By Maduka Nweke, [email protected]
Merckson Okoro is the Principal Partner, MI Okoro and Associates, a real estate firm. In this interview, he pushed for the establishment of a strong mortgage institution in the country in order to strengthen real estate. Okoro, a strong voice in real estate in the country, bemoaned numerous impediment stacked on the path of developing real estate.
He stressed that if mortgage facility was accessible to developers, buyers and renters, the growth would have been accelerated. He also spoke on the growth impediments of the Land Use Act and other challenges facing operators in the industry.
Excerpts:
What do you think can revive real estate in Nigeria?
Mortgage facilities will play an important role in the development of the real estate sector. Without funds, the sector will not make a significant impact but remain dormant. Even if the present administration will make an impact in the industry, his attention is not yet focused on the real estate sector. The President is navigating a very challenging time, and real estate doesn’t seem to be a top priority. Although he mentioned plans for mortgage reforms, social housing, and other initiatives, they haven’t materialized yet. Similar to foreign policy, focusing on creative mortgage solutions for real estate (2-5 year terms) could be very beneficial. Unfortunately, it appears these plans haven’t progressed. Social housing would also be valuable. However, as mentioned, the current focus is on broader governance issues.
Can you rate President Tinubu’s performance in real estate?
It’s too early to definitively judge the president’s performance in real estate. We’ll need to see his second year to assess the implementation of any planned policies. While some policies haven’t been enacted yet, it may take time for their benefits to become evident. At least there’s an effort to communicate this time, unlike the previous administration. The new approach emphasizes collaboration and good intentions, which is a positive step. There is more work to be done. While real estate isn’t a quick fix for broader economic challenges, it shouldn’t be completely ignored either. The reason for this being that unlike other commodities, real estate is highly sensitive to macroeconomic disruptions. There’s a recent effort at communication from the government, a shift from the past. While improved communication is a positive step, more action is needed to address the housing crisis.
Real estate and the macroeconomic landscape
Real estate is particularly vulnerable to economic fluctuations such that when the dollar rises, the cost of developing properties increases. This discourages development and reduces supply, leading to a surge in housing prices. For example, properties that sold for 400-500 thousand naira just a few months ago are now priced at over a million.
Need for sustainable solutions
The high cost of electricity further burdens the real estate sector. Due to reliance on imported diesel, multi-tenant buildings face exorbitant service charges. Solar energy offers a viable alternative. While the initial investment is higher, solar panels have a lifespan of 15 years, significantly reducing long-term costs. The government’s recent decision to encourage solar usage is a positive step.
Reducing reliance on imports
Nigeria’s heavy dependence on imported building materials inflates costs. The government should incentivize domestic production of essential materials like cement and roofing sheets. We have the resources; a deliberate effort to utilize them would create jobs, reduce reliance on imports, and even foster exports. An example is the steel industry. Revitalizing domestic steel production would eliminate dependence on imports.
Leadership and resource management
Nigeria is blessed with abundant natural resources. However, ineffective leadership hinders us from exploiting these resources to our advantage. Our leaders often view the country as a personal piggy bank, enriching themselves at the expense of the nation. A patriotic leadership that prioritizes the nation’s well-being is crucial. Nigeria has the potential to solve its housing crisis. By embracing renewable energy, promoting domestic production, and electing responsible leaders, we can create a thriving housing market that benefits all Nigerians.