adapt to the dynamic changes within their operating environment.

Converging on Lagos  for the annual Ruth Obih – led Real Estate Unite (REU), the practitioners, comprising developers, investment bankers, pension administrators, lawyers, architects, estate surveyors, policy makers and a host of others, agreed  that the  industry needed to adapt to many things,  taking  into account the geopolitical, economic, societal and technological challenges.

They noted that real estate sector had the  capacity to transform African economy if the right things are done.

Welcoming  the guests, Chief Executive, 3Ivest, Mrs Ruth Obih-Obuah, noted that the recent economic downturn had caused  real  estate sector in Africa to fall below the projected 2.6 per cent regional growth.

According to her, economic indicator, has,  however, showed that Nigeria is gradually coming out of recession.

Ruth-Obuah explained that balancing short-term indicators with long-term structural change would reinstate investor confidence in the sector.

This, she said, was paramount to the success and continued growth recovery process of the sector, as driven by the government reforms and policies.

The occasion presented opportunities for residential, commercial, healthcare and hospitality sectors of Africa’s real estate market to unite, network and discuss issues affecting their industry.

Experts’ views

In his speech, a lecturer at the Lagos Business School, Dr. Doyin Salami,  expressed worries  about the conflicting figures on the nation’s housing deficit, warning  that absence of accurate data  could worsen the accommodation crisis.

There had never been an agreement  on  figures  about the nation’s housing deficit apart from  United Nations’ estimate of 17 million.

Many housing professionals  believe  that  the figure is over-bloated.

Salami, who is a  member of   Monetary Policy Committee (MPC), said there was need for the Federal Government and the private sector to rise to the challenge by going beyond  narrow view of what Nigeria is, but on what the nation is up to.

According to him, there is need to address the issue of lack of data /information about the sector rather than basing it on speculation.

He warned that if the nation failed to overcome the problem of data, it meant that size of opportunities in the real estate sector would  continue to be based on speculation.

According to Salami, challenges of data in the real estate sector include  the overall size of financing, cost of financing and the nature of financing.

To grow the sector,  the renowned  economist urged the government  to find a pathway to lowering interest rates, adding that it must open the space for private sector to drive the process.

Another speaker, Chairman, Mixta Africa, South Africa, Mr. Deji Alli, mentioned that the problem of affordable housing  was due to the narrow focus of  private sector and government policy problems.

He said there was no common solution to housing problem, urging the government and private sector to collaborate by  focusing  on provision  of social housing.

“We need to look at society problem and use pension funds to solve it,” he said.

One of the investment bankers at the forum, Kyuri Bukar,  noted that the issue of long-term fund for real estate investment needed to be resolved.

According to him,  issues surrounding Real Estate Investment Trust (REIT) has not been properly structured, pointing out that this has made the scheme unattractive to the market.

“The underlines should be balanced/structured  every year to attract investors,” he said.

He noted that  there was no uptake and that demand for REIT was low, calling for efficient tax structure  and regulations.

Chief Executive Officer, Dunn Loren Merrifield Group, Mr. Sonnie Ayere, noted that a growing volume of capital was being targeted at sub-Sahara Africa’s real estate investment and development.

Other speakers talked about how to explore the stock exchange, pension funds and regulations in stimulating the Nigeria’s real estate market..

Managing Director, Mixta Africa, Kola Ashiru-Balogun, noted that Pension Fund Administrators (PFAs) were not comfortable with real estate market, saying that they found it easy to invest in treasury bill, which would give them quick yields.

Managing Director, FMDQ OTC Securities Exchange, Bola Onadele, said it was not expected that real estate would depend entirely on money market, but that it could start by igniting assets by short –term.

“Banks do not have the liquidity to finance real estate. To get the pool, era of commercial paper must come back to the financial market,” he said.

Last line

Government must open the space of  real estate for the  private sector to drive the process.

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