Amid tottering growth, slow and fragile recovery of the economy, the real estate sector in the first half of this year (H1 2018) witnessed some sort of activities that cut across its various sub-sectors, recording what analysts have described as ‘cautious progress’.
The various sub-sectors, including residential, retail, office, hospitality and industrial, experienced stabilisation of rents, revival of some suspended projects and the commencement of new ones, in contrast to H1 2017. One way or another, these activities impact positively on families and economy.
Prices of building materials have dipped or remained constant year-on-year. A new report on the real estate market performance in H1 2018 by Northcourt Real Estate says, however, that this is expected and understandable, given that foreign exchange rates have stayed fairly stable for about 12 months and is also readily available coupled with the quantitative easing of headline inflation from almost 19 percent in January 2017 to 11.13 percent in May this year.
Of all the various sub-sectors, activities were more upbeat in the residential subsector where the Central Bank of Nigeria (CBN), state governments, estate developers and sundry investors engaged in different levels of partnerships and collaborative efforts to increase housing supply and encourage demand.
Of significant note is the giant stride by the Ogun State Property and Investment Corporation (OPIC) on local content in housing delivery. “As part of efforts to boost the country’s economy and create direct and indirect job opportunities for Nigerians through the patronage of made in Nigeria goods and services, OPIC is now offering prospective buyers of all its housing units, houses constructed with 80 percent locally sourced inputs”, explained Ayo Ibaru, Director, Real Estate at Northcourt.
Apart from the job opportunities created, the prices of the houses have been reduced considerably as the local building materials used are a lot cheaper than the imported ones. Through this, individuals and families are being empowered, making them able and ready to contribute to economic growth.
To foster housing provision, the Central Bank have selected 34 mortgage banks and four commercial banks to increase access to housing finance for low-income earners. Ibaru explained that these selected banks will benefit from a $15 million Housing Micro-finance Fund and a $10 million Technical Assistance Fund.
Furthermore, the CBN engaged the Mortgage Bankers Association of Nigeria (MBAN), the Nigeria Mortgage Refinancing Company (NMRC), Federal Mortgage Bank of Nigeria (FMBN) and Nigeria Deposit Insurance Corporation (NDIC) to launch the Uniform Mortgage Underwriting Standards for the informal sector.
The implication of this is that operators in this sector of the economy are now being brought into the mortgage net, such that as opposed to what obtained in the past, these people, mainly through cooperatives, can access housing finance through mortgage.
In another public-private partnership effort, the Kaduna State government entered a partnership with Sterling Bank to launch a ₦5-billion fund aimed at providing mortgages at single-digit interest rates. Beneficiaries are required to make security deposits of between 15 to 30 percent of the value of the houses but would be expected to liquidate mortgages within 10 years.
This is in addition to the foundation laying for 600 housing units, a five-star hotel and two shopping malls in the state. The United Nations Development Programme (UNDP) also completed 608 housing units in Borno State as its contribution towards rebuilding areas destroyed by Boko-Haram. This is as a 72- unit housing project under the National Housing Programme in Jigawa state attained 80 percent completion.
“In all of this, jobs are being created, every inch of the way, for artisans, skilled and unskilled labourers, and building industry professionals. Houses are being provided for public sector workers and a major social problem is being solved with positive impact on the economy”, noted Michael Jideofor, a builder and real estate analyst, in a telephone interview.
The ministry of power, works and housing will also be engaging 20 local contractors in Sokoto to construct an 80-unit housing estate worth N1.3 billion. The Edo State government started the construction of 1,800 housing units in partnership with MIXTA Africa, a property development company with projects spread across Africa. Completion is expected by Q4 2019.
Within this period, property values remained linked to location, infrastructure availability, perceived levels of security and historical antecedents. This was evidently the case in the ‘Garden City’ of Port Harcourt. The federal government-owned Trans Amadi Gardens was in fair demand.
High vacancy rates have been a major feature of the residential property market even after the exit of recession in the second quarter of 2017. But, there has been a little improvement. Lagos showed slight improvements with its Mainland strongholds recording low vacancy rates.
In Yaba it was only 3 percent; Surulere, 4 percent, and Magodo Phase II, 5 percent. “These were the lowest vacancies of the nodes considered”, Ibaru disclosed, adding, “the more cosmopolitan areas of Victoria Island, vacancy rates were higher at 35 percent; Oniru, 37 percent; Lekki, 39 percent and Ikoyi 40 percent, as affordability remained a central consideration. Flexibility also featured in many residential areas with some landlords willing to offer monthly or quarterly rents”.
Abuja’s city centre saw high demand for low cost 1 and 2-Bed apartments while that of 3 to 4-Bed houses saw a drop in demand due to the weakened purchasing power of the average residents. High tenement rates, waste management and water bills contributed to the reduced interest.
However, to increase the housing supply in the FCT, the Federal Government is to partner Zvecan Consulting and a Chinese firm, Wengfu Company Limited, to build 5,000 housing units under the Federal Integrated Staff Housing (FISH) programme.
