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LimPost- recession: Developers favour affordable housing projects

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From upper-class property to moderate size projects, developers are thinking outside the box to make affordable housing available to majority of Nigerians. DAYO AYEYEMI reports

 

Braced to meet the housing needs of Nigerians in the low and middle income classes, some real estate developers are currently set for small and moderately sized projects. This decision, which is hinged on many variables ranging from people’s demand to the need to boost construction activities, provide affordable housing units and create jobs in the sector, is coming a few months after the nation came out of economic recession that lasted for one and half years. New Telegraph gathered that the innovation is not limited to residential housing project alone as developers across retail, residential, industrial and hospitality sectors now push for moderately sized projects. Monitoring this development, Managing Director, Northcourt Real Estate, Mr Tayo Odunsi, noted that there has been a rising demand for more affordable housing projects, pointing out that buyers have been insisting on getting more for less. According to findings by New Telegraph, many real estate companies and government are supporting affordable housing.

Affordable housing

One of the real estate companies boosting affordable housing presently is Mixta Real Estate Plc, which has increased its liquidity with N5billion bond to refinance existing debts and provide affordable housing projects. Its Managing Director, Mr. Kola Ashiru-Balogun, whose company once focused on upper-class property, said there were more opportunities in affordable housing.

He disclosed that all affordable housing units constructed by the company, numbering 600 units, were sold out in spite of economic downturn. From N25million price tag, he said the company has been able to deliver affordable homes at N10million. While advising the Federal Government on social housing scheme, he stated that within Lagos, the company had rolled out three projects. Also, the Managing Director, Merit Abode Nigeria Limited, Mr. Oludotun Oseni, said his firm had unveiled plans to build 20,000 housing units to improve access to homeownership for Nigerians. Oseni told stakeholders at a get-together that the firm would help to make their dream of owning a home a reality.

He said the firm, which developed the Emerald Garden City in Shimawa, Mowe, Arepo, Lusada, Agbara, Ikorodu and Ibeju Lekki in Ogun and Lagos states, among others, began operations without support from the banks or government but had gained the confidence of the investing public through consistency. Also, many built environment professionals on the platform of organizer of “Abuja International Housing Show: Housing Development Group” have steered up discursion towards adoption of innovative building technology and use of alternative cement product for mass production of housing at affordable price. In what he termed: “Affordable luxury” Managing Director of Oak Homes Limited, Mr. Kayode Olusanya, has also increased its property offerings to Nigerians. He said the firm had delivered new units of affordable luxury flat apartments, detached, semi-detached and terrace duplexes in its estates across Lagos.

The Minister for Power, Works and Housing, Mr Babatunde Fashola, said there were ongoing initiatives by the Federal Government to increase housing supply through the initiation of mass housing projects across 33 states of the country. The housing units , which are at different stages of completion, had 650 contractors to deliver 2,736 units, while employing 54,680 people in the process.

The project’s strategy is to construct bungalows with courtyards in northern regions of the country and blocks of flats or condominiums in the south. Housing experts, however, seem unconvinced, citing the slow pace of work, as designs for different regions in the country remain the only visible signs of progress. However, New Telegraph gathered that Principal Partner, Novone Consult Limited, Nya Etuk Ezekiel , an architect, has commence the building of affordable housing units in Uyo under the Federal Government housing programme.

Vacant property

It would be recalled that upper-class houses in Ikoyi, Lekki, Victoria Island in Lagos State and Maitaima and Asokoro districts in Abuja, the Federal Capital Territory (FCT) have remained vacant for more than three years now due to high price tags. According to Bismack Rewane-led Financial Derivatives Company’s data, vacant upper class property in Lekki, VI, Ikoyi has risen by 72 per cent over the last 18 months Managing Director, Sujimoto Construction Limited, a Lagos-based real estate development company, Mr. Sujibomi Ogundele, said the cause of the emptiness of property in Ikoyi, Lekki and Victoria Island was as a result of poor finishing of the apartments coupled with the use of poor materials during construction. Ogundele said that when he met with Rewane for the first time, their conversation touched on the matter of surge in number of empty apartments in Ikoyi.

Besides, he stated that padded cost of construction was responsible for outrageous prices of apartments in Ikoyi. In order to avoid drawing hasty conclusions and to guide investment choices, he urged investors to only listen to industry experts and verifiable perspectives as seen in the FDC research.

While enjoining investors to avoid the bandwagon of those listening to jaundiced opinions, the Sujimoto construction boss stated that apartments that should not cost more than N100 million were costing investors N400 million to construct. According to him, owners of such property have no choice but to let it out at N40 million, thereby transferring the padded cost of construction to tenants.

Observation

In his analysis of the first quarter of 2018, Odunsi noted that various states had created different initiatives to curb the housing gap in their respective constituents. According to him, the Lagos State Government is partnering the NMRC and private developers to deliver 20,000 housing units by the end of 2018. Besides, he said that Kaduna State Government had similarly embarked on an affordable housing programme and passed a law to establish the state’s Mortgage and Foreclosure Authority to facilitate speedy foreclosures on defaulters to its home-ownership scheme in partnership with the Mortgage Bankers Association of Nigeria.

He said: “Some major activities in the residential space in the period under review include the listing of Mixta Nigeria’s ₦4.5 billion guaranteed bond for affordable housing on the Nigerian Stock Exchange (NSE) and Odu’a Investment Company, which inaugurated a 4,400sqm residential estate estimated at ₦500million in Ibadan.”

To better avoid paying out-of-reach rents, he noted that businesses had continued the trend of moving to residential properties and converting them to office use. “Such properties offer the advantages of exclusivity and lower management costs,” he said. The Northcourt boss said that bare land remained the real estate sub-class of choice as prices and yields continued to appreciate in most locations in contrast other use classes, which have been impacted much more adversely by economic headwinds in recent years. He said: “Land prices showed appreciation in most areas.

Ikoyi and Lekki Phase 1 saw growth rates of 10.83 per cent and 15.25 per cent respectively while Magodo GRA showed signs of recovery later in the year after declining in half of the year in 2017. “Prices in places like Agungi, Abraham Adesanya and Ikeja increased moderately benefitting from increased population and demand. Victoria Island on the other hand declined by 29 per cent.”

Last line

With the latest push for affordable housing units, private developers must explore the use of local building materials to bring down high cost of housing in the country.

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Business

Group hires pioneer executive secretary

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Women in Successful Careers (WISCAR) have appointed Mrs. Fabia Ogunmekan as its pioneer executive secretary. WISCAR is a non-profit organisation focused on empowering and developing professional women to contribute to economic development and nation building in Nigeria and Africa. As the group’s executive secretary, Ogunmekanwouldoversee thedayto dayadministrationof WISCAR’sstrategyimplementationand programmes management. Prior to joining WISCAR, she served as alumni engagement manager at the Tony Elumelu Foundation.

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Insurance industry rebranding gains traction

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Efforts to rebrand the nation’s insurance sector have gained a renewed momentum as the estimated funds targeted for the project receive some boost. Indications emerged last week that the project, which has been shifted twice for lack of finance, is set to take off soon as a number of insurance companies have made financial contributions.

Giving an update on the programme last week in Lagos, the Director-General, Nigerian insurers Association, Mrs. Yetunde Ilori, said the industry was prepared now more than ever before to get the programme under way. Although she could not give specific date when it will commence, she, however, said it was certain that the industry was set to work with the consultant any moment from now to set the ball rolling.

While the contributions made so far by the underwriters is still being kept under wraps, it has, however, been revealed that the regulator, National Insurance Commission (NAICOM), has so far made a contribution of N40 million towards the project. According to available report, NAICOM contributed additional N20 million to the rebranding project, having earlier donated same amount in February. Although the Insurers’ Committee, which initiated the project about two years ago had estimated it to cost N300 million, the NIA director- general, however, said the exercise would be carried out based on whatever amount that can handle it without necessarily waiting for the committee’s estimation. Ilori had earlier clarified that the rebranding project would not be product based, but a general awareness campaign on benefits of insurance.

She noted that the campaign would be geared towards encouraging Nigerians to rely on insurance even as they make adventures, adding that the industry hopes to use the campaign to encourage Nigerians to pursue their visions vigorously with the assurance that insurers are always ready to support their dreams. Insurance operators had agreed to raise 50 per cent of the funds for the rebranding project from companies’ gross premium income, and the balance 50 per cent, shared evenly. The initiative, according to the committee, will be driven via social media, print and electronics, adding that greater attention will be on the social media due to the youth population.

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Benin snatches N300bn roro revenue from Nigeria

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Cotonou Port has snatched 50 per cent of revenue being generated from Roll-on Roll- off import at the Nigerian port, the Port and Terminal Multi-services Limited (PTML), operator of Nigerian Roll-on Roll-off terminal at Tincan Port, has said. The amount translates to N300 billion from the N600 billion provided by the National Automotive Council (NAC). According to the council, Nigeria imports 400,000 units of used vehicles valued at N600 billion annually. Of the figure, it was learnt that less than 10, 000 units of new vehicles were imported into the country in the last one year. According to a figure provided by Toyota Nigeria Limited (TNL), about 350 units of new vehicles came through the port in the first quarter of 2017.

The Managing Director of PTML, Mr. Ascanio Russo, who complained that the Federal Government’s auto policy was not adding value to Nigerian economy, said that 50 per cent of the country’s roro imports have been diverted to the neighbnouring port. He noted that the sister company, Grimaldi Lines, has the records of vehicles it shipped to the neighbouring port. It was gathered that the Nigerian port terminal is currently filled with damaged and flood ravaged vehicles from Europe and United States, while luxury vehicles were being diverted to Benin port.

The policy, which attracts 70 per cent levy, was introduced in 2014 to encourage local manufacturing of vehicles and to discourage importation of used cars into country. According to Russo, four years after the auto policy was introduced, Nigerians are yet to ride the much expected made in Nigeria vehicles. He noted that average Nigerian could not afford to pay N10 million for new cars.

The managing director said that roro imports in the country had gone down, leaving an empty space at the terminal. Russo said: “We have Grimaldi lines in different countries and we operate in Cotonou. We have the records of what is going there; I can tell you that over 50 per cent of vehicles which belongs to Nigerians are discharged in Cotonou Port because it is expensive to clear in Nigeria.” Also, Director General of Lagos Chamber of Commerce and Industry (LCCI), Mr. Muda Yusuf, said that since the policy was introduced, there had been an increase in the price of vehicles by between 100 to 400 per cent.

Yusuf noted that the increase in duties on imported vehicles introduced four years ago to encourage investment in local assembly plants had failed. He explained that inflation had made a new car of 1.8 litre engine capacity to cost as high as N18 million, while a two-litre engine capacity costs N20 million, three-litre new Japanese car costs N30 million, a 30-seater bus costs N45 million and 18-seater bus costs N29 million.

Before now, Customs duties paid for the categories of vehicle include cars, 30 per cent; buses, 15 per cent; trucks, 30 per cent; while completely knocked down vehicles attract five per cent. Other taxes are Comprehensive Import Supervision Scheme (CISS), one per cent; National Automotive Council, two per cent; VAT, five per cent and ECOWAS Trade Liberalisation Scheme (ETLS).

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