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NEW Zealand Government needs to act quickly to fix housing market

The housing market in New Zealand is becoming less affordable across the whole country.

A housing affordability study by Demographia International shows unaffordable housing is spreading to smaller centres in New Zealand.

It is the second most unaffordable housing market in the world.

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Co-author Hugh Pavletich told Mike Yardley housing needs to cost about three-times the household income.

However, more New Zealand centres are reaching median prices more than six times the household income.

Pavletich says unaffordable housing creates all sorts of problems, and access to it is a human right.

“It’s been just progressively getting worse.”

He says that it will likely come as a shock to the Labour Government to see the extent of the crisis.

Pavletich says that Australia prices are becoming more affordable, which he expects will force the Ardern Government to do more on the issue.

“I was very disappointed with their performance in 2018 when we were expecting them to be very active in dealing with these structural issues.”

He says that KiwiBuild needs to be revamped rather than scrapped, but that the Government can’t carry on down the current path.

Pavletich says that the smaller centres are becoming “absolutely overwhelmed”.

“For a place like Dunedin to be sitting at six times the household income is just absurd”.

He says both Tauranga and Auckland need to get on with fixing their land supply issues and infrastructure financing, both problems they’ve known about for years.

“Local council is where it should be solved, because these are all local issues, so it’s about time all the playtime planning stopped and they got on and actually sorted the problem.”

Ondo completes 229 World Bank aided micro projects in communities of the state

The Ondo State Community and Social Development Agency has said no fewer than 229 micro projects had been completed out of 252 projects in communities across the 18 local government areas of the state.

The projects, which were said to be part of the World Bank-assisted programmes, in the state, included construction and rehabilitation of roads, bridges, classrooms and boreholes among others in the beneficiary communities.

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According to the Operation Manager of the CSDP, Mr. Olumide Igbaroola, the projects were community-driven development approach with the overall goal to improve access services for human development in the state.

Igbaroola explained that the projects were meant to support and empower the communities and local governments for sustainable increase access by the poor people to improve social and natural resource infrastructural services.

He said the first phase of the project commenced in 2009 with World Bank financing the project with $5m while the state released a sum of N345m as its counterpart fund. He noted that many communities from the state benefitted from the first phase of the scheme but said it was winded down in 2014

He said, “The success story of the first phase brings about additional financing which commenced in June 2015 with more emphasis on gender and vulnerable groups

“As at November 2018, about 59 projects have been approved and funded by the agency while the implementation was carried out by the Community Project Management Commission and completed.

Igbaroola further explained that the communities were allowed to participate in the process from the beginning to give them the sense of belonging, saying “this will allow them to take proper care of the projects because of their financial and other involvements.”

“The project emphasises equal opportunity hence gives voice to the voiceless in the community. Gender and vulnerable are allowed to participate even their needs are given priority in any community of intervention,” he stated.

He noted that for the intervention of the agency in any community, the Expression of Interest would be received by the agency from the community after which the agency would visit the community to verify their claims, prioritise their needs, implement, monitor and maintain the projects.

Experts link collapsed Rivers building to poor monitoring, fraud

Some startling revelations have been made on what could be responsible for the collapse of a 7-storey building in Port Harcourt, Rivers State on November 23, 2018 which killed about 19 people and left scores of others injured.

The revelations were made at the just concluded sitting in Port Harcourt of the judicial commission of inquiry on the collapsed  building.

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Rivers State Governor Nyesom Wike had in the first week of December 2018, set up the 7-man panel headed by Justice Adolphus Enebeli to ascertain whether the architectural, engineering and structural designs of the building were undertaken by competent and licensed experts.

Wike also directed the panel to investigate the circumstances that led to the collapse of the building located on Woji road in New GRA, Port Harcourt.

Speaking at the closing of the sitting, Justice Enebeli said the commission, which started hearing on December 27, 2018, heard from 46 witnesses and accepted 18 exhibits.

During the sitting which lasted 13 days, some of the witnesses including building experts gave shocking reasons on what could have led to the collapse of the building.

Daniel Erekosima, a geologist that conducted geotechnical soil test on the collapsed building said he certified the soil as being suitable for a one-storey building and not 7-storey.

A builder and supervisor at the site of the building, Emmanuel Enyang, said the building was initially designed for raft foundation but later changed to piling foundation after a second soil test.

Another witness and a Civil/Structural Engineer, Oti Emmanuel, described the nature of collapse as a plastic failure of the structure, adding that such incident could have been caused by excessive load heaped on the building.

The Director of Development Control in the State Ministry of Urban Development and Physical Planning, Mina Aprioku, told the commission that when he visited the collapsed building site in mid-2017, the engineers were working in compliance with the approved plan.

Aprioku pointed out that the ministry does not have enough manpower, particularly professional staff such as architects, quantity surveyors and engineers, a situation which, he said, made them to engage the services of ad hoc compliance team to help in monitoring.

Another witness, who is the Director of Building Plan, Ministry of Urban Development and Physical Planning, Edmund Obinna, told the panel that the immediate past commissioner for Urban Development, Dr. Reason Onyia, ordered the owner of the collapsed building during the 2018 revalidation process to produce the original 2014 approved plan of the building.

He said there was need to carry out a total overhaul of the ministry, noting that the Physical Planning Law of 2013 governing urban development in the state was being breached.

A survivor, who was a labourer at the collapsed building site, Smith Akaine, told the commission that the building collapsed at about 5:00pm when they were rounding off for the day, adding that some of the workers at the site had gone to buy food.

He said the building collapsed gradually and finally came down within 10 minutes.

A former commissioner for Urban Development and Physical Planning, Dr. Onyia, during cross examination, said the compliance team he worked with was already constituted before he came in, adding that the team helped the ministry to generate more revenue during his tenure through monitoring and detection of fake building plans.

Dr. Onyia also said the ministry had no professional architect to interpret drawings, adding that it hired the services of consulting agents who were professionals to interpret building drawings, stressing that he also relied on reports presented to him by directors in the ministry.

He stated  that it was in the process of revalidation of the collapsed 7-storey building that it was discovered that the plan was missing, but that  the building registration was later  found. He said he ensured the authenticity of relevant documents before approval.

Another past commissioner in the state Ministry of Urban Development and Physical Planning, Dr Tammy Danagogo, was not happy with some top officials in the ministry whom he accused of dereliction and compromise in the discharge of their duties.

Danagogo accused the immediate past commissioner and directors in the ministry of playing a major role in the collapsed building.

Danagogo, who served as commissioner in the ministry from October 2011 to December 2013, made the allegation when he appeared before the commission of inquiry.

The former commissioner said before he assumed office, there were many sharp practices in the ministry, including indiscriminate approval of building plans by directors in the ministry.

“Every director approved plans; they (the directors) all had their boys, who would meet prospective clients and take them to their masters. In most cases, the proper thing was not done.

“As a result, I set up a committee consisting members of the Nigerian Society of Engineers, Nigerian Institute of Architects and other professional bodies. We restructured the system and came up with a template for building plan approval and a checklist,” Danagogo was quoted as saying.

The owner of the building, Joseph Alagoa, in his presentation said, “I paid all the necessary government fees before the project commenced in January 2017. The architect I hired recruited all the workers, including the professionals on the site.

“I usually go to the site any time I was in town to check the work.”

Top-3 Japanese real-estate firm Pressance makes its presence known in Thailand

JAPAN-BASED Pressance Corporation Co Ltd, a top-three developer of condominium projects in Osaka and other Japanese cities, has expanded its business to Thailand, where it holds a 25-per cent stake in a joint venture firm with Shinwa Real Estate (Thailand) Co Ltd and Prebuilt Plc.

They will this year develop their first condominium project in Thailand, Ren Sukhumvit 39, worth Bt2.5 billion.

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“Thailand was the second country in Asean where we have invested in a condominium project after our expansion to Vietnam last year,” Pressance Corporation Co Ltd’s manager of business development, Tatsuya Nakae, said in a recent interview with The Nation.

He sees great potential in developing condo projects in Thailand, due to the country’s heavy investment in infrastructure. The rapid expansion of mass-transit rail projects in the country’s major cities, is a particular inducement for residential developments close to the routes.

“We entered Thailand by setting up a joint venture with our Japanese partner, Shinwa Group, which had expanded their presence to Thailand in 2017.This boosted our confidence with our investment in the country,” he said.

Since their first project, Ren Sukhumvit 39, Nakae said the company has continued its interest in further investment in Thailand with its partner, Shinwa Group. Decisions will be based on market demand.

Tomoyasu Yamabe, director of Shinwa Group and managing director of Shinwa Real Estate (Thailand) Co Ltd, says the company is following a business plan to invest Bt8 billion in Thailand in 2019 and 2020, and may ask Pressance Corporation to become a partner.

Pressance Corporation Co Ltd developed 5,200 condominium units in Japan last year and has recorded total sales above Bt30 billion yearly.

Pressance is the latest property firm from Japan to have expanded its investment into Thailand.

Source: SOMLUCK SRIMALEE

Pension fund can be used to finance housing needs- Bode Adediji

Is the housing challenge defying all logic?

No, says a former President of the Nigeria Institution of Estate Surveyors & Valuers (NIESV) and Principal Partner, Bode Adediji & Partnership, Mr. Bode Adediji. Rather, he suggests that the country should use the Pension Fund as a first tier finance for real estate development. He believes that overhauling of the Land Use Act as well as ensuring a sound mortgage system, including effective policies on housing, will go a long way in tackling the over 17 million housing deficit afflicting the country.

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What is your opinion on asset declaration provision and the Code of Conduct Bureau? Of recent, top civil servants and influential politicians have fallen foul of this particular requirement. What is your opinion on this? 

The challenge we have is what is generally with us. As a people, we are not lacking in laws, guidelines and policies, but the implementation of stipulated laws and policies is where there is a challenge. When agencies are set up to achieve a particular noble cause that will benefit the people, the compliance level is usually very low. The functions and provisions of the Code of Conduct Bureau should be sacrosanct to political office holders, civil servants and, indeed, any category of persons, who by law, are required to abide by its status in preventing or sanctioning corruption in the country. It is an area of our constitution that must not be taken for granted because it defines a lot of things about us as a people.

The continued existence of the Land Use Act is said to have cost the nation about $300 billion. Do you agree that this Act should be repealed or improved upon?

It has been a matter of controversy since it was enacted. If there is any document or law that would have propelled us from a third- world country to a developed country, it would have been this piece of law in terms of assets own culture. The Land Use Decree struggled that to bring normalcy to land ownership, it ensured that rights, entitlements and titles to land was not trampled upon. But, unfortunately, governments in different states rather than deploy it as income generating, have influenced peddling and generating undocumented income either to themselves or cronies, stripping it of its original idea and thereby making the whole essence of the Act defeated. This hampered the efficiency and delivery on its mandate. The clamour to repeal or discard it in my mind is an attempt to throw the baby away with the bath water. For us in the Nigeria Institution of Estate Surveyors & Valuers (NIESV) and at individual levels, we are canvassing for the overhauling of the Act and fundamental amendment to those areas we find not workable. The position paper on this is in the closet of the National Assembly and until we have a government that is concerned with the development of the real estate sector, justice will not be pursued and done to stimulate the private sector.

There has been a preponderance of rental defaults. What is responsible for this?

Once there is prolonged recession like we have had, it affects political, moral and institutional aspects of our national life. The economy is in recession and when there is recession people grapple with a lot of things, such as financial, social and other challenges. Fundamental areas of people’s lives are affected during recession, including the ability to house themselves, pay their children’s schools fees, feed and generally meet their immediate needs. However, many countries have fashioned out how to deal with this kind of things because some people can hide under this to shun their obligation because paying your rent is an obligation. No doubt, there are insensitive landlords who increase their rent yearly not considering the difficulties they may be putting their tenants, but on the other hand, some recalcitrant tenants refuse to pay their rentals even while buying new cars, these are realities in third world countries. But we can learn from how other countries came out of that particular situation. Some countries have come out boldly to fashion out rules and regulations to identify those who might want to hide under recession or economic hardship to avoid paying their rentals. However, in a situation where there is a national malaise of indiscipline such as ours, some tenants will want to stand up to their landlords without paying, the landlord suffers more, though some landlords also increase their rent unnecessarily without a care.

Some years back in Dubai and Abu Dhabi,  when there was tendency for tenants, where tenants move into a place and refuse to pay nor moving out of the property, the government set up a process and guidelines to resolve such impasse. The government also put in place the machinery to resolve such and to discourage tenancy disputes in conventional court, I think that is what Nigeria needs. In extreme case like that of Florida, USA, if a tenant owes his rental and the landlord fails to collect his rent as a result of the reluctance of the tenant to pay, the local government will intervene to ensure that justice is done  by investigating if the man has lost his job or debilitated by illness. Upon satisfactory investigation, the government will compel him to pay or vacate the premises.

There seems to be property glut in the market, such that is a huge number of vacant properties adorning the country’s landscape. What is responsible for this?

The proportion of the glut in the market is not directly as a result of the recession per se. Largely speaking, it has to with our collective lack of foresight. Real estate investments and projects are always seen in all countries as a medium to long term projects. But where we see that the rate of economic growth and the migration of people from certain income class to another is either not improving but retrogressing. In this scenario, building for a particular class of people, which may be referred to as endangered species and also for people you cannot foretell their abilities to take such products in the near future, for me, is the main problem  that we have had in Nigeria. So far, those who are building are building for a class of people who  are either expatriate staff coming or  people migrating  from low to medium and high-income areas to premium areas. For these set of people as soon as there is recession there will be no effective demand for such products.

To avoid this, developers and real estate investors like other businesses, should be proactive and futuristic in concept, planning, financing, development and construction. If a developer goes to a bank to borrow money to build luxury estate for a class of people that are no longer available or dwindling, then such developer is courting crises from day one. On a specific note, the way I see the country and, particularly Lagos State, is that they have failed to embark on complementary services that would encourage private sector participation in real estate development. There are things the government ought to have done to provide an enabling environment for the private sector to ensure that whatever product is rolled out by the private sector, the burden of infrastructure development should be taken away from them. Such infrastructural provision of power supply, road network, and water adds cost on the final product and by extension it becomes unaffordable to some categories of tenant that would have expressed interest on such product.

Lagos, unfortunately, has been encouraged to develop on the platform of mono axis. There was a time and largely speaking, that is, still the case where the residential outlook focused on the Lekki/Epe axis to the neglect of other areas such as Badagry and other areas that are not fully developed in the state or even encourage developments outside the state, such as in Ota, Ogun State and the Lagos-Ibadan Expressway. But because this was not done it caused a lot of environmental and physical anomalies that is so evident in the real estate development in the state. People trooped to build in the axis, but the income and unemployment level continued to dwindle in building for the class of people that are not available to take up such properties.

Where is the vacancy challenge more pronounced – in commercial office space or residential accommodation?

Location by location, I would say. If you look at Ikoyi, for instance, predominantly, most of the first class office spaces are empty. But where you have small scale office spaces, the percentage of void is less. Victoria Island and part of Lekki is passing through a transition where largely speaking even residential areas are transformed and converted to office use. Whenever you have recession the first target that is hit is commercial office space because recession always brings about sporadic business closures and when you close down you close down. The highest rate of failure for upstart companies normally happens during recession and so if you have built for people who have just taken off, the response from the market feedback is that there is no effective demand for such a space.

What would you recommend to a real estate developer in Lagos?

My position is that a-would- be developer should select his location carefully and professionally. The mere fact that you want to join the bandwagon of Lekki/Epe axis developer does not mean that you should neglect other areas where you have ready or emerging markets. Generally speaking, people cut their coat according to their cloth. The tendency to build all these five and six bedroom flats, terrace houses should be curtailed. Families now prefer two or in maximum cases three bedroom flats and in some cases, mini-flats, where common services can be shared. The other one that is important is that the idea of encouraging individualistic self-development approach in real estate is a problem on its own. Nigerians have forgotten to implement what we learnt in school known as the economy of scale.

In many countries, the role of building where a man is going to live has been shifted from his neck to that of developer but in Lagos today and many parts of the country, the individualistic housing development is still the main focus of every one. In a situation where you have developers in different categories of small, medium and large scale then the burdens and cost associated with individuals building their own houses should be transferred on their necks and the prices will go down, the ability to pay the rent becomes enhanced. But as long as we allow individuals to acquire their land and struggle to build it on his own even when he is able to build one or two units and let one out, the proportionate cost becomes so high that prospective tenants cannot afford it. Where you have large scale housing, construction cost per housing goes down and expected rental income from such rental property becomes modified.

People, for some reasons and belief, want to have this satisfaction that they built their house themselves. What is your take on this?

I agree with that because it is a cultural problem, but for how long should we run our lives based on cultural inclinations when you know it is a problem? Shouldn’t we borrow the good things from overseas just as we borrowed their education? Why can’t we borrow their culture that subscribes to communal project development and living? I think that is the way Nigeria should go. In fairness there are so many companies currently that are specialised in small, medium and large scale housing estate development and they have been successful. What the government should have done is to focus her attention and place more emphasis in terms of how they allocate land, roll out infrastructure etc. But what we have is that some private and government lay-outs and individuals are encouraged to do their designs, seek their contractors or construct themselves, costs begin to rise and rental expectation will not be met just like we are witnessing.

Wouldn’t it be as a result of not having a functional mortgage sector?

There are so many problems associated with it and mortgage system is part of it, including the Land Use Allocation Policy. It should  be done in such a way that a particular registered developer would be assigned terms and conditions to roll out specific projects within a specified time and to be able to sell to those who have access to mortgage. This will ensure that the nation’s housing problem is being looked at in a very holistic manner and the result is we will be successful at the end of the day.

 

Why is there a preponderance of quacks in the real estate sector? Some stakeholders attribute this to the fact that would be clients prefer cheaper agency fees compared to the registered agents who insist on 10 percent commission for their services?

I don’t think that observation is correct. There are several reasons why clients patronise more quacks than registered surveyors. Firstly, the percentage of registered surveyors vis-a-vis potential customers is disproportionately low compared to the prevalence of quacks. If for example a prospective client’s first access is to a quack, then that is where he will go. I cannot think of any registered surveyor’s firm that is still very rigid on the percentage of professional fees that should be paid. You can do that during the boom but not now, nobody that is realistic can insist on that during recession as we have it now. Really, quackery will continue to grow in this country for so many reasons including lack of good job opportunities. The increase in the retirement patterns of able-bodied men and women in many respects particularly in urban centers has fuelled the practice. You cannot find an able bodied young man sitting down and idling away when he knows that he can print complimentary cards to persuade, encourage or deceive somebody to give him an assignment to go and look for a house; for these set of people their first port of call is foraying into petty trading or quackery in consultancy. These set of people by their modus operandi have greater mobility and accessibility. For as long as you have this kind of recession in Nigeria, it will spring up a large quantity of quacks because again, they have more fighting spirit than the registered estate surveyors, they are aware that their sustenance and livelihood depends on  how hard they work.

Are you satisfied with engagement of the private sector with the government in terms of housing provision?

In terms of patronage and engagement, there has not been any government in the last 30 years that is pro-professionals and my challenge is that until professionals find themselves in the corridors of power  and within the government apparatus, we should not expect a change in the way that the government relate with us. I suspect that if there is no change, the neglect that we suffer from government will continue to rise. But, for example, if an estate Surveyor and Valuer becomes a Senator of the Federal Republic of Nigeria tomorrow, his perception of the housing crises will be different. Again, if a registered Town Planner, an Engineer, or an Architect becomes a President or  Chief of Staff in the Presidency, the kind of  reception he will give to professional opinions in critical matters of housing and urban development will be different.  Until we have that setting and avoid walking far away from the corridor of power, it means that we can only talk while other makes the difference.

There are so many abandoned Federal Government buildings especially after the movement of the Federal capital to Abuja? Why have they not been  put into profitable use rather than allowing the buildings to rot?

There are some of them that are still going through legal dispute or crises while some seen physically as belonging to government has actually been sold. An example is the Federal Government houses at Bishop Oluwole in Victoria Island sold over 10 years ago. I will not blame anybody who bought and refused to do anything about it. But the abandonment is a sad development especially for a country that says it wants change and is pro-development. I have not seen any fundamental change in government policies concerning abandoned projects and properties all over the country in concrete terms. I have never seen any government in the last three or four regimes that has actually factored in their calculus this vibrant sector of the economy that can be used to check youth unemployment. If a government is pro building and pro development, people who leave school and trained as architects, engineers, technicians can actually have a place to go and work. Not only that, majority of Nigerians in Diaspora who have capacity to buy houses, if there is a functional mortgage system can expand that. But the truth of the matter is that it has never been part and parcel of any government policy to see housing intervention beyond the clamour to say we are putting roof on peoples head to embrace a more serious and wider goal of empowering people by providing employment for the young people. Once we have that, the Land Use Act perspective will change including the treatment of the Pension Fund that has accumulated to over N8 trillion. Things like entrepreneurship support system will change. The last one that I know that we talk about always instead of addressing the challenge is looking into the architecture of our housing problems and solutions to the extent that we have spoken about our concentrating on what we have to build rather than the dependency on foreign products which has been on for the past 50 years.

Is it possible to have a ‘Made-in-Nigeria house’?

Until we take a look at the local building materials we have and enforce it on people to build houses, housing cost will continue to rise and decent housing may continue to elude a greater percentage of the people.  We can ensure that 80 per cent of the material to be used to build anything in Nigeria is made in Nigeria if we have the political will. New technologies will be encouraged, no doubt, to ensure that our timber in the forest accounts for 70 per cent of our building materials either in terms of our walls, windows or floor . If other countries have done this successfully, we must not attempt to reinvent the wheel.

What best use can the Pension Fund be put into judging from the fact that it runs into trillions of Naira now?

Pension fund can be used to take care of short-term housing needs.  As at a year ago, the Pension Fund managers were prohibited from engaging in long term investment. But I believe that there can be improvement on that law by categorising for instance, some real estate development that can take about 24 months as not too long a time to fit into the laws that set up the fund. Where there can be a certainty I believe and advise that the idle fund in the Pension purse should be deployed into housing provision with short gestation period. It’s not for real estate financing that can take 10 or 15 years it can even be used as first tier finance for a particular project. It is when a nation cannot take a creative look into what their challenges and concerns are that makes the problem to persist. Look at the issue of dearth of hostel accommodation for students in the universities, why can’t the government encourage developers and assist them by making it possible for them to draw from the fund to build hostels; no doubt, the students will pay and a great need would have been met.

Why are people holding on to the concept of family houses, abandoning houses for years and living them as relics instead of earning rental income from them?

They are littered all over the place and that is an area I have never seen a government agency looking into. Those in the villages, historically and culturally, are understandable. For instance when Mr. X was making waves he lived in Abuja and went home to build a house but unfortunately the same Mr. X never encouraged his children to holiday in the village. Unfortunately when he passes on, it becomes automatically an abandoned country home occupied by cockroaches, lizards and snakes because the focus of his children are different. In this country, we lay more emphasis on entitlement policy as far as heritage is concerned than transforming a particular asset into functionality and utility. That is why you find out that most personal houses and buildings abandoned are underpinned by family squabbles. Those without family squabbles don’t have capacity to transform them into money yielding asset. It is a whole gamut of challenges that make the concept of family houses embarrassing and prevalent. It is important for government to find a way of encouraging some NGOs to go into advisory services that people can tap into where for example a family of three or four is having a squabble over a property they can be advised as to the channels they can explore raise fund and the kind of property they can redevelop the building into to yield income and everybody will be happy. In a case that the children are all abroad they and have no confidence on their relative they can be advised to appoint an independent estate management advisory agent to manage the property. The only way we can achieve the objective is for government to see the loss encountered by these families as not only theirs but that of the nation in general.

Why is the Federal Secretariat in Ikoyi still abandoned?

I don’t have information on why the Federal Secretariat in Ikoyi is still the way it is now that we have the same political party in Lagos and Abuja. Whatever may have been the crises before now on the management of the property ought  to have been resolved because at the end of the day, it is not only the developer, the state and Federal Government, but the entire  that is losing through the abandonment of such strategic and massive asset.

Why the world should be watching India’s fast-growing cities

The UN Department of Economic and Social Affairs (UN DESA) predicts that future increases in the world’s urban population will be concentrated in just a few countries. India, China and Nigeria are together expected to account for 35% of the projected growth in the world’s urban population until 2050; of these three, the absolute growth in urban population is projected to be the highest in India. In terms of sheer numbers, the largest urban transformation of the 21st century is thus happening in India, and the Indian real estate and infrastructure industry is a key contributor to this growth.

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India’s real estate sector is expected to contribute 13% to the country’s GDP by 2025 and reach a market size of $1 trillion by 2030. However, the environmental footprint of the Indian real estate industry is also mounting. Buildings in India account for 40% energy use, 30% raw material use, 20% water use and 20% land use; they also generate 30% of solid waste and 20% of water effluents. The sector is responsible for 24% of India’s annual CO2 emissions, contributing to global warming and poor air quality. It is therefore critical that India adopts a holistic and sustainable approach to real estate development.

Is the world prepared to bear the brunt of unsustainable urban growth in India? India’s urbanization is globally relevant for several reasons:

1. A global growth engine propelled by cities

According to World Bank estimates, India will continue to be the fastest growing major economy in the world, with 7.5% GDP growth predicted in the next two years. It is already one of the most sought-after foreign-investment destinations and is expected to become the third largest consumer economy by 2025. A young demographic base, growing income levels, expanding (globalized) middle-class and stable democracy has propelled India into the league of major global economic powers.

India’s unique pattern of urbanization is not a corollary, but a driving force of this growth story. Its cities contribute about two-thirds of its economic output and are the main recipients of FDI. Seventy per cent of future employment is expected to be generated in Indian cities, with emerging cities (population less than 1 million) driving consumption expenditure. With 70% of India’s built environment for 2030 yet to take shape, its impending urban transformation also represents significant opportunities for domestic and international investments.

However, this urban success story demands a closer look. Many of India’s metropolises and cities contend with unsustainable levels of stress on infrastructure, resources and public services. To achieve sustainable growth, these cities will have to become more liveable and safe with clean air; adequate infrastructure; reliable utilities; and opportunities for learning and employment.

The solution lies in inclusive urbanization processes that prioritize quality of life for all, focusing especially on the needs of vulnerable urban groups for employment, housing, sanitation, healthcare and education. Most importantly, planning must incorporate long-term resource sensitivity and community involvement at every step, while benchmarking smart and measurable outcomes for all stakeholders.

2. An urban laboratory for the world

Ninety percent of the world’s urban population growth by 2050 is expected to occur in Asia and Africa, in countries with socio-economic profiles comparable to India. Interestingly, India is currently at a unique tipping point in its journey of urban development, with 300 million new urban residents projected by the same year. A plurality of cultures, languages, climate zones and landscapes, combined with the Indian government’s efforts towards citizen-focused urban development, means that India is poised to establish unique global benchmarks in sustainable urbanization. The study and findings from its rapidly advancing urban agglomerations can help emerging Asian and African countries design policies and strategy to better prepare for their local influx and growth.

3. India’s contribution to the UN SGDs

The world is now in the third year of the Sustainable Development Goals (SDG) and making Indian cities inclusive, sustainable, resilient and safe is critical to achieving the global 2030 Agenda. We all understand that building cities is capital-intensive and requires long-term planning. However, the way in which India’s cities grow will define how it achieves its SDGs. This “how” must incorporate resilience to mitigate climate risk and productivity loss; ensure inclusivity; and be biodiverse and socially vibrant. This is the vision for India, and the good news is that we are already making sustainable urban development a priority.

Renewable energy. India registered a growth of approximately ~67% in wind power production in the last four years and also recorded its biggest ever solar power capacity addition of 5525.98 MW in 2017-18.

Policy-driven urban rejuvenation. Realising the importance of managing the process of urbanization, the government has launched visionary programmes such as Atal Mission for Rejuvenation and Urban Transformation (AMRUT), 100 Smart Cities Mission, Housing for All (PMAY) and Swachh Bharat Mission. These initiatives seek to ensure that urban progress is accessible to all and quality of life is enhanced.

A “green” built environment. Of the 60 major opportunities related to delivering the UN SDGs, six of them fall in the net-zero energy buildings (NZEB) sector: affordable housing; energy-efficient buildings; resilient cities; durable and modular buildings; smart metering; and water and sanitation infrastructure. India’s green buildings market is estimated to double by 2022, supported by growing awareness and policy provision. The private sector is already a key contributor to the green buildings movement in India and is driving consumer awareness and innovation, via initiatives such as the Mahindra – TERI Centre of Excellence for Sustainable Habitats.

4. Lessons in mobility

India’s transportation demand has grown by more than eightfold since 1980. We are navigating our way around resulting challenges such as economic loss from pollution, congestion and inefficient fuel use. The magnitude and complexity of our mobility-related challenges is unique to the Indian context and has resulted in a tailored approach. In rural India, the Pradhan Mantri Gram Sadak Yojana (PMGSY) has focused on building all-weather roads at a rate of 130km a day. At the national level, policies such as the National Urban Transport Policy & theNational Electric Mobility Mission Plan 2020 seek to provide safe, affordable, quick and sustainable access; and achieve fuel security and leadership in electric mobility.

Urban India will need about another 2.4 million homes to be built by 2020 – a massive opportunity for positive change. Our built infrastructure can mitigate environmental impact and transform the way we live, work and play. We must mainstream green buildings, use alternative sources of energy; invest in housing, transportation and waste management, and leverage public-private partnership.

The world is watching the growth pathway that India is taking. From my vantage point as an urban practitioner and observer, I believe that India must nurture its urbanization in indigenous ways, dealing with challenges by devising solutions that integrate a broader range of local factors. We must tap into lessons from ancient cities of India, while also drawing upon modern urban best practices that can be adapted in uniquely Indian ways. Understanding key emerging trends in India’s urbanization is imperative to forge a new global framework of sustainable development.

Source: Sangeeta Prasad

REAL ESTATE Adopting the Singaporean model for Nigeria’s mortgage system

After much motion without movement in its mortgage system, the next best step for Nigeria is to seek what is working in other climes that it can adopt in order to grow that segment of its economy.

The Singapore model readily comes to mind here. This involves creating a pool of funds into which everybody contributes monthly and from which everybody borrows to buy a flat or house.

Click here to watch weekly episodes of our Housing Development Programme on AIT

Singapore, a once poor island in Southeast Asia, evolved from a third to first world economy between 1965 (when it gained independence from the British) and 2000. Under Lee Kuan Yew, the country’s first Prime Minister, the government transformed huge swathes of urban sprawls and slums into well-planned cities that spurred economic dynamism and growth.

Their mortgage model succeeded not by an act of magic but because the government was determined, through a deliberate policy, to make that model work.

Conversely, the national housing fund (NHF) scheme in Nigeria can only be described as a failure because the vision is not there to drive the scheme. For too long, the mortgage system in Nigeria has failed to grow and the obvious effect is the low home-ownership level in the country and widening gap between housing demand and supply.

The Federal Government’s intervention in the housing sector was the setting up of the Federal Mortgage Bank of Nigeria (FMBN) followed by the establishment of the NHF scheme which was aimed to make mortgage affordable for contributors to the scheme at 6 percent interest rate for upwards of 20 years, depending on the age of the borrower.

This scheme has failed, hence the need for the remodeling of the entire mortgage system in the country. The Federal Government is expected to ‘top up’ contributions into a remodeled NHF with, at least, N10 billion every year to make it affordable.

If the entire system is modeled after that of Singapore, Nigerian citizens will be able to obtain 20 to 30-year low interest mortgage to acquire houses through a pool of funds into which all workers must contribute 20 percent of their salary.

It should be noted however that the NHF scheme attempted the Singapore model but failed because contributors couldn’t access the loans as they couldn’t afford the deposit for the houses. The scheme also failed because one effect of inflationary policies is high interest rates charged on mortgage loans.

Anywhere in the where, non-inflationary fiscal policy, flexible, sustainable exchange rates and hence, low interest rates, are important for attaining a mortgage system that will also attract foreign investment into mortgage market. Those are the kind of things Nigeria needs at the moment to grow its mortgage sector.

Nigeria’s mortgage system as it stands today is incapable of supporting a housing policy that will deliver houses to Nigerians. This is why the country should imitate other countries with mortgage systems that have delivered housing for both the rich and the poor.

Nigeria needs an efficient housing policy whose aim is for the government to assist millions of citizens to obtain lower-interest mortgages. This is how most citizens are helped to acquire houses in many countries with successful housing policy such as Singapore, South Africa and Malaysia.

The housing sector also has suffered slow growth over the years and this has blamed on high mortgage rates with short tenures, a difficult business environment, high inflation, and unstable policies that have together hampered the growth of the housing sector in Nigeria.

As a result of this, there is an estimated deficit of 17 million housing units. FMBN estimates that the country needs to build 720,000 units per year to bridge this gap.

Housing development experts say there is always a link between transformational housing policy and the economy. They explain that a housing policy that works for all Nigerians, including the rich, the poor, civil servants, small business people, artisans, informal sector workers and entrepreneurs, young graduates, young people with limited formal education, banks, construction companies etc, will boost construction activities and make a significant contribution to economic development.

The need for an efficient mortgage system is critical to providing accommodation for most Nigerians and this is because house is the single biggest investment an overwhelming majority of people will ever make in their life time.

It is on record that less than 3 percent of Nigerians acquire their homes through mortgage. Yet millions of them invest in building houses of different costs and quality without any help whatsoever from the government. This is the reason about 90 percent of the country’s housing stock are described as ‘dead assets’ because they are not in any formal mortgage.

Source: Chuka Uroko

5 Smart Designs Combating Homelessness

On any given night during 2018, some 552,830 Americans nationwide experienced homelessness, according to a recent report by the U.S. Department of Housing and Urban Development. That’s a tragic statistic, but it’s only a slight increase—just 0.3 percent—over 2017. A decade-long trend shows a more positive outlook; overall, homelessness has declined by 13 percent since 2010. An innovative “housing-first” approach, which recognizes the importance of stable housing first and foremost, is partly responsible for the improvement.

Click here to watch weekly episodes of our Housing Development Programme on AIT

While the people experiencing homelessness are, of course, a diverse group, some fundamental needs are shared. Creating a sense of security, privacy, and dignity is always necessary, says Jill Pable, a professor in Florida State University’s department of interior architecture and design, who runs the website (Design Resources for Homelessness). The best solutions are also participatory, Pable adds. “We must listen to and include these people in the design approach,” she says.

As attitudes toward homelessness have begun to shift (last month, Sesame Streetintroduced a storyline about a seven-year-old character who no longer has a permanent home), design has, too. “Taking steps to help these people re-enter regular society,” says Pable, should be any designer’s end goal. Permanent supportive housing, she notes, is the most successful strategy for helping the homeless get back on their feet. But temporary and emergency shelter plays a role, too. From 3D printed houses to flat-pack sleeping pods to community-based apartment complexes, creative solutions—and hope—are on the horizon.

 

a series of sleeping pods with curtains in front of them

Designed by Reed Watts as temporary bunks, these sleeping pods are fabricated from standard plywood sheets that fit together with interlocking connections and require no screws, nails, or glue to erect. The pods can stand alone or be fitted together, are easy to disassemble, and provide more privacy and security than a standard mattresses on a floor.

 

a streetscape with contemporary grey structures

In Los Angeles, where focus and funding prioritizes permanent supportive housing, Homes for Hope has begun to fill a gap for affordable transitional housing. Designed byMary and David Martin’s Madworkshop with the USC School of Architecture, these 92-square-foot modular dwellings can be installed quickly and inexpensively on unused city land. The stackable units also can be aggregated, then dismantled and reconfigured.

a curved concrete home with a curving black roofline

Traditional home-building is fraught with waste, but Icon’s mobile 3D printer can build an 800-square-foot house in less than 24 hours for under $4,000 with nearly zero waste. In collaboration with New Story, a nonprofit dedicated to sustainable building in the developing world (it has also partnered with AD to build homes in Haiti ), Icon debuted its first 3D-printed concrete house in Austin, Texas, last March.

a contemporary building with tall vertical windows on a busy street

Long-term solutions are critical for a successful transition out of homelessness. La Casa, in Washington, D.C., by Leo A Daly and Studio Twenty Seven Architecture, is a 26,200-square-foot permanent supportive housing project sited among high-density residential developments. Providing housing and supportive services for 40 people in single-person efficiency units, La Casa provides stability for tenants as well as privacy, safety, and community.

a series of small homes with front porches

This 51-acre hamlet in Austin, Texas, provides affordable, permanent micro-housing and a supportive community for those transitioning out of homelessness. Alongside its array of adorable tiny homes, the village offers community gardens, medical facilities, a movie theater, and a market, but above all, perhaps, it aims to restore hope and deliver dignity.

Zambia to commence construction of US $12m Community Dam

Zambia is set to commence construction of US $12m community dam Zambia’s Serenje District of Central Province.

Zambia’s Central Province Permanent Secretary (PS), Chanda Kabwe confirmed the reports and said the dam project which is is coordinated under the name “Luombwa Irrigation Company”, will have a capacity of 83-million cubic metres of water when filled to the brim and a back flow of 6.1 kilo metres.

Click here to watch weekly episodes of our Housing Development Programme on AIT

Luombwa Community Dam

The projected Upper Luombwa Community Dam is set to be constructed under Muchinda Chiefdom. It will be 23 meters high and have a wall of 1,700 meters long. Mr. Chanda Kabwe said the mapping established that 83 families will be affected by the project but that only 23 will require complete relocation.

 

“Preparations are progressing well and have reached an advanced stage.So far 20 out of the 23 households have already been resettled in Chief Kabamba’s Chiefdom.The project is only awaiting statutory clearance by the Zambia Environmental Management Authority (ZEMA)and Water Resources Management,” said the Permanent Secretary.

Mr. Kabwe further elaborated that the provincial administration is supporting the construction of the dam in order to grow the agricultural sector for the province be the food basket not only for the nation but the entire region and beyond.

“We do understand as a nation that by 2025 the world population will increase and of that increase about 40% is from Africa. Therefore, the demand for agricultural produce, in terms of food will be on the increase and we need to position ourselves as Central Province not only to feed Zambia but the continent at large,” he stated.

Source: teresia njoroge

The mortgage industry isn’t ready for a foreclosure crisis created by climate change

A foreclosure crisis spurred by climate change is becoming a real threat to the mortgage industry as extreme storms and other natural disasters increasingly occur in places where borrowers might not have flood or fire insurance.

The industry is not prepared for the effects of such extreme weather and rising sea levels, according to Ed Delgado, CEO of national mortgage trade association the Five Star institute and a former executive at Freddie Mac.

“If we look at the basic foundation of what drives the mortgage market, it is the application of credit risk. What’s missing is the understanding of weather risk and where those weather events can take place,” Delgado said.

The current system is reactive and local and doesn’t include plans for the widespread effects of climate change. That could affect several major housing markets at once.

As it stands, after major natural disasters, mortgage servicers follow guidelines from Fannie Mae, Freddie Mac and the FHA, which own or insure most home loans today.

The guidelines usually involve a temporary moratorium on foreclosures, as well as loan forbearance programs, which allow borrowers to miss a few months of payments but then extend the length of the loan.

This helps borrowers who need to rebuild and may be waiting for insurance payments to repair damage. It also helps people who have lost their salaries temporarily due to a disaster. Again, these are momentary solutions to singular events.

The mortgage market is not factoring the overall risk into its loan underwriting and is not quantifying the amount of potential losses should a wide swath of borrowers walk away from damaged or destroyed homes.

“Whether it’s fires and mudslides in California, flooding in Texas, or tornadoes in the Oklahoma region,” Delgado said. “It’s going to be a problem if the banks don’t start to pay closer attention to what those weather risks are.”

As an example, Hurricane Harvey, which struck in August 2017, flooded close to 100,000 Houston-area homes. In Harvey’s federally declared disaster areas, 80 percent of the homes had no flood insurance, because they weren’t normally prone to flooding. Serious mortgage delinquencies on damaged homes jumped more than 200 percent, according to CoreLogic.

 

Houston could have seen a massive foreclosure crisis were it not for strong investor demand in the market. Houston’s economy was strong before the storm, and its housing stock was lean. After the storm, investors swarmed the market, offering troubled homeowners an easy way out, largely in cash.

Investor purchases of 10 or more properties jumped nearly 50 percent in the year following Harvey, according to Attom Data Solutions. Some were large-scale buyers, like Cerberus Capital and HomeVestors of America.

Others were smaller home flippers, like JP Patel, who was still buying properties at a crowded auction event in Houston last October. His company, Texas-based Myers, has purchased 80 Harvey-damaged properties.

“As an investor, it was kind of a perfect opportunity,” said Patel. “We literally can avoid the whole problematic nature of the foreclosure process.”

Houston dodged a crisis because it was already a hot housing market, and people still wanted to live there after the storm. But Houston should be a wake-up call to the rest of the nation, according to Delgado, specifically because the damaged homes were largely not in FEMA flood plains, and were therefore not required to have flood insurance.

“You have this tremendous urbanization, population growth. Roads that are being built in the last 10 years. Where does the water go?” Delgado asked. “And is there an underlying risk for us to examine with respect to our portfolio? And then make decisions. Should we be lending in those markets?”

Lenders today, and the federal government that backs most loans, base their risk on FEMA’s flood maps, but even top FEMA officials admit the maps don’t account for increasingly extreme weather.

“We can’t try to determine what’s going to happen in 12 months beyond, because insurance is set up for what your risk is today. And it wouldn’t meet actuarial science to charge you for a future potential,” said David Maurstad, FEMA’s deputy associate administrator for Insurance and Mitigation.

FEMA is required to update its maps every five years. Maurstad says it relies heavily on local communities reporting problems — but some don’t because they don’t want their insurance premiums to go up.

“We know that only one-third of the properties in the high-risk area have flood insurance, so we have a lot of work to do,” he said.

Jennifer and Andy Taylor, who decided to walk away from their Houston home, which was flooded in Hurricane Harvey in 2017, and sell to an investor.

In Houston, flood insurance is now far more expensive because of Harvey. Amanda LeCureux has been running foreclosure auctions for the past two decades, but last October it was the past two years that had her most concerned.

“I have a homeowner, for example, who flooded in 2016 and then promptly flooded again in 2017. And while they did have flood insurance, that flood insurance used to cost them $600 a year. The projected premium for next year is $9,000,” said LeCureux.

“And that particular homeowner was stating that, while they can afford to pay the $9,000 for flood insurance alone, they just don’t know that they’re interested in staying in that home where they’ve already flooded twice in two years and with the increase in insurance,” she added.

 

And that brings up another problem, said LeCureux.

“Who’s going to buy their home? Which homeowner is going to buy the home that’s been flooded two times and then will be burdened with a $9,000 flood insurance policy?”

Borrowers may simply decide to walk away from homes that they either can’t afford to rebuild or no longer want to live in. As extreme storms and weather events, including drought and wildfires, become more frequent and widespread, the potential for a climate-induced foreclosure crisis increases.

So far, according to Delgado, the mortgage industry has not caught up with the new climate reality and its increasing risk.

“I think it’s only been in the last decade that we’ve started to understand that [Hurricane] Katrina wasn’t a fluke, that there will be ongoing, massive events, weather events, taking place, exposing potentially trillions of dollars of real estate to coastal flooding and damages,” said Delgado.

“It simply can’t be ignored anymore. We’ve been given enough warning signs to take corrective action, and it’s about time you get proactive instead of waiting for these cataclysmic events to take place.”

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