How land-swap approach can bridge housing demand-supply gap

Unlike other social problems in Nigeria including insecurity, militant activities, kidnapping, youth unemployment and others, housing deficit seems not to bother government, hence the poor attention given to the problem.

But, increasingly, professionals and other stakeholders in the housing sector are showing keen interest in how to resolve the deficit which has left about 25 million households, comprising 4-6members each, without their own homes.

In any given opportunity at conferences, summits, seminars and even at private levels, discussions are always extensive on ways and means of bridging this deficit which is not only deepening the socio-economic inequality, but also affecting productivity level in offices and industries.

New building technologies which have the capacity to mass-produce houses, use of alternative building materials, especially locally sourced materials, which will cut off import duties, have always been canvassed and even deployed without much result because the cost implications are huge.

But there is another approach which experts consider viable and more cost-effective is land-swap. This model is being explored in many developing countries and it involves government and a real estate developer signing off a deal that the former will offer a defined parcel of high valued land to the latter at no cost, while the recipient or developer will, in return, build an agreed number of units of social housing for the government to be given out to low-income earners who cannot afford to buy or build.

The housing deficit which, in 2014, the World Bank estimated at 17million units is high because of this class of people whose demand for housing is ineffective. Expert say the deficit is not so much the problem as the low level of effective demand for what is on offer on the housing market.

The level of effective demand for housing in Nigeria, Africa’s largest economy, according to the experts, is very low, not more than 10 percent of the deficit. The implication of this is that even if, by any stroke of chance or magic,  the country offsets the deficit by building 200,000 units annually, only about 2million units will be bought at any given time by those who have the capacity to buy.

Besides poverty, however, there are also reasons for low level of effective demand. Basically, not everyone who desires housing can afford it while most of those who can afford it do not have easy access and this is the main reason for the mismatch of demand and supply for different levels of buyers—low, middle and high income earners.

If demand for housing is not effective on account of poverty, it means there are other factors that are constraining not only demand, but also supply. “Economic conditions leading to low purchasing power, and constrained access to land with valid title such as government bureaucracy and  the ‘omo-onile’ factor can make demand ineffective,” explained Femi Akintunde, GMD, Alpha Mead Group, at  Africa Real Estate Conference and Awards (AFRECA) 2018 in Lagos recently.

Despite all the arguments to the contrary, Akintunde believes that government has a role to play in housing delivery, especially in finding solution to the nagging issue of housing deficit. In his contribution to the  theme of the conference, ‘Sustainable & Equitable Housing: The Role of Government & Private Sector’, he reasoned that, given the many challenges militating against the provision of sustainable and equitable housing in Nigeria, “land-swap  is the catalyst needed for resolving housing deficit”.

Akintunde emphasized  that, though government might be constrained by lack of requisite data to determine citizens with little or no purchasing power to own homes, it should explore a pre-qualification process to ensure that the social housing units are given out to citizens in dire need of them.

He pointed out that the success of the land swap model would depend on government’s ability to come up with a holistic plan, practical execution strategy and a measurement tracker that must ensure housing supply in both urban and rural settlements meets effective demand at all times.

GbolahanLawal, Lagos State Commissioner for Housing, assured that despite the prevailing economic challenges, the state government remained committed to providing affordable homes to its populace. Lagos at the moment is grappling with a housing deficit estimated at 3 million units.

But the commissioner assured , “as a forward-thinking government, this administration has a strong interest in the many ways we can make housing provision more efficient and affordable with projects such as our partnership with Echostone which seeks to push housing development frontiers by deploying the use of technology to build homes within record time.”

He disclosed that the state has set a target to build about 14,187 affordable homes by 2020, revealing that the state government bought into several innovative ideas towards the last quarter of 2017 that were capable of changing the real estate landscape in the state.

At private sector level, however, it was noted that major issues impeding housing supply ranged from state ownership of land which creates insecurity and crisis of confidence in mortgage lenders, low viability of housing projects due to high cost of building materials, to forfeiture laws which discourage banks from lending to developers, and multiple taxation.

 Part of the highlight of the conference (AFRECA) was that Alpha Mead Facilities, a strategic business unit of the Alpha Mead Group, was recognized and awarded the ‘Best Facilities Management Company of the Year’. “The award is a testament of our innovative approach to facilities management in the last 12 months”, Akintunde enthused.