Esther Macully used all of her 1.52m frame to face down a bulldozer and save her freezer from being destroyed, as a wrecking crew guarded by armed security forces razed her home in Badia East slum of Lagos.
While she salvaged the cooler, she is still waiting for the Lagos State government to fulfil a pledge to help replace the home she used as a store to sell beverages and food.
The wooden shack was flattened last February, along with the dwellings of thousands of others that authorities said were moved for a housing project that is yet to get off the ground.
“We can’t be living in this kind of condition forever”, Macully said as she prepared to move back home about 160km east of Lagos. “We’re citizens of Nigeria. Let them have mercy on us.”
The demolition is making way for more than 1,000 one-to two-bedroom apartments that will be beyond the means of Nigerians like Macully. Lagos, sub-Saharan Africa’s most populated city, is trying to narrow a national housing shortage that the World Bank estimates at 17-million. While Nigeria is Africa’s most populous nation with about 170-million residents, the real-estate market is hobbled by a dearth of home loans, interest rates about six times those in the US, poverty and Africa’s second-most expensive real estate market.
Property investors in Africa’s largest oil producing nation are aiming to lease the apartments to foreigners and the wealthy of Lagos. In the city of about 21-million people, landlords typically demand one to two years’ rent upfront due to the cost of land, Africa’s most expensive after Angola’s, London-based property broker Knight Frank said.
“The management of land resources is considered to be the oil of Lagos”, said Felix Morka, the executive director of the Social and Economic Rights Action Centre, which provides legal assistance to evicted slum residents.
Lagos State Governor Babatunde Fashola, whose second term expires after elections next year, is attempting to create a workable city out of one that is best known for crime, gridlocked traffic and daily power outages. Lagos is the smallest inland area, yet the most densely packed of the 36 states of the federation. Seventy percent of Lagosians live in slums, according to Amnesty International. The state government says Lagos needs 4-million extra homes to close the gap.
Companies including Johannesburg-based FirstRand, Africa’s second-largest bank, Resilient Property Income Fund and Actis, a London-based private-equity firm, are funding construction of office blocks and shopping malls rather than rushing into residential mortgages, which are offered by some local lenders such as FBN Holdings and Zenith Bank.
The government last month started Nigeria Mortgage Refinance Co to tackle the deficit. It will fund lenders to help encourage the building of 75,000 homes a year for low-to middle-income earners. The country does not publish house-price data, according to Global Property Guide, and real-estate transparency is the worst of 97 markets after Sudan, according to a 2012 index published by Jones Lang LaSalle.
The World Bank estimates there were 44,000 mortgages with an average size of N5 million ($31,472) each from 2004 to 2010.
The ratio of home loans to gross domestic product (GDP) of Nigeria was 0.6% at the end of 2011, even after the market surged fourfold from 2006.
That compares with 31% in South Africa and a European average of 50%, according to the US-based lender.
While GDP per capita more than trebled to $1,725 in the decade through 2013, according to International Monetary Fund estimates, inequality has worsened with 68% of Nigerians living on less than $1.25 a day, compared with 63% in 2004, World Bank estimates show.
Nigeria’s oil wealth over the decades has come at the expense and mismanagement of other industries, resulting in a lack of formal jobs, with crude revenues being siphoned off by corruption without benefiting the majority of the population. Property scams run rife with buildings often painted with warnings such as ‘This House is Not for Sale’ to avoid conmen selling homes to unsuspecting buyers or ‘Beware of 419’, referring to the Nigerian fraud code. The nation ranks 144th among 177 countries in Transparency International’s corruption perceptions index.
Even in Lagos’s most affluent districts of Victoria Island and Ikoyi, trash builds up on pavements and in open drainage gutters, while derelict and poorly maintained buildings decay in the tropical heat.
Knight Frank says office rents in those areas can typically amount to about $1,000 per square metre each year, while residential rents can cost $10,000 a month.
About 11km from Badia East, a local construction company is pumping sand out from the sea, reclaiming eroded coastline to turn the desolate stretch of land into a section that will be Nigeria’s equivalent of New York’s Fifth Avenue, said the MD of South Energyx Nigeria, David Frame, which is leading the development.
The district, known as Eko Atlantic, probably will become home to 250,000 residents, while 150,000 will be commuting there every day, Frame said in an interview in December. A 15-storey commercial building is set to be the first completed development by March 2015 with the land reclamation and sea wall due in 2017.
Residential and office plots on the first phase of the Marina overlooking the ocean will sell at $2,500 a square metre, while those away from the waterfront will go for $1,250 to $1,500, he said. Manhattan’s Fifth Avenue, home to retailers Saks Fifth Avenue and Tiffany, had the world’s second-highest retail rent per square foot at $2,500, behind only Hong Kong’s Causeway Bay, global real-estate services firm Cushman & Wakefield said in November.
The location will have its own power, sewerage, drainage and garbage disposal services, while developers have expressed interest in building a shopping mall and an international-standard hospital and school, Frame said. The appeal of reducing the often three-to-four hour gridlocked commute from Lagos’s mainland to the island’s business districts would be a big draw, he said.
The housing market could expand more than 10-fold in the short term, said finance minister, Ngozi Okonjo-Iweala, last month, while the creation of Nigeria Mortgage Refinance will help bring interest rates on mortgages to about 10%.
Interest charges on home loans run at 18%-25%, said director at London-based Actis Michael Chu’di Eje-kam in Lagos. The central bank has kept its benchmark rate at a record 12% to keep the naira stable and curb inflation before polls next year.
Macully’s children are now scattered with various relatives as she seeks another means of surviving, willing to take what she can get from the government.
“Whatever they say they want to give us, let them give it to us, so we can cope.”
Bloomberg
