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My Own Home: Tackling housing finance challenges

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The daunting challenges of access to cheap accommodation and mortgage finance will be a thing of the past if the government stays to its plans. DAYO AYEYEMI and DUKE AIGBOJE report

It is no longer news that Nigeria has 17 million housing deficit and would require building 740,000 units annually for the next 20 years to bridge the gap. What is however, news is about efforts of all tiers of the government and stakeholders to nip the challenges of accommodation among low-income Nigerians in the bud.

Demonstrating the political will to tackle the problem head-on, the Federal Government has been introducing different programmes ranging from National Housing Fund (NHF), Family Housing Fund to Federal Integrated Staff Housing (FISH) programme as well as the newly initiated Nigeria Housing Fund Programme (NHFP) – all aimed at dousing tension in housing finance and affordability among citizens.

The Family Housing Fund is a programme under Federal Government’s Social Investment Fund in which N100 billion has been set aside.
The World Bank and the Africa Development Bank (AfDB) are contributors to the fund. From this fund, developers of real estate for social housing can borrow 80 per cent of cost of project and counter fund with 20 per cent.

The latest in the series is the newly launched “My Own Home Scheme” under the Project Administration Team of the Nigeria Housing Finance Program (NHFP) in Abuja and Lagos.
With the Lagos edition unveiled, Nigerians aspiring to own houses can now heave a sigh of relief as key stakeholders in the mortgage finance industry such as representatives of the Central Bank of Nigeria (CBN), Mortgage Bankers Association of Nigeria and NPF Micro Finance Bank took time to explain benefits of the scheme.

NHFP is a Federal Government scheme that is being coordinated by the CBN to ensure access to housing finance by those said to be qualified to own houses.
It is different from the NHF, given the market-driven concept, which is based on public-private partnership (PPP) arrangement designed to enhance a sustained access to housing finance development for all categories of people.
Justifying the essence of the programme in Lagos, Housing/Mortgage Finance Consultant to the CBN on the project, Mrs. AdenikeFasanya-Osilaja, said the initiative was in collaboration with the Federal Government, World Bank and Mortgage Banks Association of Nigeria (MBAN) with other relevant stakeholders to ensure that issues of housing finance are addressed.

With the low condition of housing finance, she said both civil servants and those in the private sector needed to be properly guided on the best approach to accessing mortgages.
She said the NHFP will create the enabling environment for strengthening the Nigerian housing sector by setting up sustainable framework for mortgage originators.

This, she said, ranged from financial institutions that provide housing finance to access long-term refinancing, adding that the framework would lead to setting up of mortgage guarantee/insurance as well as a housing microfinance scheme for strengthening of Nigeria’s housing microfinance sector.
Besides, she said, “intending house owners are advised to shop around to compare rates before taking out a mortgage or housing finance loan.”
Deputy Director, Other Financial Institutions Supervision (OFIS) of the CBN and a Director in NHFP, Adesemoye Adedeji , pointed out that to ensure its accessibility and effectiveness, nine microfinance banks (MFBs) would be participating in the scheme, which is funded with $300 million
He explained that the arrangement would capitalise mortgage guarantee and insurance with $15 million for the pilot housing microfinance.

He said: “This money is with the CBN for proper monitoring and execution than just disbursing it to wrong channel that can’t afford to handle the project.”
Fasanya-Osilaja said that the NHFP intervention would include a mass literacy campaign on consumer education, protection and responsibility with regard to housing finance in Nigeria.

She said: “The campaign is aimed at educating every Nigerian on the right to own a home, the cost implications, advantages of taking loans to finance a home and to ultimately serve as a catalytic programme to jumpstart the housing market in Nigeria.”
President of the Mortgage Bankers Association of Nigeria (MBAN), Mr.Niyi Akinlusi, said, My Own Home” scheme was a departure from other housing schemes in Nigeria.”

Akinlusi, who is also the Managing Director of Trust Bank Mortgage, said that NHFP had set up a framework that will revamp the housing finance sector by making access finance a lot easier through its four major components, which include: “The Nigerian Mortgage Refinance Company, whose task is to provide long-term refinancing of mortgages and standardizing mortgage procedures; Mortgage Guarantee/Insurance Scheme, which is responsible for providing borrowers with insufficient or not equity contribution (initial down payment) with mortgage for home ownership.

“The Housing Microfinance Scheme is meant to stimulate increased lending to low-income earners in the formal and informal sectors in Nigeria through Microfinance Banks for incremental housing construction or housing improvement; and finally, the technical assistance for the scheme shall ensure the protection of all the parties involved in the scheme.”

Last Line
Under the current initiative, there is need for full implementation of the scheme to increase home ownership in the country through mortgage finance.

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1 Comment

1 Comment

  1. Tony Obiekwu

    August 30, 2017 at 2:16 am

    I am very much interested in this scheme and as as such please KEEP UPDATED ON THE VARIOUS HOUSING SCHEMES PROJECT INTENDED OR IN THE OFFING.
    THANKS FOR YOUR COOPERATION.

    REGARDS
    TONY OBI

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Business

2018: Experts predict vibrant real estate

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As oil prices stabilise at 17 per cent higher than 2017 average and direct foreign investment increases, experts see surge in real estate activities in 2018. DAYO AYEYEMI reports

 

Following improvement in the economy, things are beginning to look up in Nigeria’s real estate sector with market operators getting set to tap into the opportunities, which exist in various segments of the market.

They were, however, particular about the low and middle income residential, millennial and student accommodation sections. Apparently equipped with the dynamism of happenings in the economy, they stated that investors (both local and foreign) were prepared to launch into pockets of opportunities in real estate market. Investors’ hope has been further boosted by the latest Bismack Rewane-led Financial Derivative Company (FDC)’s report on review of third quarter of 2017, which showed that Foreign Capital Inflows (FCI) to Nigeria increased by 148 per cent to $4.15 billion.

This positive trend, analysts said, happened as a result of renewed investor confidence in the economy. Also, the experts noted that oil prices had climbed to 17 per cent higher than 2017 average, expressing confidence that if the situation persists, oil revenues might help mitigate consequences of capital flight.

Current development

This newspaper gathered that while some developers are entering into Joint Ventures (JV) with the government to provide affordable housing units for citizens, others are currently repackaging their products to attract financiers and buyers.

In exclusive neighbourhoods such as Ikoyi, Victoria Island and Lekki, where landlords can no longer wait without getting tenants and buyers for their dormant properties, they have been converting their vacant houses to smaller apartments such as one-bedroom, studio and condos to attract people in need of smaller accommodation. This innovation by landlords, according to experts, has caught the attention of working-class singles who want to live very close to their workplaces.

Experts’ view

Taking a look at what 2018 holds for the sector, experts, which comprised developers, institutional investors, mortgage providers, media practitioners, property consultants and brokers at Fine and Country West Africa’s investors series, agreed that the outlook was bright and promising for real estate, hinging their prediction on improved economic climate. According to them, the economy has started looking up with pockets of opportunities emerging in the residential segment of the market.

They observed that low to middle income market remained strong all through the recession period while the upper market struggled. “But developers are adopting creative ways of dealing with the persisting challenge with a view to stimulating demand and sustaining their business,” they said.

Setting the pace, Sales Consultant, Fine and Country in Lagos, Mr. David Mba, said that he saw a more vibrant residential market coming as a result of an improved economy in 2018, adding that what were considered challenges in the past have become opportunities. According to him, developers in their bid to share risk and also raise more capital were going into joint ventures, citing Brains and Hammers Limited’s example.

“Only recently, Brains and Hammers Limited, one of Nigeria’s leading real estate and infrastructure development companies, entered into a joint venture agreement with Lagos State Government,” he said. This move, he explained, is believed to be the company’s response to pressing demands from its clients who wanted to acquire property in Lagos.

He said: “The move will see the company developing 750 housing units, comprising 132-tower units and 618 units that will be part of the Jubilee Estate development in Iganmu area of Lagos.

“The Phase 1 of the project comprises 129 units made up of 12 units of 2-bedrooms, 24 units of 4-bedrooms terrace and 93 other units. There are also twin towers made up of 132 units, comprising 60 units of one bedroom, 24 units of two bedroom, and 24 units of 3-bedroom maisonette.”

Other market trends, Mba said, included increase in demand for good value three or four bedroom apartments in Ikoyi precincts, selling within the range of N120 million to N150 million; increase in demand for houses including terraces, semi and fully detached units. Publisher/CEO, BusinessDay, Frank Aigbogun, is of the view that improvement in the economy means increased business activities that will in turn trigger more demand for real estate products such as commercial office, retail and residential buildings.

Fine & Country’s CEO/Vice Chair, Udo Okonjo, stated that the sector’s positive outlook would come with opportunities for only investors who are ready to understand that the market had changed.

From market survey, she stated that there would be opportunities across various segments of the real estate’s market including residential, commercial office and retail. “Lifestyle communities are the new face of residential real estate.

These communities have the advantages of economies of scale and security,” the Fine and Country’s CEO said. She hinted that opportunity currently existed in millennial and student housing, adding that many investors were tapping into these areas.

Dean, Faculty of Environmental Sciences, University of Lagos, Professor Timothy Nubi, confirmed that many investors had already taken position around the university campus and were delivering one-bedroom self-contained apartments for N500,000 per annum.

In a bid to maximise the value of their property, a recent Northcourt Real Estate report 2018 outlook, noted that land owners looked more favourable to joint ventures with developers.

This newspaper also discovered that many developers and investors have been taking advantage of the ongoing construction of Dangote Refinery in Ibeju-Lekki, Lagos to acquire more lands in the axis for housing estate development.

Last line

As the business investment climate gets betters, necessary actions must be taken by the government to improve ease of doing business in the country.

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Business

How to attract finance into real estate, by experts

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Real estate venture is capital-intensive. While this huge capital is often difficult to come by, experts and advisors have propounded guiding principles for developers. DAYO AYEYEMI reports

 

One major thing the Federal Government needs to tackle urgently is developing the real estate sector, which has not shown any sign of recovery from recession going by the number of abandoned projects dotting the landscape.

As investors are beginning to show confidence in the Nigerian economy due to the government’s intervention in forex, rebound in the capital market and rising oil price, real estate developers are overwhelmed with dearth of funds to complete their projects and start new ones as banks are still skeptical to grant loans. While some of the developers are currently talking to banks for project finance, others have taken the campaigns to Nigerians in diaspora and working class home seekers.

However, some industry experts have tasked developers to package their products (projects) very well to attract financiers or investors. Understanding critical problems with financiers of real estate projects, Managing Director, MCO Real Estate (MCORE), Mr. Munachi Okoye, said that developers must package themselves by following strict guidelines to attract project finance.

MCORE is a real estate investment and advisory firm that offers services and solutions to investors, developers and other third parties towards the development of and investment in large scale real estate and infrastructure projects. For any developer seeking funding for a project, Okoye stated that certain basic principles must be applied. For starters, he pointed out that funders would not finance the acquisition of land, enjoining developers to bring land with clean title to the table as their equity contribution. For debt, he said that funding would always exchange against title, which, according to him, acts to secure the loan.

“Without title, there is no collateral to secure the loan,” he said. In addition to land, the MCORE boss explained that developers were also expected to contribute cash as their equity investment. Okoye said: “This is called having ‘skin in the game’ and gives the investor the comfort that the developer is fully committed to the project’s success and would not walk away if the project is challenged.”

He also wants developers to know that funder would need to know that the project is attractive to its target market, pointing out that this would be evidenced by pre-sales. “Pre sales backed up by deposits reduce the need for external funding hence improving returns,” he said.

Besides all these, Okoye stated that financiers would need to know that developers and his team have the experience to successfully deliver the project on time and within the budget, saying, “If a funder is not comfortable with a contractor he may ask that the contractor be replaced with a more experienced one that has a track record of delivery.”

The MCORE boss reminded developers of the need for a good and well-written feasibility report about the project, saying that funders would require a feasibility study particularly for large projects. According to him, a well written feasibility study will provide a window through, which an investor would be able to view the opportunity presented by a proposed project better.

“A good feasibility study is far more likely to attract funding from investors than a poor presentation,” he said. Okoye stated that investors would always focus on their return at the end of the project, adding, “if return is not attractive, no investor will invest.”

 

Joint ventures

In relation to joint ventures, the managing director said that developers must ensure that the JV partner are not overcompensated, stating that if this happens, there would not be adequate return for the investor.

He said: “It is imperative that the developer looks at all the revenue generating aspects of his business – lettable areas, units for sale, land for sale, advertising revenues etc and seeks to design in such a way that revenues are maximised while costs are managed. “Costs such as lifts, swimming pools, fittings and fixtures and sub-structure costs among others, should be engineered wherever possible to minimise costs while delivering value.”

According to him, real estate developers must be opened to multiple exit strategies since market would determine how a deal is ultimately executed.

He noted that residential developers undertaking a JV might seek to compensate investor with units, adding that in certain cases, some investors might not want the trouble of selling units but preferred to receive cash. Exits for larger developments such as hotels, shopping malls and commercial office developments, Okoye said, would require additional expertise, adding that such project are usually sold by private equity investors to international companies or funds.

“In recent times developers have sought to sell commercial office developments on a per floor basis making it easier to sell in the local market,” he said.

In the final analysis, he advised that a good developer has to juggle costs, land acquisition, regulatory issues, funding, design, revenue generation, business requirements, construction and deliver a successful project that meets or exceeds the requirements of the user while providing an attractive return to the investor. Nigeria received up to $21 billion inflow in 2017 through Diaspora remittances. It has also been estimated that remittances to developing countries would grow by 4.8 percent to $450 billion.

 

Other projects

In a move to attract funding, the Director of Homework Development and Properties Limited, Jide Adekola, has restored the trust of foreign investors in Nigeria’s real estate sector.

This is the major outcome of the recent conference, organised by the Association of Nigerian Physicians in the Americas (ANPA) in Atlanta, Georgia, United States, where the Lagos-based leading real estate company showcased its affordable housing units and promoted the recent positive developments in real estate industry in Nigeria.

Adekola said the forum provided a platform that helped to change the perception that foreign investors would not get value for money or might get scammed in Nigeria.

Besides, he said it has also created the awareness that there are professionals in the sector who are able to provide quality products in due time. “The change in perception, which we have created, would in no small measure boost businesses and increase the volume of foreign direct investments that can engender increase in gross domestic product of the country, “Adekola said.

Principal Partner, Kola Akomolede and Company, Chief Kola Akomolede, stated that when things happened in the economy, it would take time for real estate sector to rebound.

While he urged developers to package their products for would-be investors, Akomolede said: “It will take time for property development projects that have been stopped to resume and be completed.

On how he attracts funds for estate development, Group Managing Director, Adron Homes, Emmanuel King, the developer of Treasure Parks and Gardens, said he had spread his tentacles to Nigerians in diasporas, especially in United Arab Emirates, United Kingdom and United States of America, targeting them for home-ownership in the country. King said that many of them came for site visitation, subscribed and convinced their friends, who are now potential homeowners in his estates.

 

Last line

Apart from good feasibility report and project packaging, a good developer needs a good team to help his business grow.

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Housing: Developers adopt strategies to cut deficit

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To reduce Nigeria’s 17 million housing deficit, real estate developers are taking up pragmatic marketing strategies to help Nigerians realise their homeownership dream. Dayo Ayeyemi reports

 

Housing is more than mere shelter as it encompasses all basic infrastructures such as road network, power supply, clean water and other services that make life enjoyable.
Besides, the number of quality houses in any nation is one of the criteria for measuring its level of development and quality of life.
Real estate sector has been seen by experts as a mirror of the economy as it directly reflects the economic status of the nation.
However, despite the huge housing deficit of 17 million in Nigeria and the need to build 740,000 housing units annually to bridge the gap, statistics have shown that over 60 million residents are living in indecent houses across the federation.
According to the United Nation’s statistics, 60 per cent of households in the developing world don’t have access to clean water.
Besides, the UN report says 30 per cent of urban population in the developing world live in slums, while 4.5 million move into slum each week.
Bracing to reduce homelessness among Nigerians and improve living condition, some real estate developers have mapped out pragmatic sale strategies to simplify and help Nigerians in need of accommodation fulfill their dream of home ownership.
From site and services scheme to introductions of easy flexible payment, concession and high discounts among others, home seekers now have options to choose from.

Marketing edge
Group Managing Director, Adron Homes And Properties Limited, Oba Adetola Emmanuel King, said that successful strategy required hard work, critical thinking and strong execution skills.
He hinted that from Lagos to Abuja and Ibadan, he had mapped out strategies through the company’s forthcoming ‘Lemon De Val Party’ to help families seeking accommodation realise their dream at low entry point.
He stated that first and second editions of the programme, which were held on Valentine Day, had helped 3,000 families to realhse their home ownership dream in his various housing estates across Nigeria.

As part of the strategies, the Adron boss introduced some Nigerian musicians and Nollywood practitioners such as Ajibola Alabi popularly known as “Pasuma” and “Small doctor,”, Saheed Balogun and Fathia Williams as the company’s ambassadors.
According to king, Nigerians need housing, stressing that he had discovered that the best way the company could make it possible at affordable rate was by ensuring that the entry point is reduced to N500 for easy accessibility.
“We have new estates coming on board. In a few days, we will be doing ground breaking ceremony of Town Park and Gardens in Imota, Ikorodu, Lagos,” he said.
“We are also going to be doing ground breaking in Kuje in Central Park and Gardens in Abuja and also in Ibadan. It is also in our plans to extend to the eastern part of Nigeria and also in northern Nigeria.”
The Adron boss disclosed that the company had acquired about 10,000 hectares of land, totaling 120,000 plots, with about 100,000 subscribers in its portfolio for home ownership scheme.
He said the company’s total assets is worth N100 billion.

He revealed that 2018 Valentine Day event had become necessary as construction of housing units by the company is meant to tackle the acute shortage of shelter in Lagos state and the FCT.
According to professionals in the sector, there are no shortcuts to marketing real estate products. Some tips, they said, included core abilities development, promotion of value, conpromotio, creation goals mindset, relationship management and development, leveraging other platforms and inbound marketing.

Director of Homework Development and Properties Limited, Mr. Jide Adekola, an architect, is restoring the trust in foreign investors in real estate sector. His firm now has affordable housing units in different locations in Lagos.
Adekola, in Atlanta, Georgia, United States, disclosed this to Nigerians in Diaspora, while showcasing the products and promoting recent positive development.
He added that he has helped to change the perception that foreign investors would not get value for money or might get scammed in Nigeria.
He also said that there were professionals in the sector who are able to provide quality products in due time.

He said the forum had increased networking among customers, adding that it has increased trust in foreign investors in real estate market and boosted awareness.
Shedding light on some of the innovations being adopted to encourage Nigerians to own their homes while celebrating the Valentine season, King said that his firm would be offering incentives such as 14 per cent discount in all the estates, easy and flexible traditional payment system and supply of 100 bags of cement in some instances.
He explained: “Pay an initial deposit of N140.000 for a plot, spread the balance over a period of 14 months and you qualify for a free ticket to our Lemon De Val Promo 2018. Pay outright for a plot of land and you are qualified for a raffle draw to win a set of sofa, king sized bed and 100 bags of cement.”
Besides, he said the company had partnership with some mortgage institutions, while encouraging its clients that subscribed to National Housing Fund (NHF) to access it.

Last line
Since construction of housing is capital-incentive, Nigerians need easy access to cheap and effective mortgage system to attain their housing dreams.

 

 

 

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