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e are
obviously not going to recover from the frenzy of Nigeria’s Mortgage Refinance
Company, NMCR; at least not anytime soon. Since it was launched, no week has
passed without an item of news, opinion, report, broadcast or sundry details
about it – such is the faith our industry has in the scheme.
Experts such
as Mr. Hakeem Ogunniran, Managing Director, UACN Property Development Company;
Mr. Niyi Adeleye, Head of Real Estate Finance, Stanbic IBTC West Africa and
others have however hinted that the NMRC, though a welcome development, is not
a magic wand.
While their
arguments are telescoped by the myriad of other challenges slowing down the
industry, my concern has always been; giving the “mathematical wonder” expected
of the scheme, where is the land? That is, even if all mortgage seekers receive
mortgages at reasonable rates, where are the houses for them to buy?
We all
know the housing units in large supplies are not those targeted at the average
Nigerian. Those targeted at them are not in the city centres, besides the fact
that they are also in short supply.
Furthermore,
everyone agrees that even the highbrow areas of states such as Lagos are
overpriced for corporate and high income clients because of the scarcity of
land. The implication is that except something is done about access to land,
mortgages may truly be available, but the supply end of affordable homes for
mid, mid-low market may remain unmatched. Thankfully, the NMRC is
forward-looking enough in this regards, but the impact might not be felt sooner
than expected.
Since land
is a fixed asset, it therefore follows that the only way to breathe life into the
NMRC as well as Nigeria’s growing retail and hospitality sectors is to develop
infrastructure.
Developing infrastructure such as roads will open up new axes,
especially in the suburb of the cities. If this happens, the market which will
absorb the average-Nigerian mortgagees will be adequately created; with
developers matching demand with their supply and homebuyers savouring the
pleasure of owning a home – in the true sense of the word!
A clear
example is the opening up of the Ibeju-Lekki axis of Lagos owing to the
Lekki-epe express way concession.
Currently, there are number of developments
on the axis that could be considered “affordable” if placed side-by-side the
average price of property on the corridor.
With the
final budget of the Babatunde Raji Fashola’s administration of Lagos State
allocating a substantial 20% of its 489.7bn to infrastructure; it is safe to
conclude that the tides will favour Real Estate in the city in the coming
years.
Speaking
through its commissioner for Works and Infrastructure, Olufemi Hamzat, the
state government said it is optimistic about the completion of 10-lane
Lagos-Badagry express way by 2015; and it is not relenting in its efforts to
attend to the inner-city roads numbering about 1,000.
If
significant steps are taken to match the words with action, it is public
knowledge that real estate activities already saturating the corridor will pick
up.
Besides the fact that the axis is mostly marked as industrial: residential
for mid and mid-low will also do well on the axis as manufacturing companies
finding their ways into the country will have a pool of close-to-home employees
to draw from.
Second, at
the Real Estate Unite 2013, Mr. Chu’di Ejekam of Actis reaffirmed that there is
a huge retail market in Lagos. For example, in the retail space, he informed
that Johannesburg which is just the size of Ikeja has about 70 shopping malls
which are size of The Palms; while Lagos, with an estimated 21 million
population can account for only 3 standard retail malls.
One of the
reasons he mentioned besides landing titling, cost of land and poor skill set,
is the availability of land around axes where people’s spending power, within
an 8km radius, averages about $1, 500 monthly. With the NMRC leading and a
budget bent on strengthening infrastructure; a new set of middle class with
relevant purchasing power and shopping culture will emerge around the suburbs
of Lagos, giving opportunities for employment and supplementary growth in the
retail sector.
Finally, the
federal government has also allocated an impressive amount of its 2014 budget
to infrastructure and with 14 states already on the pilot scheme of the NMRC, a
bustling infrastructure sector and attendant real estate market expansion will
mean more employment and an increase in real estate contribution to the Gross
Domestic Product.
Source: 3investonline.com
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