Translating the large number of real estate developers in Nigeria to a more affordable housing for the citizens is almost the same as pouring water from a big tanker into an empty basket.
Checks has therefore, revealed that there are a lot of challenges that cut short the large number of developers from bridging the housing gap which has remained above 17 million units in the last 10 years.
Lack of infrastructure, regulatory framework on the part of the government, low income on the part of the end users, and unavailability of affordable capital for developers were some of the issues noted by stakeholders.
Rotimi Akindipe, an Architect and MD/CEO of Groveworld Realties Limited, a real estate development company in Lagos, said the housing solutions Nigerian developers have are unaffordable to most buyers.
“There is a glut in the kind of houses that are delivered to Nigerians, especially first time homes buyers, who, naturally, are the people that need these houses. First and foremost, the houses are not cheap, but they have to be affordable; the places they are located do not help commuting to their place of work,” Akindipe told us.
Checks revealed that the increasing young adult population who are just starting their career in urban cities coupled with those whose income level were affected by the 5-quarter recession are now settling for one-room self-contained as a result of dampened purchasing power. They are the ones driving the demand for such properties.
Therefore, the average rate per month at which single room self-contained apartments are rented increased by 24.16 percentage points from 42 percent in 2017 to 66.16 percent in 2018, survey shows.
To that effect, Godwin Asuelimen, Head, Core Product at Propertypro.ng, said the demand for housing is mostly for the low priced properties. “For leasing, the studio room properties are the hot cake in the market, but developers want to get back their investment on time and, as such, they mostly focus on building 2 or 3-bedroom apartments,” he said.
He added that what is on offer is too expensive for the large segment of the middle and low income earners, noting that even single rooms, sometimes, are beyond their budget, especially when the property is located in a highbrow reveals that it is more expensive to construct a building in Nigeria than it is in most of Africa. Bankole Folorunsho, Deputy Managing Director, Stable Shelters Development Co. Limited, a real estate firm, says there is supposed to be a regulatory body for prices of land in Lagos, for example, as many people see lack of regulation as an opportunity to sell at high price.
“This is one of the factors that is driving cost of houses and translates to why real estate developers have not been able to bridge the housing gap,” Folorunsho told us.
His submission was affirmed by Asuelimen who emphasized, “it is very important that government plays a regulatory role in the real estate sector.”
Akindipe noted that “government’s influence is not really felt in the real estate sector; you can’t have large size of land where you can setup divisions like they do abroad, where you can build 100 houses.”
Meanwhile, credit sales reports that the average rent of Nigerians between 20-35 years of age is around $230 monthly and the average price of one-bedroom in mega cities like Lagos, Abuja and Port Harcourt is around $300 per month.
Folorunsho explained that even getting land documentation and building approval also contribute to the high cost of real estate properties, saying, “the guy that is going to push your documentation file is not going to do that except you give him something.”
On the solution that can help translate the large number of developers into affordable accommodation for Nigerians, Akindipe said Nigeria has to, first and foremost, upgrade its infrastructure because “housing is a subset of infrastructure.”
Folorunsho explained that a developer in Nigeria, gets his own light, supplies water treatment facility and builds good road network. This, according to him, is supposed to be done by the government. “For instance, in some parts of Lagos Island, you need to drill an industrial borehole before you get good water and upon that you would still have to treat it; those things don’t come cheap.”
“As far as government is not providing those social amenities, the end users are going to be bearing the cost of those things when they are buying real estate properties; this means construction cost will remain high”, he added.
Source: By Endurance Okafor