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Construction sector drives businesses expansion plans by 42.9 index points

Nigerian businesses are showing optimism in the macro economy as they are seen to expand in the next survey month driven by the services sector at 42.9 index points.

The central Bank of Nigeria (CBN) on Friday, released its Business Expectation Survey (BES) for the month of January, which revealed that at 25.9 index points, respondents expressed optimism on the overall confidence index (CI) on the macro economy in January 2019.

The businesses outlook for February 2019 showed greater confidence on the macro economy with 62.1 index points.

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Biodun Adedipe, founder and Chief Consultant of B. Adedipe Associates, said his 2019 macroeconomic expectations that the external sector is growing strongly, except for the great influence of hydrocarbons in foreign earnings.

The BES was carried out during the period January 14-18, 2019 with a sample size of 1050 businesses nationwide. A response rate of 94.8 per cent was achieved, and the sample covered the services, industry, wholesale/retail trade, and construction sectors.

The respondent firms were made up of small, medium and large corporations covering both import- and export-oriented businesses.

In the BES report, the optimism on the macro economy in the current month was driven by the opinion of respondents from services by 13.0 points, industrial 10.9 points, wholesale/retail trade 1.5 points and construction sectors 0.5points. Whereas the major drivers of the optimism for next month were services (35.0 points), industrial (20.0 points), wholesale/retail trade (5.4 points) and construction sectors 1.7 points.

The positive outlook by type of business in January 2019 were driven by businesses that are neither import- nor export-oriented at 17.6 points, both import- and export-oriented 4.2 points, import-oriented 3.5 points and those that are export-related 0.6 points.

However, the surveyed firms identified insufficient power supply by 61.6 points, high interest rate 60.0 points unfavourable economic climate 55.3 points, unclear economic laws 53.5points, financial problems 52.9 points, unfavourable political climate 50.8 points, insufficient demand 45.7 points and competition 44.2 points as the major factors constraining business activity in the current month.

Meanwhile, Majority of the respondent firms expect the naira to appreciate in the current, next and the next twelve months respectively as their confidence indices stood at 23.0, 31.9 and 44.6 points.

Respondent firms expect borrowing rates to rise as the confidence indices stood at 20.0 points in current month, 6.7 point next month and 7.6 points in the next twelve months.

Respondents’ expectation of inflation rate in the next six months and twelve months in January stood at 11.7 and 11.6 percent respectively.

Source: HOPE ASHIKE

 

5 Investment Opportunities in Nigeria’s Growing Construction Industry

According to Nigeria’s National Bureau of Statistics, the construction industry since 2010 has enjoyed a real growth rate of 13%. Government infrastructure spending has been a major driver of this growth as well as private sector investment in both residential and non-residential construction activities.

So how can local and foreign investors take advantage of this growth?

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5 Investment Opportunities in Nigeria’s Growing Construction Industry

Here are five opportunity areas for investment, based on insights from experts, businesses and stakeholders involved in the construction industry.

  1. Residential Housing

According to Nigeria’s Bureau of Statistics, the contribution of real estate sector to the GDP has grown on an average of 17.5% between 2010 and 2013. But with a population of over 167 million people and a rising middle class, the demand for quality housing remains high. According to the Federal Mortgage Bank of Nigeria (FMBN), the country currently has a housing deficit of 17 million units.

Real estate projects are springing up in Abuja and Lagos.  Those housing projects however make up only one percent of what Nigeria needs, says Vincent Nwani, director of research and advocacy for the Lagos Chamber of Commerce and Industry.

“For us at the chamber we feel that Nigeria is not doing so great in terms of explosion or revolution in the construction/real estate environment”, Nwani said. “We need investments in low cost housing to meet the demand from the teeming Nigerian households. The shortage of residential and commercial buildings means opportunity in the construction industry is very huge. We have not yet scratched the surface”.

  1. Infrastructure

Although government infrastructure spend has been a major driver of growth in Nigeria’s construction industry, analysts say the country remains heavily underserved with infrastructure. They agree a lot of construction is still required in both public and private infrastructure.

In February 2014, President Goodluck Jonathan announced the implementation of Nigeria’s National Integrated Infrastructure Master Plan will cost USD 2.9 trillion over the next 30 years.

Okey Ezenwa, a member of civil engineering consulting firm Yola Consultants, says investors can set up an equipment assembly plant and explore opportunities in road construction. “Road construction requires a lot of equipment”, he said. “An equipment company in Nigeria can produce or assemble road construction equipment such as cranes, bulldozers and welding machines”.

In addition, as corporate offices and hotels spring up in major cities such as Lagos, Ezenwa says standard reinforcements are needed, particularly, for high-rise buildings.

“Most of the standard ones, like those used by Julius Berger, are imported”, the civil engineer noted. “If a good operator will come in and put up a manufacturing unit that produces standard iron rods it will be good for the market and investor”.

  1. Retail

The retail sector continues to stimulate growth in Nigeria’s construction industry. Data from the statistics office reveal that the services sector, which include retail services, made the largest contribution of 51% to Nigeria’s latest rebased GDP.

According to McKinsey’s recent growth estimates for the economy, annual sales in consumer goods could more than triple to $1.4 trillion by 2030 from the current $388 billion. That likely explains the expansion projects by multi-national companies such as  Unilever Plc, Nestle Plc and Shoprite Holdings. The South Africa headquartered grocery store Shoprite, for instance, has  announced plans to build dozens of new retail outlets across Nigeria.

Ado Bayero Mall opened in the northern city of Kano a few months ago. In the South, Effurrun Mall in Delta State and Onitsha Mall in Anambra will open to the public later this year.

PayPal recently launched in Nigeria. In its first week of operation, consumers were reported to have purchased items from Britain, China and the United States via its online platform. As e-commerce thrives in Africa’s biggest economy, global companies will need to set up stores closer to their customers base to facilitate improved service delivery.

  1. Lekki Free Zone

The Lekki Free Trade Zone LFZ was launched in 2004 to harness the investment and tourism potential of Lagos. The emphasis is on manufacturing, real estate and tourism, said Chi Changgui, commercial controller of the Lekki Free Zone Development Company. It’s a mixed-use development.

The LFZ, according Changgui, has received diversified investment interest from Africa, China and Europe. Apart from well-known projects such as the USD 9bn refinery Dangote Group, Changgui said that a Nigerian garment factory and a food processing company from Ukraine, are slated for the trade area. He adds that some companies have started preliminary site work.

The Lekki Free Zone is part of the Lagos State Lekki Master Plan project, which includes the satellite estates and towns around Lekki, offering multiple investment opportunities.

“We have the free trade zone, the upcoming airport there and to the west side of it, the Grace Field Phoenix Estate, Orange Island and the Shell Estate, all coming up”, says Kunle Ladega, an urban and regional planner in Lagos. “There is also plan for a light rail project around that axis”.

  1. Eko Atlantic City

Eko Atlantic City, another city being built from scratch in Lagos, aims to actualize the megacity dream of the Nigerian commercial capital.

“We wanted to tap into the experience of worldwide projects such as Cape Town and Dubai”, says David Frame, managing director for South Energyx, promoters of the Eko Atlantic City Project.

Eko Atlantic City allows anyone who wants to go into construction or the real estate business to think outside the box, Ladega notes. “The City provides opportunity for investors to test their dexterity in real estate”, he said.

Modeled after 5th Avenue in New York City, Frame says the city is being designed to hold 250,000 permanent residents and 150,000 visitors. The main district should be ready two years from now and open for visitors, he says, adding there are clients already developing buildings. Still, contractors and work-specific builders are needed to make the city a reality.

Nigeria’s First Bank plans to build a 52-story building at the site. The land was bought two years ago and Frame anticipates building will commence this year.

 

Labor’s affordable housing policy criticised

Labor’s policy to pay developers for building affordable rental homes has been criticised for being “awful value”.

Two of Australia’s top think tanks have slammed the “building on the National Rental Affordability Scheme” policy released in December that would give owners or managers of new homes $8500 a year for 15 years to rent their properties out for 20 per cent below market rates.

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It aims to build about 250,000 new homes and will cost about $6.6 billion over a decade, but the Grattan Institute’s John Daley said it would be “pretty awful value if it is anything like the last one”.

The plan revamps a previous policy launched by the Rudd government in 2008 when only 31,000 dwellings were built and subsidies of $11,048 a year paid.

Mr Daley told The Australian the subsidy was higher than the typical rent reduction for tenants, and landlords kept the difference.

He said the flat rate per dwelling also created an incentive to build smaller homes in cheaper locations, suggesting many of those built were apartments and studios that were unsuitable for those the scheme was trying to help, such as single mothers.

In a column for The Australian, Housing Minister Paul Fletcher suggested the proposed subsidy would be about double what typical renters would save under the scheme.

“Where is the sense in spending a dollar of public money to generate 56c in rent relief for low-income tenants?” he wrote.

Centre for Independent Studies research director Simon Cowen agreed a revamped scheme would be a waste of money and pointed out Commonwealth Rent Assistance already provided direct cash to support renters.

Mr Cowen believes housing should be dealt with by state governments, and it was up to them to address supply issues in places like Melbourne and Sydney.

“The first version of this scheme didn’t generate nearly as many houses as hoped — that is because these schemes don’t ­address the real issues blocking supply: state government taxes and charges and local government planning laws,” he said.

However, Labor’s spokesman for housing, Senator Doug Cameron, said many were opposed to ending the subsidy including the Housing Industry Association, Urban Development Institute of Australia, and National Shelter.

“Nearly two-thirds of the dwellings Labor built under NRAS were two or more bedrooms,” Senator Cameron said.

Last year a report revealed Australia was facing a massive housing shortfall unless governments ramped up affordable home building.

The Australian Housing and Urban Research Institute (AHURI) warned the country would need an estimated 727,300 additional social housing dwellings in the next two decades — with the current shortfall sitting at 433,000 homes.

Report co-author Dr Laurence Troy, from UNSW Sydney, found the number of public housing units built by Australian governments had shrunk significantly from the 8000 to 14,000 new public housing units a year that were being built 40 years ago.

“Australian governments have been recently funding only around 3000 new social housing units per year,” he said. “We estimate that output of about 15,000 is needed just to stop the existing shortfall from getting even bigger. To fix the current problem as well, over a 20-year period, calls for a tenfold increase.”

 

Egypt to invest US $36m in constructing language schools

Egypt has signed a US $36m  investment contract  through the public-private partnership (PPP) to construct  24 language schools  across the country.

The Minister of Finance Mohamed Moeit said the contracts signed are part of the government’s efforts to improve the quality of the educational system, and to find new and modern frameworks to develop all aspects of the educational system, in order to serve the broad sectors of the Egyptian society who are looking forward to having better educational levels.

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He further added that that the government signed eight contracts with eight Egyptian and Arab investment companies for the first phase of the national project, for the construction and operation of schools.

Participation of the private sector

Mr. Mohamed also emphasized that the state supports the participation of the private sector in the enrichment of public services. Consequently, the ministry of finance is working to attract private sector investments in order to benefit from its expertise and its operational efficiency in numerous fields.

According to the contracts, 24 new schools with 1,000 classrooms will be established  in seven govern-orates, namely Cairo, Giza, Damietta, Gharbeya, Sharqeya, Qaliubiya, and Menoufiya.

Investors in charge will build the schools, equip them with necessary equipment for operation and run them for a period of 30 years after which, the schools’ ownership will be then transferred to the ministry of education.

 

Railway section of cross-border bridge linking Russia & China to be ready in March

Construction of the final deck for the railroad bridge over the Amur River to the Chinese city of Tongjiang will be finished next month, according to the government of Russia’s Jewish Autonomous Region.

It will be part of the long-awaited infrastructure, which is aimed at connecting Russia’s Far East with China’s northernmost Heilongjiang province.

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The 2,209-meter-long Nizhneleninskoe (Jewish Autonomous Region) to Tongjiang (Heilongjiang province) bridge will become the first railway bridge between the two countries. China has already completed the construction of its part of the bridge.

Russia plans to export iron ore, coal, mineral fertilizers, lumber, and other goods via the railway infrastructure to China.

Construction of the cross-border bridge between Russia and China officially started in 2016, following 28 years of negotiations. The new bridge and its associated infrastructure will cost more than $300 million and will be 19.9km long. Some 6.5km of the bridge and road junctions will lie in China, and the remaining 13.5km will be located in Russia, according to China’s CNS agency. The length of the main suspension bridge will be roughly 1,300 meters and its width will be 14.5 meters.

The highway section of the bridge will be ready for traffic this year. Traffic capacity is expected to exceed three million tons of cargo, and will reach 1.48 million people a year by 2020.

The bridge will greatly facilitate trade between the two countries, since the route will be roughly 3,500km shorter than current journeys. By 2020, cargo turnover is expected to increase 10-fold, from 300,000 to three million metric tons.

Source: Amur River

Real Estate: Election Have Crippled Activities In The Industry

Though it may not be clearly noticed, activities in the political arena have slowed down professional activities in the real estate industry going by the assertions of experts in the built environment.

Most operators in real estate have continued to com

Though it may not be clearly noticed, activities in the political arena have slowed down professional activities in the real estate industry going by the assertions of experts in the built environment.

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Most operators in real estate have continued to complain of low patronage as a result of deflation in the economy except for election programmes. Some of the experts said that aside “body language”, those who have money are channeling it into electioneering campaigns with a view to recoup after elections.

According to Mr. Isaac Onyenweife, politicians are investing heavily in their preferred candidates with intention that when they get onboard, they will make up what they spent during the campaigns.

“You know that real business men and women do not have boundaries when it comes to business investments. So, some rich men who hitherto patronised real estate business have all diverted their attention to politics and that is having a great toll on real estate. Nigerians invest blindly. If Okeke is making it in this business, every other person moves into Okeke’s business. That should not be so. You should mind your business. Everybody must not be in one business,” he said.

Some other interested persons in the business noted that the sector has witnessed low patronage since the inception of the present administration. He maintained that it has been so since the advent of this administration. According to an Abuja-based estate surveyor and valuer, who spoke to one of the national dailies, Mr. Eric Okafor, the situation is better experienced than imagined, as property investments are on decline, and many void properties existed. He stated that this month’s elections would not help matters because investors are apprehensive of the aftermath of the elections.

According to him, “after the polls, we hope more people will relocate to Abuja city. And more confidence would have been built, and there will be investment again because the political atmosphere would by then be certain.”

Similarly, Mopelola Kola-Lawal of Modaville Realties Plus, speaking to the same national daily, said real estate industry was a major contributor to the economy in 2018, as Lagos continues to be the most active state of the federation. She said the reasons are not far fetched, with the world urbanisation study prospects that Lagos would be the 9th largest city in the world by 2030. This continues to heap the gain of real estate in the state.

“The country still requires 17 to 20 million housing units to address the housing deficit, with the yearly demand of N1 million houses compared with annual supply of only 100,000 units.”

plain of low patronage as a result of deflation in the economy except for election programmes. Some of the experts who spoke to Daily Sun PropertyMart said that aside “body language”, those who have money are channeling it into electioneering campaigns with a view to recoup after elections.

According to Mr. Isaac Onyenweife, politicians are investing heavily in their preferred candidates with intention that when they get onboard, they will make up what they spent during the campaigns.

“You know that real business men and women do not have boundaries when it comes to business investments. So, some rich men who hitherto patronised real estate business have all diverted their attention to politics and that is having a great toll on real estate. Nigerians invest blindly. If Okeke is making it in this business, every other person moves into Okeke’s business. That should not be so. You should mind your business. Everybody must not be in one business,” he said.

Some other interested persons in the business noted that the sector has witnessed low patronage since the inception of the present administration. He maintained that it has been so since the advent of this administration. According to an Abuja-based estate surveyor and valuer, who spoke to one of the national dailies, Mr. Eric Okafor, the situation is better experienced than imagined, as property investments are on decline, and many void properties existed. He stated that this month’s elections would not help matters because investors are apprehensive of the aftermath of the elections.

According to him, “after the polls, we hope more people will relocate to Abuja city. And more confidence would have been built, and there will be investment again because the political atmosphere would by then be certain.”

Similarly, Mopelola Kola-Lawal of Modaville Realties Plus, speaking to the same national daily, said real estate industry was a major contributor to the economy in 2018, as Lagos continues to be the most active state of the federation. She said the reasons are not far fetched, with the world urbanisation study prospects that Lagos would be the 9th largest city in the world by 2030. This continues to heap the gain of real estate in the state.

“The country still requires 17 to 20 million housing units to address the housing deficit, with the yearly demand of N1 million houses compared with annual supply of only 100,000 units.”

 

Construction: Building near mining site could be catastrophic

Despite the obvious dangers associated with setting up building near mining site, several developers often fall victim to such dilemma.

Indeed, many do not mind building their homes near mining sites. Oftentimes, they do it because they want their residential homes to be near their work places. At some times, the aim gets jettisoned when events of catastrophe happen. Those who build near mining sites also believe that the soil upon which they intend to build the house is strong eventhough it is believed that what matters in making building foundation is more than merely being strong. Making your foundation at difficult sites endangers the building not merely the foundation alone. The fact that there are different soils recommended by experts to suit your taste makes it possible that you seek the advice of professionals in that regard to know what and where to avoid while building your home.

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You may also know that in the course of building your home, you may experience unstable ground,  clay soil, trees, sloping land. In all, difficult’ sites can quickly become expensive to build on. One should bear in mind that building on difficult terrain normally involves some solutions like digging down the soil deeper.

Many a time, those building near a mining site may not know that those inside the mine have burrowed far both vertically and horizontally. So when the builder fails to know that and goes ahead to build it means that he is building castle in the air while sitting on the keg of a gun powder. On ground with poor bearing capacity, such as soft sandy clays, the simplest solution is to dig down a little further. If a standard trench foundation is deep enough, its base should be supported on firm ground unaffected by seasonal changes, while beam and block floors can happily bridge across the surface. Also by digging deeper, if the foundation is within the circumference covered by the miners you will notice it before laying the pillars.

However, in clay areas, the ground around the sides of the foundations will still be prone to periodic expansion and contraction as the ground becomes saturated and then dries. So to resist lateral pressure, the sides of the trenches can be lined with a flexible slip membrane which allows the clay alongside to independently shrink or swell. Also, building wider foundations can help spread the load over a larger area, but this may require steel reinforcement to prevent shearing. And, as we have seen, with deeper trench foundations it soon becomes cheaper, easier and safer to switch to either piling and or ring beam foundation.

Piles are concrete columns drilled deep into hard bedrock to securely anchor the building, aided by frictional resistance from the surrounding ground. This method has become much more common in housebuilding since the advent of cheaper short-bored systems installed using hired mini-piling rigs. It is now the most widely used foundation type after conventional trenches, thanks in no small measure to planning requirements encouraging retention of trees and the development of brownfield land.

There are good reasons why developers generally steer clear of ‘tricky’ sites. Potentially exorbitant groundwork costs, coupled with prolonged periods of uncertainty, can rapidly transform a viable project into a daring gamble. However, what might appear to be a ‘problem plot’ can sometimes turn out to be a blessing in disguise for self builders willing to take on technical challenges. The primary role of foundations is to anchor the building to good bearing ground (in other words, ground capable of supporting the building). Even relatively lightweight structures, such as timber frame houses, need to be securely ‘fixed in place’ to resist ground movement. The trouble is, conventional trench foundations start to become uneconomic below about 2m deep. So on sites where stable ground is in short supply, you are likely to need something a bit more sophisticated to protect your home from the ravages of nature. This normally means consulting a structural engineer at the design stage. The need for ‘special’ foundations can also extend the time taken for groundworks from three or four days for a conventional build, to perhaps two or three weeks more than doubling your total costs for this stage of the project.

The sinking of the ground surface due to mining starts with the removal of coal from underground. Gravity and the weight of the overlaying rock causes the layers of rock to shift and sink downward into the void left by the removal of coal. Ultimately, this process can affect the surface, causing the ground to sag and crack and holes to form, which may severely damage or destroy residences. A few inches of differential subsidence beneath a residential structure can cause millions of Naira worth of damage. Subsidence can happen suddenly and without warning. Detailed investigations of an undermined area are needed before development to resolve the magnitude of the subsidence hazard and to determine if safe construction is possible. While investigations after development can determine the extent of undermining and potential subsidence, often, existing buildings cannot be protected against subsidence hazards. This is because of the inability of available technology to predict exactly where, when and how much subsidence will take place at a given spot and the cost of remedial measures.

Where longwall mining is active and subsidence is a well-documented and predictable action, surface response to ongoing mining can be accurately estimated. However, in the case of room and pillar mines, especially where they are inaccessible and record-keeping may be inaccurate, predictions of when subsidence will happen are not possible. Several factors contribute to the timing of caving at the mine level and subsidence appearing at the surface. Pillars and timbers left in place can hold the roof of the mine up for long periods of time. Generally, the smaller the void width and the greater the number of pillars, the longer the roof can be supported.

Groundwater in the mine provides a buoyant force that helps support the ceiling. Also, pillars retain their strength because the lack of oxygen in the water-filled mine prevents the chemical breakdown of the coal. Therefore, water level changes in the mine increase the chance of pillar failure.

Changes can contribute to the initiation of subsidence 100 years or longer after the mine closes. Once block caving or sagging occurs in the mine, time and the physical characteristics of the void space and overburden will determine if subsidence reaches the surface and how much subsidence takes place. How much subsidence will occur and the features that will appear at the surface depend not only on the type of mining but on geology and several physical features of the voids left by mining.

Number of young people owning a home in England has fallen steeply

Overall the number of people owing their own home in England has remain unchanged for the fifth year in a row, but the number of young owners has fallen by a third in a decade, the latest official figures show.
Of the estimated 23.2 million households in England, some 14.8 million or 64% were owner occupiers in 2017/2018, according to the data from the English Housing Survey, which points out that owner occupation has not changed since 2013/2014.

But when the figures are broken down to look at the age of people buying a home they show that only 38% of 25 to 34 years olds own a property, down from 55% a decade ago and the overall number renting in the private sector has increased from 28% to 44%.

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The survey report, published by the Ministry of Housing, Communities and Local Government (MHCLG), reveals that the proportion of households in owner occupation increased steadily from the 1980s to 2003 when it reached its peak of 71%. Since then, owner occupation gradually declined to its current level.

While among owner occupiers, there remain more outright owners than households buying with a mortgage, the gap between the two groups has narrowed. Since 2013/2014, there have been more outright owners than mortgagors. In 2017/2018 some 34% of households were outright owners while 30% were buying with a mortgage. In 2016/2017 some 34% of households were outright owners while 28% were buying with a mortgage.

After more than a decade of decline, the proportion of 35 to 44 year old owners has increased up to 57% from 52% in 2016/2017, following a long period of decline from a peak of 71% in 2007/2008.
At the same time there has been a considerable increase in the proportion of 35 to 44 year olds in the private rented sector, up from 13% in 2007/2008 to 28% in 2017/2018, the figures also show.

In 2017/2018, the private rented sector accounted for 4.5 million or 19% of households. Throughout the 1980s and 1990s, the proportion of private rented households was steady at around 10%. While the sector has doubled in size since 2002, the rate has hovered around 19% to 20% since 2013/2014.


The survey also looked at whether those renting intend to buy in the future. In 2017/2018 some 25% of social renters expected to buy a property at some point in the future, down from 30% in 2016/2017 while in the private rented sector it was 58%, unchanged from 2016/2017.
The figures show that a large number of people still cannot get on the housing ladder, according to Kate Davies, executive director of the Intermediary Mortgage Lenders Association (IMLA).

‘As owner occupation rates show little change for the fifth year in a row, we continue to see the effects of the affordability issues facing borrowers looking to move onto and up the housing ladder. Although mortgage rates remain low, which should support borrower affordability, high house prices and regulatory constraints on lending continue to represent barriers for borrowers wanting to move onto or up through the housing ladder. As such, the IMLA expects a relatively flat year for mortgage lending growth in 2019,’ she said.


‘While the overall rate of owner occupation is static, the Housing Survey found that the number of outright owners is now much higher than that of households buying with a mortgage. This is symptomatic of a market which is undergoing a profound structural shift, with a larger share of the funds used to purchase property coming from cash and injecting equity into the housing stock, an unusual occurrence in a non-recessionary period,’ she explained.
‘In this continued subdued period, more than a decade on from the financial crisis, perhaps it’s an opportune moment for policy makers and regulators to reassess the costs and benefits of the present regulatory structure. We must recognise that the costs for those who continue to be locked out of homeownership can be considerable and lasting,’ she added.

The higher number of 25 to 44 year olds renting is a sign that some are not able to afford the first step onto the property ladder, but also of others actively choosing to rent, according to John Goodall, chief executive officer of lender Landbay.
‘The lifestyle that renting can offer is much more attractive to many people who may choose to sample many locations, work in different places, or spend time abroad. The flexibility that comes from having a lease, the support when things go wrong and the lack of responsibility of owning a property all add up,’ he said.
‘Now more than ever, all eyes are on the Government to encourage meaningful investment in the sector, and to stop penalising landlords with extortionate stamp duty. In these turbulent economic times, the sector needs to be encouraged to grow rather than stifled,’ he added.

Over N11billion loss following Fortis Micro-finance Bank Liquidation

Investors in the now defunct Fortis Microfinance Bank may have lost over N11 billion, following its liquidation. Fortis last traded at N2.58 on the Nigerian Stock Exchange (NSE), on the 27th of July, 2018 and has a total of 4.5 billion shares in issue, thus resulting in a total market cap of N11.8 billion.

Losses could be more

The estimated losses could be much more for shareholders that got into the stock at a much higher price.

The bank listed on the NSE in 2012 at a price of N5 per share. Investors that have held since then, may have lost over 48% in value.

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Journey to the end

In a notice dated 6th of February, 2018 the bank stated that it had experienced a run on its operations, due to its suspension from trading by the Nigerian Stock Exchange (NSE). It also stated that some anomalies were discovered in the third quarter of 2017.

Tiko Okoye and Adewale Aderounmo were retained from the previous management team.

In August 2018, barely five months after, Lawson put in her resignation. No reason was given for her action.

About the company

Fortis Microfinance Bank Plc was incorporated as a Private Limited Company on the 18th of June 2007 and commenced operations as a unit Microfinance Bank on October 4, 2007.
The company converted to a Public limited company in October 2011 and its shares were subsequently listed on the Nigerian Stock Exchange on the 20th of June, 2012. In August 2015, Fortis obtained a licence from the CBN to operate as a National Microfinance Bank.

SA Investors put R3.38bn into UK Property despite Brexit

ACTIVITY in the UK property sector has seen South African Investors conclude 29 deals with a combined value of R3.38 billion (£190m) in the past few years.

It’s no secret that 2018 was a difficult year for local investors with most asset classes declining in value both locally and abroad. However, one asset class does stand out amongst the rest – SA’s listed property sector.

“The sector is wading off many challenges including a weak economy, a volatile rand and tenant struggles. And much of the sector is now offshore which is providing support to investors returns,” said Ortneil Kutama, SA Commercial Prop News Media Director.

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Brexit chaos is battering the UK property market, but SA investors with an appetite for volatility are snapping up real estate in the country.

They are lured by falling UK property prices on the back of a weak pound and looking for favourable returns over time.

According to UK building and project consultancy, Paragon, has advised South African investors on 29 deals with a combined value of R3.38 billion (£190m) in the past few years.

London has seen few large deals with South African investors in recent years, but Paragon has observed a significant uptick in inward investment from the country, driven by discounts on currency as the pound weakens.

Paragon’s joint managing director, John Munday, said in email statement that the trend looks set to continue. “There are always trophy asset hunters looking to make a mark in London, and that is an appealing approach for some. But we’re also seeing many South African investors being hungry for new opportunities and asset classes all across the UK and in every sector.”

“South African investors keep a relatively low profile in the UK, but they’re now looking much more open-mindedly at the whole UK market,” says Munday.

The listed property sector has grown almost six-fold to R600 billion over the last decade.

“The growth was largely fuelled by local property companies expanding abroad and they are likely to continue to make more money offshore than in their own backyards,” Kutama adds.

There has been a change in the thinking of the South African investor community towards offshore diversification in recent years.

“The sector has seen a dramatic shift offshore with about 46% of its value in overseas markets, including eastern and western Europe,“ says Kutama.

Eastern European-focused property stocks such as Nepi Rockastle, MAS Real Estate and EPP NV look set to reward investors in 2019 as they benefit from strong economic growth and improving rentals there.

These companies have exposure to the likes of Poland, Romania and other countries in central and Eastern Europe, which have strong property fundamentals.

The World Bank has projected that the Polish economy will grow about 3.9% in 2019 and 3.6% in 2020. It expects 3.5% and 3.1% from the Romanian economy in 2019 and 2020.

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