Housing Solution Fund (HSF), a local currency real estate investment trust (REIT), has raised hope for increased homeownership in Nigeria with the successful completion of a Series 1 issuance under its NGN100 billion programme aimed to support private sector-led finance for affordable housing.
The fund’s promoters explained to BusinessDay that it was established in collaboration with development partners to provide innovative market-based solution to stimulate housing demand and sustainably scale housing supply.
The fund plans to do that by investing in affordable and accessible long-dated home loans offered to eligible homebuyers in partnership with participating lending institutions and pre-qualified housing developers in Nigeria.
The Fund is managed by alternative investment management firm, FundCo Capital Managers and co-sponsored by Shelter Afrique, alongside pioneer investments from four domestic pension funds and one insurance company.
Nigeria has an estimated population of 213 million. By 2050, the United Nations estimates that 75 percent of the population will be living in cities which translates into an annual housing requirement over the coming decades of, at least, 700,000 units to keep up with growing demand and urban migration.
Currently, production is estimated to be less than 100,000 units per annum, resulting in an overall accumulated housing deficit of about 26million units, increasing annually by 900,000 units. The estimated annual cost to bridge the housing gap is put at over N21 trillion (USD23.4 billion).
The HSF’s primary objective is to ensure the liquidity, affordability, and accessibility of the home loan market for potential homebuyers. Through active investments in home loans via participating lending banks, the Fund aims to address the challenges posed by Nigeria’s fragmented housing sector.
This mandate aligns with its sustainable green housing delivery strategy as the pathway to a balanced built environment through which it aims to pioneer green home loans for the green housing development in Nigeria.
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“We are excited to have completed our first series under our programme with a mix of DFI, pension funds and insurance investors. We are confident that our innovative business model will play a pivotal role in increasing the housing stock in the market,” Maurice Okoli, HSF’s Chief Investment Officer, said.
Okoli explained that this is to be done through strategic collaborations with key partners such as InfraCredit, Shelter Afrique, Nigeria Mortgage Refinance Company and eligible developers, adding that these partnerships are designed not only to enhance the Fund’s impact, but also to contribute significantly to alleviating the housing deficit in Nigeria,
He disclosed that the successful Series 1 issuance was led by Shelter Afrique Development Bank, a well-established pan-African housing development financial institution, alongside domestic pension fund managers and insurance companies, including FCMB Pensions, Fidelity Pensions, Radix Pension, Norrenberger Pensions, Leadway Assurance, among others.
“The diverse commitment underscores the industry’s recognition of the HSF’s potential and its critical role in reshaping Nigeria’s housing finance landscape. The fund’s collaborative funding model seeks to address the fragmentation of housing demand and supply-side activities by ensuring that the demand and supply-side intervention occurs in a symbiotic and complementary manner,” Okoli said.
On the supply side, eligible developers will access sustainable construction funding from domestic institutional investors and DFIs like Shelter Afrique on the back of guarantees from credit enhancement institutions like InfraCredit, thereby creating a strong pipeline of completed housing projects for the Fund.
On the demand side, the Fund will identify, evaluate and invest in affordable home loans through participating institutions towards the purchase of their homes, in collaboration with refinancing institutions like the NMRC.
This model creates a replicable and scaleable first of its kind integrated and coordinated structure for addressing a seemingly intractable housing market problem. Renaissance Securities (Nigeria) Limited acted as the Issuing Housing to the HSF Series 1 Issuance.
