FMBN, labour plan 2,800-unit housing scheme

The Federal Mortgage Bank of Nigeria (FMBN) and leading labour unions have agreed to begin the implementation of a national affordable housing programme for workers.
FMBN is kick-starting the scheme in two states and Abuja, in conjunction with the Nigeria Labour Congress (NLC), Trade Union Congress (TUC) and the Nigeria Employers’ Consultative Association (NECA).

The project will start next month with the launch of the 100-unit housing estate for Voice of Nigeria (VoN) in the Federal Capital Territory (FCT).
After the Abuja launch, Yola (Adamawa State) and Umuahia (Abia State) will follow suit.

The pilot phase of the programme aims to deliver 2,800 housing units in 14 sites across the country. This includes 200 houses in each of the six zones in addition to Lagos and Abuja.

The housing scheme is a product of strategic collaboration between FMBN and the country’s leading labour unions towards addressing, in a structured and sustainable manner, the housing requirement of workers currently estimated at about 3,750,000 housing units.

It is expected to provide safe, decent, quality and affordable housing to registered members of NLC, TUC and NECA that contribute to the National Housing Fund (NHF) managed by FMBN.
Planned house types therefore include semi-detached bungalows and blocks of one bedroom, two bedrooms, and three bedrooms.

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FMBN’s Group Head, Corporate Communications, Mrs. Zubaida Umar, said the designs of the houses were based on tested local and international social housing models.

“To ensure successful execution of the programme, the design and implementation plan was based on extensive deliberations and recommendation of housing experts.”

In a related development, the Lagos State government has promised to provide robust business environment for private developers to partner authorities in reshaping the city and accommodate all classes of people.

Commissioner for Housing, Prince Gbolahan Lawal, stated this yesterday in Lagos at the 2018 African Real Estate Conference and Awards with the theme ‘Growing African Cities: The Reshaping Model’ organised by, a member of ToLet Property Group.

According to him, the greatest challenge in housing is how to reduce deficit, stressing that government has set a target of 20,000 new housing units by the year 2020 as part of its multi-faceted approach to confront the three million shortfall.

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He said: “Lagos State government is ready for private partners who are set to work with us. Our task is to ensure that enabling environment is possible. For affordable housing, our contribution as government is to make sure that you have land, provided you have the financial and technical ability to develop it. We will also ensure that you have land titles.”

Chinedum Uwaegbulam

Housing as means to an end: The family homes fund is set to bridge the gap

Through the combined effort of various market players including Government Ministries, its Agencies and the private sector determined efforts are being made to address acute need for affordable housing in Nigeria. The challenge is a daunting one. But there are significant reasons for optimism that new partnerships and initiatives supported by the Federal and State Governments will help provide the over 17million new homes we need over the next 15 years.

The Family Homes Fund Limited is one of such new initiatives. The Fund is a partnership between the Federal Ministry of Finance and the Nigerian Sovereign Investment Authority as founding shareholders.

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The Fund will be the largest affordable housing focused fund in Sub-Sahara Africa leveraging its significant capital (in excess of N1trn by 2023) to facilitate access to affordable housing for millions of Nigerians on low to medium income. Through strategic partnerships with various players in the sector and some of the world’s main Development Finance Institutions it has an ambitious commitment to facilitate at supply of 500,000 homes by 2023

However, leveraging its capital to support the supply of new homes for families on low to medium income is only a means to an end. The key priority for the Fund is totake advantage of the opportunity a large-scale house building programme offers to create jobs. Jobs which are sustainable and offer families security, improved quality of life and hope.

Housing, Jobs and Economic Development

With a projected cumulative spend of up to N1trillion by 2023 into various inputs into the housebuilding process including doors, windows, tiles, roofing materials, blocks, paving stones, paint etc. there is opportunity to incubate large numbers of SME small scale industries creating significant employment.

The Family Homes Fund aims to catalyse the creation of new jobs through the investments we make. Alongside investment by other players in the housing sector we have a real opportunity to achieve impact. Real positive impact on families, women who often carry the biggest burden in poor households and young people. At a national level, this potential effectively harnessed could generate up to 1.5% increase to the GDP by 2023.

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How will we make this happen? The Family Homes Fund Ltd.’s approach to creating jobs will be driven by 3 priorities:

Policy: The Fund aims to support ongoing dialogue around development of a local contents framework for inputs into the housebuilding process. A long-term objective is to ensure that up to 80% of manufactured inputs are locally produced.

Partnerships:  We can achieve much more collectively, than any single player can individually. The Fund aims to build strong partnerships with a broad church of institutions and agencies to maximize this opportunity. We will work with existing and new partners in the Building Materials Industry offering where appropriate guaranteed purchase commitments thus enabling critical access to capital for investment in new.


People:  Through the Investments we make, The Fund will equip a new generation of young Nigerians with high-level skills in modern methods of construction and technologies.

Through a combination of these activities, the Family Homes Fund aims to create or support up to 1,500,000 jobs by 2023 making a real difference to the quality of life of their families and the economy.

The Cable

What Lagos ranking as 3rd worst city to live in means to local property market

A report by the National Bureau of Statistics (NBS) says that 65 percent of all real estate activities in Nigeria happen in the three big cities of the country namely, Abuja, Lagos and Port Harcourt. 37 percent of these activities take place in Lagos alone.

Abuja and Port Harcourt account for 22 percent and 6 percent respectively. The high percentage of activities in Lagos is understandable because this is the country’s real estate hub where land value is so high that it constitutes a large chunk of the state government’s internationally generated revenue (IGR).

The state has a burgeoning real estate market. But this market is presently under serious threat by the action and inaction of the state government which seems unbothered by the negative impact of the state’s difficult and challenging environment on people sand business.

Recently, the World Economic Forum (WEF) said Lagos, which is Nigeria’s commercial capital, is the third worst  city in the world to live in, explaining that out of 140 cities of the world surveyed for livability, Lagos was ranked 137th.

Unconfirmed reports have it that  the parameters considered included ease of doing business, security, infrastructure, health, education, transportation, etc. and after considering all these, WEF concluded that Lagos was like a city under war.

This has far-reaching implications for the state’s property market. Both domestic and foreign investors will be looking at Lagos with a third eye in their investment considerations and decisions. “If it is not easy to do business here, what would you like anybody to come and do?

“Except the return on investment is so high that it is irresistible, then high risk takers will come in and what they will do is just to hit it and go back, meaning that whatever is their attraction is not sustainable and ”, said Gbenga Onabanjo, an environmental activist and consultant.

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Living and doing business in Lagos is extremely difficult and casual visitors wonder aloud how the residents survive the stress and strain imposed on them by terrible and, most times, life-threatening traffic gridlock, suffocating congestion, domestic and industrial waste littering roads and streets, etc.

Another major challenge to business in the state is the state of roads infrastructure which has kept the city, which prides itself as a mega city, permanently on slow motion as against a truly mega city that is fast-paced with both people and commerce on fast lane.

As a commercial city and particularly a real estate destination, Lagos needs an environment that is enabling for investors to come in and invest. It needs good infrastructure and adequate security. But all these are lacking, meaning that not many new investors will consider the state for investment.

Not too long ago, Lagos was selected as one of the 100 resilient cities in the world by the Rockefeller Foundation. 100RC President, Michael Berkowitz, explained that Lagos was selected because of its leaders’ commitment to resilience-building and the innovative and proactive way they have been thinking about the challenges the city faces.

 “For us, a resilient city has good emergency response and meets its citizens’ needs,” Berkowitz continued, adding,  “it has diverse economies and takes care of both its built and natural infrastructure. It has effective leadership, empowered stakeholders, and an integrated planning system. All of those things are essential for a resilient city.”

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Lagos governor, Akinwunmi Ambode, hailed this selection, assuring that the state’s entrance into the 100RC Network will help it  fight the resilience challenges of urban planning, transport gridlock, environment, public health and modern infrastructure.

But it remains to be seen what the state is doing in this direction.  Everything seems to have ended with the euphoria that greeted the selection and the announcement. “Though I am not conversant with the parameters for selecting Lagos a resilient city, I think that for Lagos to be a resilient city, given the way the state is constituted, a lot still needs to be done because everything seems to be disorganized”, said an analyst who did not want to be named.

“The city is over-crowded and there is need for decentralization and decongestion of the city centre. The rural-urban migration to Lagos is so high that government needs to stem the tide and the way to do it is by the state government to start to help the neighbouring states set up cottage industries so that people can as well stay there and find job opportunities”, he analyst advised.


Sterling Bank Ahead In Combating National Housing Deficit

Sterling Bank Plc has adopted unique strategies to increase the nation’s housing stock.  

The huge deficit level in Nigeria’s housing sector is worrisome. As at 2012, experts estimated the deficit to be at a minimum of 17 million units and recently raised an alarm that the figure could be up to 25 million units if a proper investigation of the state of affairs in the sector is undertaken. Worse still, experts say the majority of Nigerians live in blighted areas that are unfit for human habitation.

Affirming this, Minister of Power, Works and Housing, Mr. Babatunde Fashola, disclosed that Nigeria has been contending with a huge deficit in the housing sector over the years. He decried the current situation which effectively enables only one percent of the Nigerian population access mortgage facilities, saying it is extremely low relative to a country like the United Kingdom with 77 percent.

Fashola expressed concern that the deficit is apparent both on the supply and demand sides. According to him, it is not just that the housing situation is grossly inadequate to satisfy the needs of the population, access to mortgage is also inadequate. The minister noted that financial institutions have allocated barely one percent of their loan portfolios to housing and about 11 percent to construction in the last 30 years.

Against this backdrop, it is commendable that Sterling Bank Plc is partnering with real estate development firms to reduce the country’s housing deficit. The bank’s housing sector interventions are being executed by its Commercial, Institutional and Non-Interest Banking Groups through partial and full financing of viable real estate development projects across the country.

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At the 2018 City People Real Estate Awards, Sterling Bank Plc was named the most Real Estate Friendly bank of the year for the significant role it is playing in the housing sector. The innovative model the bank has adopted to cater to the demand and supply sides is noteworthy. As a member of the Nigerian Mortgage Refinance Company (NMRC), Sterling Bank has been able to mobilize funds for home-finance/mortgage refinancing.

While receiving the award, Basheer Oshodi, Phd, Group Head, Non-Interest Banking, Sterling Bank Plc revealed that the bank has committed significant resources to the real estate development sector to ameliorate the impact of the huge national housing deficit on citizens across different socioeconomic classes. According to Mr. Oshodi, judging from the impact the bank has made in retail real estate financing, it is ready to provide credit to real estate developers who adopt prudent project selection and management models.

Some of the housing estates include the part-financing of Crown Court Mabushi in Abuja for Crown Realities Plc. The project comprises 72 units of 3-bedroom flats, 18 units of 4-bedroom semi–detached houses and 16 units of detached 4-bedroom houses.

Prior to this, Sterling Bank had part-financed the prestigious Crown Estate in Lekki, located on a 41.7 hectares gated private estate along the LagosEpe Expressway in 2000.

Other residential projects part–financed by Sterling Bank in collaboration with developers include Diamond Estate, Amuwo Odofin, Lagos; 360 low-cost housing units for Diya Fatimilehin & Co., Friends’ Colony Estate, Lekki Lagos; a 210 semi–detached and detached housing units for Aircom Nigeria Limited, Common Wealth Court, Lekki; 36 apartments of Defacto Properties Limited and Bourdillon Court Estate, Lekki, Lagos comprising 192 housing units (flats and Terrace houses) for Aircom Nigeria Limited.

Others are Cromwell Court’s 180 units of apartments; Milverton Estate’s 240 units of apartments, Northern Foreshore Estate’s 566 mixed housing units; Napier Garden’s 220 mixed housing units, all for Aircom Nigeria Limited in Lekki, Lagos and Tarino Towers’s 29 units of apartments for FMT Parkview Limited located in Ikoyi, Lagos.

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Sterling Bank also partfinanced Visage Apartment’s Victoria Island Lagos, 40 units of apartments for Sat Leasing Limited on Victoria Island, Lagos; Primewaterview Gardens’s, phases I & II 539 units of apartments for Primewaterview Ltd in Lekki Lagos; Eko Court, Parkview Estate’s,12 units of apartments for Samtl Properties Ltd in Ikoyi, Lagos; Happy Haven’s Banana Island’s 16 units of apartments for Samtl Properties Ltd in Ikoyi, Lagos; Doby Haven’s 20 units of apartments for Eco Building Ltd in Lekki, Lagos and Pearly Gate Estate’s 40 mixed housing units for Edward Properties Konsult.

The bank has also wholly financed another residential estate for Crown Court in Durumi, Abuja which was inaugurated recently by the Minister of the FCT, Mr. Mohammed Bello.

Managing Director and Chief Executive, Crown Realties Plc, Mr. Darl Uzu, commended Sterling Bank for stepping in to provide critical financing for development projects in the country, particularly in a period of recession. Uzu said the financial institution has proven to be a dependable partner in times of need for Crown Realities Plc.

“At the height of the recession when funds were scarce and investors’ confidence was at its lowest, Sterling Bank stood by us and extended credit to finance our operations,” he said, adding that Crown Realties will not disappoint the bank and will do everything possible to further strengthen the confidence reposed in the company. “We’ll always do our part every time.”

Extending its successful Public Private Partnership model into the real estate development sector, the bank financed Sterling Court Housing Estate in collaboration with Lagos State Government through Agboyi-Ketu Local Council Development Area.

Conceptualised by the concessionaires in 2009, Sterling Court is located within Ajelogo Housing Scheme in Alapere, Lagos. It consists of contemporary apartment building designs, ultra-modern terraces and duplexes which meets housing needs of middle class families. The housing project covers the construction of 40 blocks of 320 housing units, commencing with 26 blocks of 116 housing units in the first phase in 2017.

Bennett Oghifo

60M People in Nigeria Live Without Adequate Access to Water

 Over 120m lack decent toilet

Statistics reeled out recently by WaterAid Nigeria shows that 33 per cent (about 60 million) of people in Nigeria are currently living without adequate access to water; 67% (over 120 million people) do not have a decent toilet; and 26% (about 47 million people) practice open defecation.

WaterAid, which has an office in Nigeria, is a global organisation with branches across the world. It enables the world’s poorest people to gain access to safe water, sanitation and hygiene education. The organisation believes that these basic human rights underpin health, education and livelihoods and form the first, essential step in overcoming poverty.

Presenting the water and sanitation situation in Nigeria, the Country Director, WaterAid Nigeria, Dr. ChiChi AniagoluOkoye said, “Nigeria is at the precipice of a water, sanitation and hygiene catastrophe. Despite the progress achieved between 1990 and 2015 for access rates to improved water sources, Nigeria has regressed with regard to access to piped water service. Access to piped water on premises in urban areas dropped from three in every 10 persons in 1990, to even less than one in 2015.”

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The country director of WaterAid Nigeria stated this in her presentation at a workshop in Nairobi, Kenya, organised by the Media for Environment, Science, Health and Agriculture (MESHA), an association of writers, journalists and communicators who specialise in reporting science for development; the Centre for Science and Environment (CSE), a leading research and advocacy think tank based in New Delhi, India; and the Kenya Network for Water and Sanitation. The workshop for journalists in Africa discussed, among other things, how to improve coverage of water and sanitation in the African media.

ChiChi Aniagolu-Okoye said a major intervention was the federal government’s “declaration of a state of emergency in water and sanitation. In addition to declaring a state of emergency, the Federal government has also enacted enabling policies and programmes in the last three years towards achieving the goal of SDG 6.”

Other interventions are the Development of the Partnership for expanded WASH (PEWASH) policy 2016-2030. The PEWASH articulates the government’s plans to reach 100% coverage for WASH services in rural areas. The document sets out a framework for coordination and investment among key sector stakeholders and across the three tiers of government, according to her.

There is also the development of a National WASH Action Plan that sets out a 13-year strategy, including an 18-month emergency phase. It includes the establishment of a National WASH Fund for increased financial investment for WASH.

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She said Nigeria has a national sanitation roadmap 2025 which provides a guide towards achieving an open defecation-free country; a Water Bill for the proper regulation of water provision and use in the country. The bill has passed the 3rd reading at the National Assembly; improved coordination of sector actors through the National Task Group on Sanitation, revitalisation of the task group on water quality, setting up the inter-ministerial committee on sanitation to facilitate high level engagements between relevant ministries, improved engagement with development partners, development of draft national monitoring framework (National WASH Information System (NAWIS) WASH information Management System (WASHIMS).

She said despite these laudable steps, a lot still needed to be done to ensure that Nigeria meets SDG 6 Goals by 2030, saying there was need for strong political will that would ensure “improved funding for the section, including plugging leakages to ensure the funds that do come to the sector are properly utilised; better coordination of stakeholders -government, donors, CSOs; an effective monitoring system that includes a high level task force chaired by the minister and includes government, bureaucrats, CSOs, the religious, traditional rulers, representatives of women, girls and people living with disabilities groups which meets monthly basis to track progress.

Others are improved private sector involvement; Hygiene Behaviour Change programme that works and is sustainable.

WaterAid, she said “is throwing its weight behind this audacious step of the federal government to support the realisation of the expected goals of SDG 6.”

Bennett Oghifo

Dearth of legal framework, policies, infrastructure drags real estate sector — Analysts

Real estate and mortgage industry analysts have linked the setback in the industry to lack of functional legal framework, right policies and inadequate infrastructure which are said to be major growth drivers in the real estate sector.

This was disclosed to BusinessDay in a five-analysts-survey aimed at finding solution to the challenging state of the industry in Nigeria, Africa’s largest economy.

Meanwhile, negative and weak growth in construction and real estate sector of the country has continued to drag growth in its economy even as it slowed down in the first quarter of 2018 to 1.95 from 2.11 in the previous quarter owing  to, among other things, reasons cited by the analysts.

The sector has reported nine consecutive quarters of contraction even after the economy of Africa’s largest crude oil producing nation exited recession in the second quarter of 2017.

Abiodun Akanbi, Head of Strategy at Infinity Trust Mortgage Bank, said legal frame work in relation to absence of foreclosure law in Nigeria is one of the biggest problems of the industry.

“If you lend out money, and the borrower refuses to pay, you are at the mercy of the debtor because you cannot foreclose, as there is no foreclosure law in Nigeria; that is a major problem, and because people know that there is no foreclosure law, they just go to court, get an injunction and trail for 6 to 7 years,” Akanbi explained.

According to Association of Housing Corporation of Nigeria (AHCN), inability of the Nigerian mortgage sector in driving home ownership is worrisome as more than 90 percent of new homes utilise funds from personal savings for increamental construction.

Meanwhile, mortgage to GDP ratio in Nigeria is estimated at 0.6 percent, as opposed to 2 percent in Ghana, 31 percent in South Africa, 32 percent in Malaysia, 77 percent in the United States and about 80 percent in the United Kingdom.

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Africa’s most populous nation has a housing deficit of about 17 million units and its mortgage rates ranging between 7-10 percent for the Federal Mortgage Bank of Nigeria (NHF) and between 15-25 percent for commercial mortgage institutions is considered by industry experts as one of the highest around the world.

While with a population of about 55 million, mortgages in South Africa accounts for almost 30 percent of total credit, the largest component of banks’ assets, which amounted to about ZAR5.14 trillion ($382 billion) at the end of January, according to central bank data.

Bank lending to construction and real estate sectors in Nigeria has remained dismal when compared to the likes of South Africa, the continent’s most-industrialized economy.

According the chairman of BHCI, JD Diabira, the first specialist commercial real estate mortgage provider in Francophone West and Central Africa “the lack of capital for the property industry is not the big issue, it is made out to be. It seems to us the real problem is the willingness (or not) of lenders to lend.”

The reason, he says,  is that local lenders have little reason to offer mortgages; which has been attributed to high prevalence of government bonds in the market which banks have collected 6-7 percent.

Hakeem Sadiq, CEO of Zama, a Lagos-based real estate advisory firm said Diabira is right in the sense that funding is not the only challenge Nigeria real estate sector has, as there are ways to raise funding for a lot of projects as is already being seen in the sector.

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“I think aside from just the funding thing, a lot of the issues faced by the sector comes from infrastructure. A large part of being able to develop and redevelop the real estate sector is actively based on the availability of infrastructure, access to good road and electricity. Also adequate data on the sector, which stakeholders can use to plan and make investment decision is another issue,” Hakeem said.

Responding to why lenders may not be willing to give out funds to borrowers, Yemi Stephen from Estate Links, a real estate developing company, said in Nigeria, the reason could be as a result of high rate of mortgage default.

“If lenders have alot of bad debts it will be very difficult for them to lend out again, and also with the double interest rate on the mortgage there will not be faithfulness on the part of the borrowers in repaying their debts,” Stephen said.

“Another issue could also be for the lenders being able to have some security with the developers, investors and borrowers. In that aspect, the real estate market is not that strong yet and a lot of banks are actually investing in them that is why a lot of housing facilities have high interest rate,” Hakeem told BusinessDay.

A lot of lenders do not want to start dishing out credits to developers and refinancing institutions and the projects are executed half way and their funds become stuck; that instability is what makes investment risky.

Meanhwile, Nigeria government has plans to start a mortgage-loan guarantee programme next year in an effort to improve lending to low-income earners and boost home ownership.

This was disclosed by Tokunbo Martins, Director of Banking Supervision at CBN that the  nation’s government through the apex bank is working on a project that will see the start of a firm this year called Nigeria Mortgage Guarantee Company (NMGC) which will be owned by the government and private investors

As to why Africa’s largest producer of crude oil lags other countries in providing housing for its citizens, the state-owned Federal Mortgage Bank of Nigeria (FMBN) linked it to record high interest rates, poverty and a lack of proper land deeds, as home loans total about 50,000 in an economy which vies with South Africa as the continent’s largest.

On the way to go in bridging the housing deficit in Nigeria, Hakeem said “it is all about the ability of the government to implement policies. For instance, policies that can actually spur growth, like having an ease of acquisition, like in Lagos, acquiring land can be a very huge problem for a lot of people, even though they may want to acquire it but being able to go through those processes are very difficult and also with the corresponding taxes, it  becomes unattractive.”

Another industry expert, who pleaded anonymity said “the more investment the government puts into providing adequate infrastructure, the  easier  the real estate market will develop and there is also need to grow the economy in general as this will rob off on the citizens’ purchasing power and will make them eligible to access mortgage.”

“The spending power of an average Nigeria is another issue; if you ask an average Nigerian how much he can actually put down to invest in property even in a situation where affordable housing could be an option, you will be shocked,” Hakeem concluded.

Endurance Okafor

Flood mitigation: FG moves to set up technical committee on vulnerability assessment in states

The Federal Government, through ECOWAS Early Warning and Response Mechanism in Nigeria, ECOEWRM, has unveiled plans to set up a technical committee on the vulnerability assessment of flood mitigation across the states of the federation.

This came as Governor Akinwunkmi Ambode of Lagos State is expected to kick off ECOEWRM’s two-day workshop in Lagos today, which is scheduled to take place in other six identified states of the federation. Head of ECOEWRM/Senior Technical Adviser to Vice- President on Disaster Risk Management, Dr. Olufemi Oke-Osanyintolu who stated this, stressed that the event aimed at mitigating imminent flood incidents across the identified states.

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According to the statement, the workshop with the theme: Building Flood Resilient Communities, is expected to be declared open by governors of the states where it will take place, commencing from August 20, to September 14, 2018. Oke-Osanyintolu listed the schedule of events to include: “From August 20-21, Ikeja, Lagos; Benin, Edo State, August 27-28; Port Harcourt, Rivers State, August 30-31. Others are Yenogoa, Bayelsa State, September 3-4; Owerri, Imo State, September 6-7 and Katsina, Katsina, September 10-11 while the programme had been slated to hold in Awka, Anambra State, September, 13-14.

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He said: ”State governors will be required to give an update on efforts they have made towards mitigating imminent flood incidents in their states. Participants will also review the 2018 seasonal rainfall predictions and the annual flood outlook. “One of the outcomes of the event will be the setting up of a technical committee on the vulnerability assessment of the states.

“Participants at the event will comprise of state governors, relevant ministries, deferral legislators, state commissioners, the Armed Forces, Police and para-military. Others are; developmental partners, Local Government chairmen, civil society organisations and non-governmental organisations.” 

Olasunkanmi Akoni

Big City Housing Doesn’t Have to Be So Expensive

Bringing down prices requires a combination of affordable homes and upzoning.

The one-story house for sale on Oak Court in Menlo Park, Calif., is 88 years old and 830 square feet, with two bedrooms, one bathroom, a detached one-car garage, and no air conditioning. Almost anywhere else it would be the startiest of starter homes. But because it’s in Silicon Valley, where the supply of housing is far short of the demand, the bungalow was listed in mid-August for $1.575 million.

Imagine if ants put up barriers that stopped other ants in their colony from getting to a sugar cube. That’s what Americans are doing to one another by making housing impossibly expensive in the very places, such as Silicon Valley, that most need fresh talent.

Housing prices needn’t be high just because an area is hemmed in by water or mountains, as Silicon Valley is at the end of San Francisco Bay. After all, you can always build upward without wiping out green spaces and historical treasures. Rather, high housing prices are the outcome of a strategy by incumbent homeowners to keep a lid on construction. Keeping cities frozen in time, only more expensive, is great for homeowners and bad for just about everyone else, including local employers and the people who would come to work for them but can’t. While the problem is most pronounced in Silicon Valley, it exists in San Francisco, London, New York, Tel Aviv, Tokyo—name your global hot spot.

Affordability matters because cities have never been economically more important. Biotech companies choose to cram together in San Diego and Cambridge, Mass.; cybersecurity firms are cheek by jowl in Israel’s Silicon Wadi; consumer-electronics companies want to be near one another in the former fishing village of Shenzhen, China.

Constraints on housing prevent people from joining, and contributing to, clusters of innovation. A new paper by economists Chang-Tai Hsieh of the University of Chicago Booth School of Business and Enrico Moretti of the University of California at Berkeley found that restrictive zoning in Silicon Valley, San Francisco, and New York “lowered aggregate U.S. growth by 36 percent from 1964 to 2009.”

Thirty-six percent is kind of a big number. Says Hsieh: “If you compare it to all the things our political system talks about, this is just huge relative to everything else.”

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The good news is that cities don’t have to be prohibitively expensive. The trick is to form a broad coalition for what pro-housing activists call Yimby (yes in my backyard) by ensuring that the benefits will be enjoyed by all, or almost all. More housing can help wealthy landlords, who benefit from the right to put more housing units on a given block, as well as low- and moderate-income families, whose rents come down when the supply of rental housing goes up.

To be clear, not every city with a housing shortage is economically thriving. Delhi, Jakarta, Lagos, Manila, and other megacities have different issues to deal with, including an influx of desperate people from rural poverty. We’re talking about First World problems here: how to cope with the complications of prosperity.

One recent success story is Mountain View, Calif., the home of Google parent Alphabet Inc. In December the City Council approved a plan for the area around the Googleplex that allows for construction of almost 10,000 homes, up from zero in the original proposals. Leonard Siegel, who was vice mayor then and is mayor now, says the city is locating homes near office space rather than trying to jam them into older neighborhoods. “Many people are perfectly happy for us to build housing near Google, because it’s not in their backyard,” he says.

Mountain View officials insisted that developers make 15 percent of the homes affordable, and they’re charging them fees to cover the cost of new public infrastructure such as transportation and sewer lines. “The way I told one developer, ‘We’ll find out if we piled on too much,’ ” Siegel says. “ ‘I want to load your back with straw, and when it starts to break, pull one straw off.’ They said, ‘I understand.’ ”

Some market purists argue that building affordable housing is unnecessary. Filtering theory says that even the construction of luxury housing will ultimately benefit the poor because the rich will move into the new units, freeing up their old dwellings, which will be occupied by the middle class, who in turn will make their old homes available to the poor.

Filtering really is a thing, and it works in the aggregate. But in any given neighborhood, lower-income renters are right to fear that gentrification will price them out of their home. So they oppose new construction, which only exacerbates the citywide shortage. Case in point: A California Senate bill to allow for denser construction along transportation corridors, backed by the Yimby movement, failed earlier this year over concerns about displacement of the poor.

That’s why making sure everyone benefits is essential. Rent control is anathema to most economists, but if applied only to existing housing, not new units, it can tamp down political opposition to fresh development without discouraging construction. Another effective approach is inclusionary zoning, which guarantees that a certain share of development will be affordable. The trick is not to lay so many requirements on developers that they back out and nothing gets built; not every mayor can afford to be as demanding as Mountain View’s.

Finally, outright construction of public housing can make sense. Does that sound socialist? Consider that more than 80 percent of residents in Singapore, the free-market city-state, live in government-built housing. This year the World Bank praised the food courts in Singaporean housing, known as hawker centers, “where all income classes and ethnicities meet, socialize, play, and dine together.” At least two hawker centers, it said, have a Michelin star.

U.S. Department of Housing and Urban Development Secretary Ben Carson has one good idea: to use the lure of HUD dollars to get cities to ease zoning rules and permit more construction. But Carson hasn’t earned the support of advocates for low-income housing because he also wants to scale back an Obama-era rule requiring cities to work toward desegregation, which he once decried as “social engineering.”

Ydanis Rodriguez, 53, can identify with both sides of the Nimby struggle. He was born and raised in the Dominican Republic and moved as a teenager to Inwood, a neighborhood at the northern tip of Manhattan. He became a leader of 2011’s Occupy Wall Street movement. Now a New York City councilman, Rodriguez is a fierce advocate for his low-income constituents, many of whom are fellow Dominicans. When the city announced a plan to upzone Inwood, allowing for taller buildings and more market-rate housing, many of his constituents opposed it, fearing that gentrification would force them out. Rodriguez, controversially, came out in favor of the plan. He argued that it would keep low-income people in Inwood by constructing thousands of units of subsidized housing in addition to market-rate buildings.

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“It hurt,” Rodriguez says of the accusations that he was selling out his own people. But when the upzoning passed the City Council on Aug. 8, he says, “I went to sleep in peace that night.”

The upzoning of New York under a succession of mayors, including Michael Bloomberg (founder and majority owner of Bloomberg LP, which owns Bloomberg Businessweek) and Bill de Blasio, is evi­dence that a big city can burst the bonds that limit growth. For more evidence, see La Défense in Paris, Canary Wharf in London, Pudong in Shanghai. Growth can be messy, but it’s better than stasis, which pretty much assures that supercities will fall short of their potential. “Arguably,” Harvard economist Edward Glaeser wrote in a Brookings Institution paper last year, “land use controls have a more widespread impact on the lives of ordinary Americans than any other regulation.” The most important policy for cities is to let them grow.

Peter Coy

Where to find good value, high returns on real estate investment

Whatever the economic cycle, real estate sector remains an investment destination where investors will always get value and relatively high returns on investment, especially if the investment is done in the right place at the right price and for the right reason.

Bonds, treasury bills, equities, mutual funds, etc are all good investment asset class but cannot compare favourably with real estate in terms of reliability, flexibility of use and potential for value appreciation over time.

A good number of people think, erroneously, that real estate investment is for the ‘big boys’ but investment experts disagree,  stressing that investment in real estate takes into consideration the 5Ws consisting of who, what, when, where, why (and how).

As for who should invest in real estate, the experts say just “anybody” irrespective of age or gender can invest in real estate. Anybody, no matter how young, could investment and this includes women. At a real estate conference in Abuja recently, participants canvassed women empowerment to enable them invest in real estate, believing that it is one of the surest ways of protecting the future.

Bricks and mortar are more stable than stocks or bonds; they have long term growth with income return and this is why people should invest in real estate. The wide housing demand-supply gap offers   investment opportunity which value is well over $363billion. The deficit is said to be increasing by 2 million houses per year at the current population growth of 2.6 percent per year.

Though it is important to know that the time to invest is now, what matters most in all real estate investment considerations is where to invest and get not just great value, but also good returns.

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Good yield on any investment is very important because it compensates for the investor’s time, efforts and the sacrifice in terms of forgone alternatives to the investment. This is why where to invest and get good yield is critical.

A couple of years ago, the National Bureau of Statistics (NBS), noted that Lagos State recorded the highest amount of real estate activities at 37 percent  followed by Abuja at 22 percent and Rivers state at 6 percent,  covering 65 percent of all real estate activities in Nigeria.

That statistics has not changed, meaning that Lagos remains a compelling destination for real estate investment. This is quite understandable.  Lagos is Nigeria’s commercial nerve centre. It has over 20 million people, meaning that the city is a large real estate market. This island city has over three million housing deficit; about 80 percent of its population lives in rented accommodation which means that homeownership level is very low, thus presenting huge investment opportunity in residential real estate.

The Lagos real estate market is distinctively segmented into low, middle and high end. Demand is very weak at the low end market because this is where low income earners look for housing.  At the mid-end market, demand is relatively strong, but much stronger at the high end market.

Ikoyi, Victoria Island and Lekki, the three island locations in the state, constitute the core of high end submarkets in Lagos. Though property, land or built up, are very expensive in these locations, analysts say they offer real value and good returns to investors.

But to invest wisely and profitably in these locations, experts advise that in-depth analysis of each location’s strengths, weaknesses, opportunities and threats (SWOT) should be done.  First and foremost, potential investors have to understand that  “real estate investment is not a get- rich quick scheme;  understand your investment parameters;  be thorough in assessing opportunities; seek professional advice; do due diligence, and if the deal is not right, walk away”, Udo Okonjo, CEO, Fine and Country, advises.

As an investment destination, Ikoyi’s strength is in its excellent location,  ease of obtaining approvals for development,  high rents and return on investments (ROI) based on demand to be in a serene environment;  internationally recognized and accepted location increases value perception, and offers highest office rents in Nigeria and second highest in Africa.

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The weakness of this location is in its high cost of land and approvals, building would be restricted to high rise apartments to maximise land; there is need for an attractive design and layout of the project based on competing developments within the axis.

Opportunities in Ikoyi as an investment desitnation include ease of rental as there is a large pool of prospective home buyers, both local and  Nigerians in Diaspora would rather buy out right a finished product that meets their immediate needs in Ikoyi; amendment in Lagos planning legislation is expected to make zoning for commercial use easier.

But there are threats too. These come in as construction challenges leading to delayed delivery; lack of financing for projects or mortgages for prospective buyers; presence of competing developments within the same axis and planning challenges to secure permission for commercial office use.

The strengths of  Victoria Island are its excellent location, ease of obtaining approvals for development based on precedent, high rents and return on investments (ROI) based on demand, and a wide mix of support service companies.

The weaknesses include poor parking,  traffic congestion, lack of supporting infrastructure,  high cost of land and approvals, building would be restricted to high rise apartment to enable maximisation of land, and available land for residential development within this axis is extremely small

The opportunities in this location include lack of good quality residential and commercial space and demand for this is high; there is also opportunity for corporate entities and individuals to own properties close to their offices.

But the development of the Eko Atlantic in the long term is a major threat to the continued prosperity of Victoria Island. So, potential investors should always bear in mind that this development, which is already evolving with some residential and office developments coming up fast, may throw spanner in the works.


Builders worry over collapsed Jabi building, move against quacks

The Council of Registered Builders of Nigeria (CORBON) has expressed concern over the processes leading to the construction of buildings in the country.

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CORBON was reacting to the recent collapse of a three-storey building at Jabi in Abuja.

Chairman of the council, Prof. Kabir Bala, said the council was reaching out to relevant stakeholders in the building environment for synergy in enforcing laws to regulate products and processes which are inputs for the production of buildings.

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Bala, in a statement, said the council immediately after the incident “had meaningful discussions with the Standards Organisation of Nigeria (SON). The two bodies are working on a strategy that will engage all stakeholders in the sector to imbibe the culture of standards in all aspects and ramifications of construction projects.”

“CORBON shall continually build capacity of builders and work to checkmate the activities of quacks on building sites,” he assured.

Daniel Adugbo


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