New strategies defined by partnerships and joint venture initiatives for low cost housing development by both local and foreign investors are fast evolving in the Nigerian housing sector which, before now, had been most active at the upper-end segment for high-income buyers. The fall in oil price at the international market has changed significantly investment decisions in this sector as oil workers who were major demand drivers at the high-end housing market are either withholding or scaling down their demand, forcing investors to weigh their options.
Nigeria has a housing deficit conservatively put at 17 million units and it is estimated that 60-70 percent of this deficit resides in the low to middle income market which individual investors and developers avoid for reasons ranging from low profit margin to infrastructure and Land Use Act.
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“Given the present economic realities with falling oil prices and devaluation in our local currency, low cost or affordable housing is the way to go for now and in order to share your risk and lower your cost through shared expertise and comparative advantage, investors are, increasingly, opting for joint ventures and strategic partnerships”, Gbenga Olaniyan, Estate Links MD/ CEO, told BusinessDay that there are immense opportunities in this segment of the market, he said, is almost incontrovertible, corroborating Doyin Salami, a lecturer at Lagos Business School, and Richard Nyong, the MD/CEO of Lekki Gardens Limited, who on separate occasions, had estimated the value of the opportunities at US$385 billion and US$400 billion, respectively.
“At N3.5 million per housing unit (low cost), the World Bank estimates the value of opportunities in the Nigerian housing sector at US$385 billion”, Salami said at a forum in Lagos, quoting a World Bank report which projects that the country’s 17 million housing deficit would rise to 25 million by 2020.
To deliver 5,000 affordable housing units in the Lekki axis f Lagos, three mortgage banks including Imperial HomesMortgage Bank Plc, Trustbond Mortgage Bank Plc and Homebase Mortgage bank Limited, recently entered into strategic partner- ship with three property developers including Gran Imperio Group, Ocean Springs Estate Limited and Vestril. “What we want to achieve with this partnership is a large stock of houses which mortgage banks can leverage to create products; we cannot do it alone as developers and it is interesting that, for the first time, mortgage banks are coming together to support developers”, Adeyeye Ogunwusi, Gran Imperio CEO, explained.
