Nigerians’ resilience stabilises real estate sector in 2021

Despite rising cost of building materials and volatile business environment, Nigeria real estate sector sees increased activities as the year runs out. DAYO AYEYEMI reports.

Despite the persistent harsh economy, volatile business operating environment and rising cost of building materials, there seems to be a little stability and increased activities in the Nigerian real estate/housing sector as the year 2021 comes to an end in less than four days.

Apart from this, figures from the National Bureau of Statistics (NBS) also show that the real estate sector expanded   by 10 per cent  year over year (YOY) in the third quarter (Q3) 2021 and has sustained a positive quarterly YoY growth trend since Q1 2021.

Many experts have attributed stability in the sector to increase in the construction activities by the federal, state governments and private developers.

Given the assessment of the real estate sector in 2021, President of the Nigerian Institute of Quantity Surveying (NIQS), Mr Olayemi Sonubi, said there has been progress in the provision of housing, but that the huge Nigerian population dwarfed the growth, saying “it looks like a drop in an ocean.”

He explained that some of the projects by the Federal Ministry of Works and Housing and that of Family Home Fund (FHF) have taken off but that many stakeholders are not aware of the schemes.

“Yes, the Federal Government is building housing units, but how accessible are they?’ he said.

Apart from the housing construction, Sonubi said it has become pertinent to look at the mortgage aspect of these projects to ascertain the preparedness of the Federal Mortgage Bank of Nigeria (FMBN).

The NIQS said “It is only in creating mortgages that people can access funds for the housing units.”

It has been estimated that over 40 per cent of Nigerians now live in urban centres of varying sizes.  The incidence of this population in urban centres, analysts say, has created severe housing problems, resulting in overcrowding in inadequate dwellings, and in a situation in which 60 per cent of Nigerians can be said to be ‘houseless persons’.

According to estimates, despite numerous government policies targeted at increasing home ownership, 70 per cent of the population in Nigeria cannot afford to buy a house.

There are less than 100,000 mortgage loans representing a small percentage of the Nigeria’s population

Immediate past President, Nigerian Institute of Building (NIOB), Mr Kunle Awobodu, noted that lack of data was a big challenge in the real estate sector.

According to him, as at the end of 2021, there was no data detailing the number of houses delivered by the private developers, federal, state and local governments.

Besides, he said there were no agencies of government or private developers that invited stakeholders to inspect the quality of housing units being delivered.

“I want the FMWH, FHF, state housing corporations to deliberately  invite leaders in the sector for assurance of their works,” Awobodu said, adding that there was a need to pay attention to standard housing constructions to halt building collapse in the sector.

Former Chairman, Nigerian Institution of Estate Surveyors and Valuers (NIESV), Pastor Stephen Jagun, said the market was tough for real estate because of the struggling economy.

Despite this, he said that the resilience of Nigerians helps the industry to stabilise a little bit, recalling that Nigerians in diaspora also made impact.

Jagun pointed out that the collapse of a 21-storey building in Ikoyi in the last quarter of the year was a low point for the real estate sector.

According to him, for that singular failed structure,  it would take a serious campaign to convince people to invest in that segment of the real estate sector.

“Developers will need to get people’s confidence.  Also, the government needs to act fast and pin-point the area with the problem or the cause of building collapse to avert future occurrence,” Jagun said.

During the year, the Federal Government, through the National Housing Programme (NHP), delivered 5000 housing units across 36 states of the federation. It has also opened an online platform for the sale of the housing units.

Some states in the federation also made progress in the delivery of housing estates in the country. Specifically, Lagos State Government delivered no fewer than 7,000 housing units in the year.

 

Mortgage

The Federal Mortgage Bank of Nigeria (FMBN) said it deployed N47.814bn in loan disbursement towards mortgage and construction financing between January and October, thus closing 2021 on a strong note.

The remarkable feat is, according to FMBN’s Managing Director/Chief Executive Officer, Arc. Ahmed Musa Dangiwa, in continuation of its management’s drive to optimise available resources and ensure that more contributors to the National Housing Fund (NHF) scheme access affordable housing.

Dangiwa stated that FMBN disbursed about N19.886bn towards the delivery of 2,921 affordable housing units in several locations across the country. “The houses comprise one, two and three-bedroom bungalows and mixed apartment buildings with a price range of N3.6m to N8.6m,” he said.

The apex secondary mortgage bank also provided N13.508bn in NHF loans to 1,130 Nigerians to enable them to achieve their homeownership dream. The loans are payable over 30 years at a single-digit interest rate of six per cent.

Additionally, the bank said it disbursed N14.129bn in home renovation loans to 17,083 beneficiaries to enable them to revamp their living spaces.

 

Building materials

There was a major increase in the prices of building materials. This has also affected the prices of housing units being produced by the government and developers.  Unlike 2019/2020, a survey by the Nigerian Tribune show that prices of imported building materials such as floor and wall tiles have increased by 100 per cent and 120 per cent respectively.

For example, one pack of vitrified floor tiles, which cost N2,200 in  Lagos’ building material market in 2019/2020, is currently selling between N4,500 and N5,000 per pack, while a  pack of Spanish/Italian tiles now cost   N6,000 – N7,000 from initial N3,200. Also, prices  of iron rods – 10mm, 12mm,  and 16mm, which were selling at N344,000; N330,000 and N330,000 in February 2021  have jumped to N442,200; N446,450  and N442,200 respectively in Lagos’ building materials’ market.

Prices of imported roofing sheets and ceiling tiles moved to N3,500 per square meter (psqm), while prices of plywood per sheet now cost between N10,000 and N12,500, depending on the location.

From  N3,400 in September 2021,  a 50-kilogramme bag of cement now costs between   N3,800 and N3,900 in Lagos  depending on the location.