While other sectors of the Nigeria economy are looking up, the real estate is still in recession, no thanks to the National Bureau of Statistics’ 2018 third quarter report. Dayo Ayeyemi reports.
In spite of government’s effort to revamp the economy and promote development in all sectors, the real estate industry’s growth is still negative.
According to data from the National Bureau of Statistics (NBS), real estate contracted by -2.68 per cent in third quarter of 2018 as against -3.88 in second quarter.
Many factors not limited to paucity of fund, harsh business operating environment, low purchasing power, forex issues, anti-corruption campaign, high interest rate, high costs of land and housing units, and absence of infrastructure have been adduced for negative growth, but analysts are worried that the situation may persist if nothing is done to restructure the sector for growth.
STOPPED Although a few achievements have been recorded in the areas of road and rail constructions, mortgage finance and National Housing Programme, they said these were not enough to take the sector out of slump.
According to the First Vice President, Nigerian Institute of Building (NIOB), Mr. Kunle Awobodu, the sector recorded a lot of unachieved hope in 2018, noting that glut of property still took centre stage in high brow areas of Nigerian cities.
He added that construction works on major roads in the country were slowed due to funding issue.
However, he agreed that activities in the real sector in 2018 were better than 2017, when the Nigerian economy was deep in recession.
“We hope that 2019 budget will bring a lot of fulfillment,” he said.
Other experts in the sector adduced stagnant demand, unfriendly legislative framework, illiquidity among others as major reasons real estate sector remained in negative.
Chairman, HOB Estates Limited, Chief Olusegun Bamgbade, said there was no achievement in the sector in 2018.
He wants the government to prune bureaucratic bottlenecks in all fronts and address governance holistically, pointing out that the authority could not afford to continue to function in an analogue way and expect digital results.
A former Managing Director, Lagos State Property Development Company, Mr. Anthonio John-Bede, said there was no major achievements in the housing sector.
“No achievement. No expectations next year,” adding that the economy was going to be stormy due to poor management and ‘’effect of quota system and federal character.’’
According to Affordable Housing Advocate, Mr. Kunle Faleti, one of the key issues affecting real estate has to do with affordability, noting that people’s income levels were really low.
“A mortgage of N1million at six per cent for 20 years is approximately N7, 200 monthly. If we factor in age, mortgage tenure will be reduced and payment will go up.”
For the middle class, he pointed out that affordability had to do with existing consumer loans – automobile, electronics, school fees, personal loans among others.
He noted that a lot of individuals had very little residual income to use every month due to existing debts, saying, “it is the reason for the very high non-performing loans on existing mortgages, which is over 60 per cent of total loan portfolio in the country.”
New Telegraph took a cursory look at different segments of real estate/ construction sector, pointing out some activities during the year:
Nigeria’s retail malls
Despite huge investment to revamp the economy, vacancy rates in some of the nation’s retail malls were high in 2018 high. One year after the nation came out of recession, some of the shopping malls are yet to recover from its effects.
Leading the pack is the Gateway Mall in Abuja with 85 per cent vacancy rate, followed by The Palm in Ota, Ogun State – 73 per cent; Novare Mall in Lekki – 47 per cent; Apapa Mall – 45 per cent; and Jabi Lake Mall in Abuja with 43 per cent vacancy rate respectively.
While Novare mall in Lekki showed a sign of improvement going by the increasing volume of traffic, the Palm in Ota, Ogun State remained low in term of traffic almost two years of their inauguration.
According to a report from Northcourt real estate, while the popular Palm in Victoria Island, Lagos and Ikeja City Mall were fully occupied and have been recording huge traffic since inception, same could not be said of others that came later.
Vacancy rates of other malls across the country include Maryland Mall in Lagos- 10 per cent; Festive Mall in Lagos- 18 per cent; Adeniran Ogunsanya Mall-8 per cent; Genesis Centre, Port Harcourt in River State- 17 per cent; Big Treat, Port Harcourt – 17 per cent; Grand Towers, Abuja – 22 per cent; Ceddi Plaza, Abuja- 23 per cent; and The Palm, Ibadan – 27 per cent.
The Managing Director, Family Homes Funds, Mr Femi Adewole, said Nigeria had raised about N800 billlion till date for mass housing projects from the African Development Bank (AFDB) and the World Bank among others to address its housing deficit of over 17 million units.
According to him, the nation has a strong commitment of under $200 million, adding that the fund has been actively running in the last five months.
Adewole said that FHF had invested over N20 billion into five housing projects in the country, which are on-going.
The housing projects, he said, had about 5,600 homes in all, listing the current locations for the projects to include Millinium City in Kaduna, which is housing about 650 homes; Royal City in Kano of about 757 homes; 620 homes in Asaba, Delta state; 1,074 homes in Ogun state; and 580 homes in Federal Capital Territory.
“We have a strong commitment. We have invested over N20 billion to five housing projects to support Nigerians, which are earning below N100,000. We are also providing financing for developers who will build homes ranging between N2.5 million to N5 million,” he said.
The Federal Mortgage Bank of Nigeria (FMBN) says it has processed N12.4 billion refunds to contributors of the National Housing Fund scheme and registered 224,752 to the fund in 2018.
Its Managing Director, Mr Musa Dangiwa, said the bank had disbursed housing loans totaling N40.9 billion to 1,843 NHF contributors. He added that the bank also provided Home Renovation Loans totaling N14.072 billion to 16,031 Nigerians. He also listed FMBN innovative housing products to tackle housing affordability challenge, which included rent-to-own scheme, where contributors could own a home and pay monthly or yearly rents over a 30-year period.
Unlike what he met when the budgets for the three key ministries by the previous government was N19 billion for works, N5 billion for power, and N1.2 billion for housing, making a total of N25.2 billion, Nigeria ‘s Minister of Power, Work and Housing, Babatunde Fashola, said budget for works was jacked up to N394 billion, power was N69.96 billion and housing was N64.9 billion (Total N529 billion) in 2017.
The budget for infrastructure was moved forward to N543 billion in 2018. Fashola ensured that the massive debts of over N150 billion owed contractors by previous administration were paid to enable them resume to sites Also, under the his leadership, N450 billion debts owed to state governments, who intervened on federal infrastructure, especially roads and bridges, were paid.
Currently, contractors are carrying out the rehabilitation of Benin-Ore-Sagamu road, Lagos-Ibadan expressway. Within the year, contracts for the rehabilitation /reconstruction of Lagos-Ota-Abeokuta Road,, Ikorodu-Sagamu road, and Apapa- TinCan – Mile 2 -Oshodi- Oworonshoki road were awarded and works on going.
Other roads receiving attention are Sokoto-Tambuwal-Jega-Yauri Road, Ilorin-Jebba-Mokwa-Bokani Road, Ilorin-Kabba-Obajana Road (Sections 1&11), Ibadan-Ilorin Road, Section11 (Oyo-Ogbomosho), Lagos’ Third Mainland Bridge, Obajana Junction-Benin Road Phase 2: (Sections i-iv), Sapele-Ewu Road Sections 1&11, Second Niger Bridge, Onitsha-Enugu Expressway (Amansea-Enugu State Border), Yenegoa Road Junction-Kolo-Otueke-Bayelsa Palm and Bodo-Bonny Road with bridge.
Others are Odukpani-Itu-(Spur Ididep-Itam)-Ikot Ekpene Federal Highway Sections 1&11, Ikom Bridge, Enugu-Port Harcourt Dual Carriageway Sections i-iv, Calabar-Ugep-Katsina Ala Road, Vandeikya-Obudu-Obudu Cattle Ranch Road, Oshegbudu-Oweto Road, Oju/Loko-Oweto Bridge with approach roads, Nassarawa-Loko Road, Abuja-Lokoja Road Sections i&iv, Suleja-Minna Road Section 11. Kaduna Eastern Bypass, Kano-Maiduguri Road Section 1-1V, Hadejia-Nguru-Gashua-Bayamari Road and Kano Western Bypass. Over 45 bridges are also slated for rehabilitation.
National Housing Programme
In the housing sector, Fashola said that pilot housing scheme is being constructed in 34 states of the federation to determine the home’s affordability and acceptability. While some have been completed, others are at different stages of completion.
Only a few developers delivered housing projects in 2018 due to lack of fund.
Government and all stakeholders must collaborate to revamp the housing/real estate sector.