NHF loan review drives mid-low income housing devt

Amid a shortfall in housing development for people in the middle and low income brackets, investment appetite for those segments of the property market is rising, even among market leaders and big time developers. This is against the backdrop of the increase of the National Housing Fund loan per participant, from N5 million to N15 million.

Challenges in low income housing development range from low margins or return on investment , to absence of foreclosure laws and lack of critical infrastructure. This is why in spite of the apparent high demand, arising from a 16 million housing deficit which weighs heavily towards the low income market, most developers still avoid it.

Some developers however see value in that segment of the market, and according to Samuel Ukpong, the Managing Director, 1004 Estates Limited, “we at 1004 will be doing some schemes for lower and middle income earners, and not always for the high end buyers. We are already working on it and we hope to get the land from the Lagos State government; we will take off and definitely, most of what we will be doing will be from 1,000 units and more”.

Ukpong, who spoke in an interview with BusinessDay in Lagos, explained that there is economy of scale in that kind of development, adding that there are reasonably discounted costs which are not seen in normal investment”.

He disclosed that they were planning to go into large scale development, another 1004 flats along the Lekki-Epe Expressway, adding that plans were also being made to do the same thing in Abuja, the federal capital.

He reasoned that since the Federal Mortgage Bank of Nigeria (FMBN) has increased the National Housing Fund (NHF) loan from N5 million to N15 million, meaning that a house buyer can now afford a house of that amount, plus his own personal savings of N5-10 million, they would be developing houses within that price range.

Benson Edward, a private developer working with Practical Habitat, an American firm, says they have plans to do low income housing around the Trade Fair complex area of Lagos, where they intend to develop about 350 housing units.

“By the time we are through with our Praise Ville Garden in Ogudu GRA Phase 2, we will be doing some houses in the Lagos area, where we have identified and purchased land for the purpose of future developments and we are looking at cheap houses for low income earners in those areas”, Edward said.

He further said, “We are going to continue to partner with these our American friends, Practical Habitat, who have proved themselves in this industry. The houses they built in Ijora are of very good quality. I am not an engineer but I partner with very strong groups to be able to develop good houses at affordable prices”.

The UAC Property Development Company (UPDC) Plc also says its new real estate development strategy targets buyers in the mid-income segment of the property market.

The company explained in an interview with our correspondent, that it recognises the growing customer demand from this segment of the market, adding that they would follow the demand.

Hakeem Oguniran, the company’s managing director and chief executive officer, observed that before now, they were doing only luxury and premium estates, but have come down to the mid-income market, which is their strategy at the moment.