Nigeria’s real estate market is booming despite the economic downturn
While other sectors of the Nigerian economy are reeling from the impact of the economic downturn caused by the coronavirus pandemic, mismanagement of the economy among other factors, the real estate market, strangely, has continued to thrive thanks to the foreign remittances, to government funding. and workers’ cooperative societies, survey of SUNDAY LEADERSHIP showed.
According to Bamtale & Co. CEO Isaac Bamtale, “people living abroad really take advantage of the economic situation and send money home, to invest in real estate; either to buy houses or to build properties.
No matter what happens in the country, the real estate industry is booming on three levels; people who are out of the country because our currency is lower, bring their funds to build houses. The majority of them exploit the advantages of the real estate industry by building properties for personal and business use. “
“In the real estate industry, a lot of people working overseas come back to invest in properties, others send money home to invest in real estate, which has caused a boom in the industry.
He noted that “Besides food and clothing, housing is needed for everyone. Even when the going is tough in the country, people still prioritize buying and renting properties. Almost everyone prefers to have their own house because it is secure instead of spending a lot of money on rent. Some people would go so far as to take out a mortgage through their office to buy land just to have a roof over their heads and reduce the cost of rent as well as to have their own assets.
In a report published by PricewaterhouseCoopers (PwC), titled “Strength from Abroad: The Economic Power of Nigeria’s Diaspora,” the firm said: “Official records indicate that there are 1.24 million migrants from Nigeria in the diaspora. (United Nations, 2017). This figure is likely to be higher in 2018 and 2019 with the recent trend in migration from the country.
“Almost half of Nigerian adults have indicated their willingness to leave the country within the next five years, according to a 2018 survey by the Pew Research Center. As a result, Nigeria accounts for over a third of migrant remittances to sub-Saharan Africa. PwC estimated that these flows amounted to USD 23.63 billion (2017: USD 22 billion) in 2018 and represented 6.1% of Nigeria’s GDP. Migrant remittances in 2018 represented 83% of the federal government budget in 2018 and 11 times FDI inflows during the same period. “
PwC noted that “Nigeria’s remittances were also 7.4 times the net official development assistance (foreign aid) received in 2017 of $ 3.4 billion. PwC estimates that migrant remittances to Nigeria could reach $ 25.5 billion, $ 29.8 billion and $ 34.8 billion in 2019, 2021 and 2023 respectively. Over a 15-year period, PwC expects the total volume of remittances to Nigeria to almost double, from US $ 18.37 billion in 2009 to US $ 34.89 billion in 2023. The growth of remittances is subject to global economic forces, which could stimulate or hinder the growth of remittance flows. Other factors that will stimulate remittance flows include the growth in the rate of emigration, the economic conditions of the resident countries and the economic fundamentals of the Nigerian economy. The World Bank predicts that global growth will slow to 2.6% in 2019. ”
Commenting on the role of the federal government in boosting the country’s housing stock, the Head of Public Affairs of the Federal Mortgage Bank of Nigeria, Mr. Ahmed Mohammed Kaoje, explained that the loans from FMBN are affordable contrary to the views of certain segments of the public. He argued that the bank has introduced several innovations that have attracted subscribers.
“The fund is very accessible if you apply. Anyone who does not apply will of course say that it is not accessible but very accessible. We have different windows depending on which one you like. We have about five to six products; we have the normal NHF loan to buy a house that’s already built; we have construction loans that we give to people who have land with good title deeds; we also have a home improvement loan which is a micro-credit program that we give to people to renovate their existing homes.
“We have hire-purchase, you walk into a house funded by a federal mortgage bank and you pay in installments, over a period of time the house becomes yours. We also have a cooperative development loan that we provide to formal and informal cooperative societies to build houses for their members. So many people have taken advantage of these products, we have our records and I can say the fund is accessible.
He noted, however, that: “The only thing is that some people are complaining that it takes time, and that is because there are about four parties involved and each has to play a role before the deal can be done. concluded. ”
He further explained, “We have the applicant, which is the contributor who is interested in the property, we have the primary mortgage bank, we have the developer who builds the houses, and we have the Federal Mortgage. Bank, so each of these parties must play their role accordingly, and when one party has not played their role, it affects the whole transaction. This is why you find that some people are complaining that our loan is hard to access, but the bottom line is you will get it. “
He added that the bank had introduced some innovations and made more repayments in the past four years than in the past 20 years.
“Things have improved tremendously in banking, we’ve introduced a lot of innovation and repayment is one of the areas where whether you like federal mortgage banking or not, you have to get us a high score on refund. I would have given you the figures, but I don’t have them here.
“In the past four years, what we’ve paid in reimbursement is more than what we’ve paid in the last 20 years of the plan.”
He said that the Federal Mortgage Bank grants loans at an interest rate of 6 percent, with the exception of the rent-earning plan which is 7 percent.
“Our loans are made at an interest rate of 6 percent, except for the capital lease system that we provide at 7 percent. The home improvement loan is 5 percent, the NHF loan and the individual construction loan are at an interest rate of 6 percent.
The rent to own is 7 percent because the 1 percent is insurance. He added that the bank gives developers 10% for the NHF loan, but 9.9% for the cooperative housing loan. “
Victorson Agbenson, chairman of the Federal Radio Corporation of Nigeria (FRCN) Multipurpose Cooperatives Limited, told LEADERSHIP SUNDAY that co-operatives have tackled the funding gap created by the economic downturn as co-op officials now rely on To build houses.
“The good thing about government funded co-ops is that contributions are deducted at source. Deductions are sent to co-ops who have a free hand to lend this money to members who need funds to build their homes. The head office of FRCN Multipurpose Cooperatives Limited is over 400 million naira wealthy, with 1,000 members across the country. We receive around 20 million naira per month and we have housing projects for members. “
He added that several government and parastatal agencies have their thriving co-ops and most members prioritize housing. He also said that the government headed by President Muhammadu Buhari has introduced some transparency in the management of cooperatives across the country.
The President of the Association of Real Estate Developers of Nigeria (REDAN), Dr Aliyu Wamakko, acknowledged the role played by the government in filling the housing shortage, but regretted that “government owned properties have become homes for reptiles ”and called for more government funding to private developers.
“In any serious economy, once it comes to real estate development, it’s driven by the private sector. The government does not have any house building companies and we find it difficult in Nigeria because the government engages in building areas that are affordable for Nigerians which are not affordable. Those built by this government were left for reptiles. The cost of construction is more than what people can afford.
“Most of the houses built by this administration have been blown away” because no one is there, no one can afford to pay. How can someone pay around 12 million naira for a two bedroom apartment? If you add up all the costs involved, there is no way for a poor man to approach this house, even if the location is good. The government did not stand up and ask us who are in the industry. We will be able to better advise the government on a better way to do it, ”he said.
Besides the federal government, some state governments have various housing programs for their citizens and in some cases partner with private developers to provide what they call affordable housing, to workers and individuals.