In Nigeria, the problem of housing deficit has been compounded by the rapid rates of urbanization and economic growth. Housing difficulties is more serious for the low income groups where problems have been complicated by rapid growth, inflated real estate values, influx of poor immigrant and lack of planning. Also the problem of the shifts in the designing of housing from the rooming design to flat and single family house designs as responsible for acute housing deficit in Nigeria for the low income groups.
Regrettably, for more than five decades, Nigeria is yet to develop an effective and workable housing delivery programme that would enable the country to achieve the goals of its housing for all policy. Gigantic housing programmes were initiated by successive administrations since independence but most of the housing schemes remained largely uncompleted.
An expert in Real Estate Development and Management, Mr. Umezurike Austin Umezurike said at moment, Nigeria needed to invest N7 trillion annually to bridge the housing deficit gap.
Mr. Umezurike, who is the Chief Executive Officer of EJUMERGEO Ltd, disclosed this in a special interview with the Editor, Skybirdnews Group, Mr. Charles Nwaoguji, stated that Nigeria has a housing deficit of about twenty five million (25,000,000) units.
He said that government should declare state of emergency on housing sector and create friendly financial policies that would encourage local investors to think towards the industry.
However, he noted that “huge investment base is required to an average of 6 – N7 trillion about 16 to $20b annually to enable a bridge in the gap of the housing deficit.”
“Government in all levels should legislate and create policies that shall alleviate the challenges of real estate developers and prospective investors from land use to provision of basic infrastructural development that accompany real estate development,” he said.
In this interview, he spoke on other issues, challenges facing Real Estate Development and management, state of Nigeria economy, the effects of COVID-19 on businesses, and etc,
Well, Nigeria and her economy is somewhat pretinent to keenly observe from time to time, this gives insight for proper assessment and possible advise to prospective investors who might view here as an investment destination.
However, the Nigerian economy is a mid-income based, mixed economy. It is an emerging market, with expanding real estate, Manufacturing, Financial, Service, Communications, Technology and Entertainment Industries. In terms of norminal GDP, the economy is rated 27th-largest economy in the world, while it maintains its 22nd-largest economy position in terms of parity of purchasing power and real estate contributes about 7.8% to the GDP.
The Re – emergence of manufacturing sector of the economy pushed Nigeria to becoming the largest economy in Africa and when this present administration of President Mohammadu Buhari came onboard, it introduced some policies that diversified the economy and discouraged import based economy thereby giving room for a production based economy. Nigeria produces a large proportion of goods and services consumed within the West African coast and real estate is one of such.
Housing deficit in Nigeria
Nigeria has a housing deficit of about twenty five million (25,000,000) units. This is quite regrettable and calls for an emergency response, that is why I requested Government in my earlier statement, to declare state of emergency on Housing if we really want to bridge the gap in that sector. It also creates huge business opportunities for investors who understand that real estate returns is on long-term basis, but is one that is well worth it.
However, huge investment base is required to an average of 6 – N7tr, about 16 to $20b annually to enable a bridge in the gap of the housing deficit.
Government in all levels should legislate and create policies that shall alleviate the challenges of real estate developers and prospective investors from land use to provision of basic infrastructural development that accompany real estate development.
Since independence, all the housing policies by the Federal Government are laudable ones but have all failed because they were built on unsustainable tenets that underscore provision of housing solely by the government for the citizens. This is an anomaly and ridiculously mischievous which must be corrected for the country to move forward and achieve a remarkable reduction in the housing deficits because government has no business providing housing for everybody but should encourage private sector to thrive in such ventures.
Challenges facing Real Estate development and management
This is a very prominent question and indeed worrisome; below are some of my concerns seen as challenges in the industry;
One of the major challenges affecting real estate industry in Nigeria is the bureaucratic process of land registration. Process of property registration in Nigeria is viewed as one of the worst globally, and this poses a very serious challenge and setback in the industry. Process of registration in Nigeria can last as long as six months to two years, taking an average of about ten to twelve procedures depending on the State, and it costs about 22% to 25% of the value of the property.
Consequently, constant delays are inevitable due to the lackadaisical attitude of workers at the Land Registry Office. It’s common knowledge that developer’s applications would pass from desk to desk for several months and by the time the necessary approval is obtained, such a developer may have lost his source of funding or incurred huge interest on loan obtained from bank for such project.
However the creation of GIS and piloting of e-approval system for development permit by the Lagos State government hopefully aims at streamlining the regulatory environment and improves incentives for private investment and businesses as Land Registration Initiatives.
The cost of constructing/building a house in Nigeria is on the high side though this may vary from state to state or region to region. Take for instance, building a five bedroom duplex without the purchase of land cost about N30 to N100m depending on the facilities proposed for the duplex and location. Cost of building in Nigeria rates the highest in Africa.
High Building/Construction cost in Nigeria is majorly as a result of these three parameters; high costs of building materials, high cost of skilled labour, and costs associated with poor road network or at times no road or plan at all to the project site with poor or no sewage systems.
To buttress this point, about 90% of Nigeria’s urban dwellings are built of concrete and the price of cement in Nigeria ranges form 50-60% higher than our neighboring countries in comparison with world market prices. Lack of public infrastructure adds as much as 40% to the total costs of the development. Nigeria is a blessed nation no doubt and with tremendous natural and human resources domicile across its length and breathe and hardly experiences natural disasters such as earthquakes, Tsunami, or Tornadoes. Despite the absence of all these damaging natural disasters, our building materials are still very expensive and man made collapse of houses still exist due to improper monitoring by regulatory bodies. Fundly said, “since we didn’t have our own natural disasters to bring down our buildings, we simply created our own version through sheer negligence”.
In terms of transparency, Nigeria suffers from elements of corruption, lack of fundamental data and poor environmental sustainability programs when building both small and large-scale properties.
Real estate investors are subjected to multiple taxation, the taxes and levies paid by developers include the following; development levy, income tax, building plan approval levy, property tax, land use tax, and we also have cases whereby real estate investors are expected to pay renovation tax whenever they want to renovate their properties. The developer must as a matter of importance, pay Omo-onile (illegal community fee) receipted from foundation to decking to roof even fence level and all stages of the project.
Paucity of funds in Nigeria poses a major threat in the industry. Financing remains a problem in both ways, property developers and prospective homeowners. So if you’re thinking of investing in property, financing or securing real estate loans for financing a personal home purchase, you will still have to deal with the familiar problem of insufficient capital.
How to tackle the challenges
One of the ways of tackling these challenges which our firm Ejumergeo Ltd. has embarked upon is educating people through seminars and the likes on real estate investment opportunities. We go as far as internalising in the minds of our clients and participants, the fundamentals of real estate financing, how they can locate the best sources of investment capital and protect their personal assets from investment risks, effectively maximizing cash flow, helping potential investors understand and apply creative financing techniques.
Haven said that government on it’s own part should declare state of emergency on housing and create friendly financial policies that will encourage local investors to think towards the industry. It’s unfortunate that foreign investors have better and easier assess to funds in Nigeria bilaterally than local investors and that is economic sabotage and system aberration. Nigerians in Nigeria if encouraged have all it takes to solve Nigerian housing deficit problems
How lockdown affects businesses
Following the spread of the new Corona Virus, the Federal Government had instituted a lockdown in Lagos, Ogun and the FCT, this is viewed by businesses world over as a global tragedy and indeed has very negative effect on greater percentage of the world prominent economies of which Nigeria is key player and Lagos State as leading economic nerve center of Nigeria is at the receiving end. On the flip side, Pandemic of this nature usually create new opportunities, businesses and develop new ideas that avail economies greater opportunities to bounce back if they are efficient enough.
What the lockdown may mean to the real estate sector just as in many other sectors is total locked down in business and operations. For instance, ongoing land procurement processes are on hold, just as some building projects which have not reached completion. These activities are tied to timelines and investors’ money are on the line as well, you know what that means to a business man. Anyway, the issue at hand is a matter of life and death, so we say life first before business.
However, as an optimist, the lockdown availed me ample opportunity to look inwards, so I called up the Chemical Engineer in me. Relative to the situation at hand, I developed about four different products that would aid community hygiene and well-being now and even post covid era. Producing these; Hand gel(Sanitizer), Disinfectant, Dish washer, Liquid soap has been fulfilling and production shall be scaled up upon satisfaction of appropriate authorities.
Advise to government on covid-19
Yeah, Novel Corona Virus is a global tragedy and requires every sincerity and responsibility in governance. However, the emergence of COVID-19 has crippled even the biggest economics of the world and requires very serious discipline in the management of public resources and treasuries.
Nigeria has done well in containing the pandemic and managing the spread but some mischievous Nigerians and state governors who see every misfortune as an opportunity to play politics just to patronize their political ego misinformed the public from the on sent and I am certain that you know how Nigeria is wired tribally, politically and religiously.
My humble advise to the government is to prioritize the health sector possibly again, declare a state of emergency on the sector and build world class hospitals at least one in each zone of the federation not necessarily to patronize zonal arrangements but to make it closer to the people.
One of the most important things the Government needs to do urgently is to recognize and give our scientist and traditional medicine practitioners the opportunity to prove their expertise and we must not always depend our clinical research or analysis of the West.