• Friday, May 24, 2024
businessday logo

BusinessDay

Reasons FG, developers rule out low cost houses for Nigerian market

Nigeria’s housing deficit data unreliable – Experts

Building low cost houses and putting on the property market for low income earners is not possible in Nigeria because such a venture is not economically viable, the federal government and property developers in the country have said.

Despite insistence by other housing sector stakeholders that building houses low income earners could buy is possible and economically viable, government and these profit-driven investors also insist that it does not make economic sense, citing cost of land, building materials and high interest rate.

“If you want low cost housing, where’s low cost land, low cost cement, low cost doors and low cost labour to deliver low cost housing?” queried Babatunde Fashola, Nigeria’s minister for works and housing, at a media programme in Abuja recently.

The minister explained that he had not been talking about low cost housing because “there is no low cost land; what government can do is to make the houses affordable and dignified.”

Bamidele Onalaja, Lagos State chairman of Real Estate Development Association of Nigeria (REDAN), affirms, saying it will be difficult to have, for instance, a N2 million house on the market without the government providing the land.

He stressed that land had remained a big factor in house production, hence the need for government to do more by providing free lands which complicates the matter further as the government says there is no free land.

According to the REDAN chairman, part of the reasons houses were costly in Nigeria was the price of land which, he explained, depended on location and building materials.

This validates findings by the Centre for Affordable Housing based in South Africa which notes that the lowest cost of a house produced by a private developer in Africa at the cost of $8,000 (about N2,999,900) is affordable to only 26 percent of the urban population in Nigeria.

At a press briefing recently, Ayodeji Ojo-Omoniyi, Group Executive Secretary, Adron Homes and Properties, said his company would build affordable instead of low cost housing because they were in business to make profit and not to solve other people’s problems.

Ojo-Omoniyi stressed that their focus was on middle income earners to whom they deliver decent and quality houses and find ways of making the purchase easy for them through flexible payment plans and discount sales strategies.

Tolulope Onalaja, Executive Director at RevolutionPlus Property Development Company, also explained why low cost housing was not possible in Nigeria, citing cost and time of property registration and documentation, calling for speedy processes for land titling and documentation which still has no time frame to complete transactions.

“In the United States, you can get your title under 48 hours, but it is different here; governor’s consent can take up to two years as there is no time frame; it is becoming a big challenge because you cannot get a time frame and relate same to Diasporan Nigerians that buy properties from developers like us,” she said.

Continuing, she advised that “government should give a time frame for getting titles and allow for more coordinated ways of searching and getting titles. Government still has a lot to do as regards the Omoonile malaise, and property taxation, which is killing businesses. They should give tax holidays to companies and encourage private businesses that are still trying to survive.”

But Fashola was of the view that, going forward, every decision taken in the housing sector has to be driven by hard data with adherence to market segmentation. He recalled that some houses built by the Shehu Shagari administration in the 80s in the north have been left unoccupied because no survey was carried out as to the taste of those who needed the houses.