Real problems in Real Estate sector

DAYO AYEYEMI examines the effect of rising cost of building materials on the real estate sector and how the country’s galloping inflation has forced many Nigerians to abandon and/or suspend their building projects.

AS the harsh economic realities continue to bite hard on many Nigerians, the building and real estate sector in the country may expereince a lull in its activities for a long time. This is because things are no longer rosy in the housing sector as prices of reinforcement bars popularly known as iron rods soared by 100 percent in one month. Aside from this, the escalating prices of other building materials such as cement, sharp sand, granite and wood have also unsettled activities in the industry.

A market survey conducted by Sunday Tribune showed that the price of one tonne of different sizes of iron rod skyrocketed to N1.2 million in February from N500,000 in January. This represents over 100 percent increase in one month.

It was also reported that cement price jumped to N13,000 per bag from N5,500 it sold for in January.

Prices of other building materials such as 20 tonnes of sharp sand and granite rose from N80,000 and N240,000 to N120,000 and N300,000 respectively.

During a market survey conducted by Sunday Tribune in Ilorin, Kwara State, it was gathered that the cost of Toprite asbestos (made with a mixture of cement) is now N4,800 per sheet, having increased by N2,000 from what was obtained in January this year, where it was sold at N2,800 per sheet. The Nigerian asbestos (made with a mixture of fibre) now sells for N5,000 per sheet while Imperial asbestos (the typical old ordinary type) now sells for N3,200 as against the N2,000 it went for before now.

Checks further showed that a bag of 3”, 4” or 5” nails is now sold at N40,000 from N13,500. This is just as sellers attributed the high price to twin causes of its scarcity as well as the current economic situation in the country.

“Anyone with 4” nails in stock is like a king. It is so scarce to get in the market. Some sell a bag for N48,000 while some sellers will force you to sell it with 3” nails. Our shops used to be filled up with nails. See what we have,” a seller at Niger Road market in Ilorin said.

It was also gathered that a carton of roofing sheet nails is N45,000, having jumped from N24,000.

“Interestingly, it is no longer as full as before,” the seller said.

Sunday Tribune also learnt that imported roofing sheets which used to sell for N26,000 per bundle have gradually become N53,000. Locally made 0.15 of roofing sheets now sell for N76,000, thick roofing sheets sell for N86,000 while coloured roofing sheets sell for N90,000.

A plank seller at Sawmill, Ilorin, Abdulfatah Agaka, said that the price of wood and plank has witnessed an increase like other building materials, clarifying that the increase in price of wood is not so much like other materials.

He explained that the increase in price of wood was due to the price of diesel, petrol and other materials being used in the lumbering business, which, he said, had gone up too.

“We buy at a high price, but to sell at a high price is worrisome because there are few buyers. There’s no encouraging patronage any longer.

“Price of wood and planks is determined by the type of wood or its quality. However, the price is not that different from what it used to be. May be N500 difference because price of cement would determine if a project would continue to a level of when wood would be required.

“The present situation has affected the completion of many projects now. Many developers or private builders have stopped projects due to the high cost of building materials,” Agaka told Sunday Tribune.

As the situation continues to worsen by the day, the implication for real estate developers and home builders is that many projects will be abandoned.

In Ibadan, Oyo State, many constructions have since been abandoned and deserted owning to the uncontrollable hike in cost of building materials. The development has also rendered many site workers jobless as many employers are now groaning under the yoke of the harsh economic realities.

A Sunday Tribune survey in Ibadan showed that a bag of cement now goes for between N10,500 and N11,000 while 10-tonne tipper load of sharp sand which previously sold for N16,000 now goes for N70,000. It was also learnt that 9” block now sold for N700 per unit.

Experts, some of whom spoke with Sunday Tribune, declared that the country should brace up for more building collapses due to standards’ compromise while adding that low and middle income earners seeking to build a roof over their heads should forget their dream of home ownership.

Speaking when interviewed in Lagos, President, Real Estate Developers Association of Nigeria, Dr Aliyu Oroji Wamakko, said there is no way Nigeria can achieve affordable housing with the skyrocketed building materials’ prices.

“We find it unreasonable to reach N13,000 for a bag of cement. That means you are killing the economy,” he said.

Expressing fear over the escalating price of building materials, a professional builder, Mrs Iyabo Bolarinwa, declared that the issue is “becoming increasingly embarrassing.”

She enjoined manufacturers to look into the issue, pointing out that with the skyrocketed prices of materials, it would be difficult for everyone to build houses.

Speaking further, she projected that many people will begin to cut corners as a result of the escalating cost of building materials.

“Looking into the prices, building professionals are not in agreement with the escalating prices. Manufacturers should be patriotic. We need to have shelter over our heads, they should consider it and give us good prices so that we can equally turn in good buildings,” she said.

Coordinator, Building Artisans in Lagos, who identified himself simply as “Atewolara”, said his members were not happy with the rising cost of building materials including cement.

He also revealed that many developers have reduced the number of labourers they have on their sites, adding that many members have lost many projects because of the highly-priced materials.

Speaking in the same vein, former Chairman, Nigerian Institute of Quantity Surveyors, Lagos chapter, Mrs Nike Ayanda, confirmed that high cost of materials and general inflation have slowed down activities in the sector.

She said: “When things have not even gone this bad and naira has not fallen like this, we know that people were compromising on standards on their sites, which had been leading to incidents of building collapse.

“People are now trying to save money and would not buy quality materials. Sometimes, even the clients will influence the kind of materials that are being used because they don’t want to pay much money.

“That was even when things were relatively okay. What happens now that we have the financial situation that we have at hand. We really need the government to come to our aid.

“For a bag of cement to sell for average N13, 000, is unheard of. For a tonne of iron rod to be over N1 million, how will people build?

“This is a serious matter, and if this thing is not checked, it means that the ultimate result is that building collapse will still happen because people will continue to compromise.

“Another thing is that the building industry is the sector that engages a lot of workers. On a project site, we can count how many workers that are there. So if there’s a problem with the building construction, it is going to affect everybody. The sector is important to the economy, therefore we should not allow inflation to affect the industry negatively because it translates directly to the survival of the masses,” Ayanda said.

She appealed to the government to do everything possible in terms of economic policies to bring out actions that will help to checkmate the rising inflation rates in the country.

President, Building Collapse Prevention Guild (BCPG), Alhaji Sulaimon Alahi Yusuf, raised the alarm over what he called an “accelerant in the causation of building collapses in the state.”

The accelerant, he said, was the depreciation of value of the national currency, the naira.

“As at the preparation of this brief address, the naira had fallen to approximately N1,500 against the dollar, over 100 percent depreciation in just about six months. This means that the cost of building materials will rise astronomically,” he said.

Yusuf argued that the hiked cost would eventually have a ripple effect that would see further proliferation of substandard goods as more builders would seek to cut cost by all means and an increase in the patronage of quack professionals and untrained artisans.

He expressed fear that the effects of these emerging menace might not be felt immediately, but in three to four years’ time, one may begin to see more building collapses, warning that “prevention is better than cure.”

Former Vice Chairman, Nigerian Institute of Architects, Lagos chapter, Femi Shodunke, expressed fear that with the astronomical increase in the costs of building materials occasioned by the steep depreciation of naira against foreign currencies, hyper inflationary trends in the economy and ever increasing government’s levies for buildings development-related activities, adding that it has a “tendency to lead to an increase in sharp practices among developers and contractors during construction stages of buildings.”

“There is no doubt that these factors will add to the already known list of causes of building collapses and failures in Lagos State in particular and across the country in general.

• Additional reporting by Biola Azeez and Soji Ajibola