By Maduka Nweke, [email protected]
With Nigeria’s housing deficit peaking at 28 million in 2023, operators in the real estate sector have urged the Federal Government to declare a state of emergency on building materials, the greatest impediment to achievening affordable housing in Nigeria.
With no hope of an immediate crash in the prices of imported building materials in sight, stakeholders are deepening conversations around shopping for local alternatives where possible.
There are loud calls for the fortification of local producers with funds and other incentives to boost their production capacities so that ultimately, Nigeria is weaned off the over-reliance on imported building materials.
Calls have also reached a crescendo for the federal government to come up with policies mandating Nigerians to use available and certified locally-sourced building materials.
Some major local building materials available in Nigeria such as adobe, bamboo, are not harnessed on a large scale despite the fact that they are reliable, yet cheaper compared to imported materials.
As a panacea to the troubling housing deficit challenge, operators have tasked the government to build more houses, preferably at all price points. A real estate developer, Mr. Ambrose Osilama, said there are opportunities available for high-quality properties that meet the needs of today’s investors, urging firms to learn to adapt their growth strategies to succeed.
Osilama noted that last year, most real estate operators strategised 2024 with high hopes, believing they would ride out current risks and reposition the sector for sustained growth and improved returns. According to him, “There is a reluctant acceptance in the industry that interest rates will remain high. Despite available equity, transactions are down and many in the industry point to instances where buyers and sellers simply cannot agree on pricing because the dearth of sales limits price clarity. Most developers are not liquid enough to develop more estates, thereby creating an artificial rise in the available ones. On a positive note, respondents to this year’s Emerging Trends survey, believe the worst of inflation is behind us, which should give the government a reason to pause interest rate hikes and do something to the rising cost of building materials. I believe that since they can act on the exchange rate to get to N1,235/$, the building material issue will be a minor problem.”
Managing Director, PWAN Real Estate, Mr. Emeka Anyiam, said that Nigeria’s population is projected to surpass 300 million by 2050, making it the third most populous country globally. This rapid population growth, he said, will continue to fuel demand for housing, commercial spaces and infrastructure development. He said as more people migrate to cities in search of better oppourtunities, the need for affordable housing and mixed-use developments will escalate, presenting a vast market for real estate developers. He said one of the critical challenges in Nigeria’s real estate sector has been the issue of affordability.
“Collaborations between developers and financial institutions are enabling the implementation of innovative financing models such as mortgage schemes, rent-to-own programs, and cooperative housing societies. These efforts aim to increase access to affordable housing, especially for the middle and lower-income segments of the population. Technology is set to play a transformative role in the Nigerian real estate industry. With the rise of digital platforms, property listing websites and online marketplaces, the process of property search, transactions, and documentation is becoming more streamlined and transparent. Virtual reality (VR) tours and Augmented Reality (AR) applications are enabling potential buyers and investors to explore properties remotely, reducing the need for physical visits. Additionally, the adoption of smart home technologies and energy-efficient solutions will enhance the overall value and appeal for properties in the future.”
The co-founder and Chief Operating Officer of Gidi Real Estate, Ayorinde Ejioye, noted that the industry has witnessed increased growth and evolution, which offered new opportunities but also threw up challenges. He said: “At the commencement of 2024, it will become more intense, especially as government policies aimed at regulating the industry are ever-increasing and prevailing. It is therefore important to highlight the likely real estate trends of 2024 to guide stakeholders as to the development of real estate and investment in Nigeria.
“The economic state of Nigeria and how it impacts the real estate sector has remained on the front burner for many analysts and commentators. Nigeria’s real estate market has been characterised by unprecedented growth which is driven by the country’s urbanisation and growing real investment, with Lagos, Abuja, Rivers and Anambra as the destinations.
This is not without the various challenges that it poses, resulting from property scarcity, a large disparity between the middle and lower class, infrastructural and housing deficit, political instability, host community relations, and government policies amongst others.
“Overall, the industry looks to continue from the developmental pace of 2023. Government policies have been instrumental in the industry’s development over time but this has been limited by several factors including host community settlement, funding, political instability, governmental bureaucracy amongst others. Also, there have been numerous efforts to encourage more private sector involvement in the industry and introduce new reforms.
“For instance, in Lagos, developers are now mandated to register with the Lagos State Real Estate Regulatory Authority (LASRERA) and eschew the development of untitled lands. In the same vein, marketers are now required to compulsorily register with the agency to enable them to practice real estate marketing as licensed realtors. While this is a commendable effort, as it raises the bar against fraudsters in the industry, it also poses a challenge to the bureaucratic process of land documentation, which may result in another scam that it is supposed to curb. In all, it is expected that this will aid fair play in the industry by regulating the industry’s terms of practice, reducing fraudulent practices, facilitating stakeholder-government engagement, and creating access to government funds, which will in turn, develop the industry in the long term. Other states are expected to follow through, in no distant time.
“It is likely that the challenges that the problems of this policy pose will not last the test of time, because according to the permanent secretary of Lagos State Land Bureau in 2023, the government is gearing towards the digitisation of acquisition of land in the estate. What this means is that the bureaucracy of acquiring and authenticating the status of lands in the state will reduce, just being scammed will. This will also affect the industry as a whole, by improving processes that would have been difficult pre-emergence of technological incorporation in the industry.
“In the end, Nigeria’s real estate is bound to experience growth in 2024, which is all thanks to the profitability of the industry, the government’s growing presence and foreign investment. This, however, will be limited by scarcity, economic fluctuation, and policy development of which regulating reforms is an ongoing issue and the political will of the government to declare emergency in local building materials in the country.”