Housing delivery: Experts canvass good land administration to attract investors

In order to attract more investors, foreign and local, to the Nigerian housing market, there is need for a good land administration, experts at a forum on real estate sector review in Lagos have advocated.

Land administration in Nigeria, as it is today, is not only tedious and cumbersome, but also costly and time-wasting, leaving  the country many miles behind its peers such as South Africa and Ghana in ease of registering property and doing business generally.

The forum, which was put together to review the economy and the performance of the real estate sector in 2016 and also to give an outlook for the sector in 2017, was powered by Realty Point Limited—a real estate development company with a mandate to enable tenants to sack their landlords.

The experts noted that the headwinds that defined the economy in 2016, culminating in a recession by the third quarter of the year, posed a major challenge for the real estate sector which took a plunge with low demand, over supply of commercial and residential space and high vacancy rate.

“The delay in passing the budget up to the second quarter of the year and the uncertainty in the economy, forced many investors to pull out from the equity market, leading to a contraction in the economy,” said Tayo Odunsi, CEO, Northcourt Real Estate, who noted also that companies were stifled by high exchange rate and lack of foreign exchange.

In many countries, real estate depends on the performance of the economy such that when the later is hit, the equity market will be hit and the next is real estate where house prices are affected. In this situation, price and quality become king and buyers selective.

The commercial office space market struggled with an oversupply which Oladotun Olusola of  DotRubik explained was because a lot of money was taken out of the economy by equity investors such that retail and commercial office space were built but uptake was slow and they were largely unoccupied.

This, according to him, created a situation where people became a lot more sensitive to what they put their money in. Vacancy rate was very high in retail facilities and Odunsi estimated the rate in Jabi Lake Mall in Abuja at 60 percent, 50 percent at Novare Mall and 33 percent at Circle Mall, both in Lagos.

The ripple effect of government’s macro-economic policies also affected this sector and, according to Akin Arongundade, Business Development Manager at Realty Point, the foreign exchange policy affected the price of building materials and other inputs. “Most developers suffered some level of default  from up-takers  and this was because people had pay-cuts in their working places; some suffered job losses and this led to a lot of renegotiation of earlier agreements on house prices and mode of payments”, he disclosed.

It was generally a challenging 2016, but the experts said there was hope in 2017, believing that both government Treasury Bill and Diaspora funds will make the new year brighter. Additionally, certainty and clarity are now creeping into the economy with certain things like foreign exchange now defined, even though it is not implemented.

Part of the hope in 2017 is coming from the mortgage sector where Arinze Adigwe of Homebase Mortgage Bank revealed  there was a restructuring exercise going on in the Federal Mortgage Bank of Nigeria (FMBN) which would impact positively on the National Housing Fund (NHF) and its contributors. He added that the Nigerian Mortgage Refinance Company (NMRC) was also working with some state government on the possible review of the Land Use Act.

In spite these, Adigwe was still worried that the Nigerian business environment was not supportive of an effective mortgage market, saying the risk factor was too high with the rate of job losses, unpaid or delayed salaries and unemployment.

Debo Adejana, CEO, Realty Point, was particularly concerned about ‘homelessness’  in Nigeria and so made a strong case for affordable , social housing and Rent-to-Own schemes which, he noted, was gaining traction with what NatanelFlorens and the Lagos State government were doing.

 “There is need for social housing, especially in the cities where we have cases of demolition going on. This is because displaced people, especially miscreants, need to be resettled. Many of them left the rural areas for the city where they are now displaced. There is always a backlash if they are left on their own”, he advised.