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LimPost- recession: Developers favour affordable housing projects

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LimPost- recession: Developers favour affordable housing projects

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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