TrustBond Mortgage beats analysts’ expectations amid economic headwinds

TrustBond Mortgage Bank, one of Nigeria’s few primary mortgage banks (PMBs) operating with national licence, has beaten analysts expectations with its 2017 financial year results which, in the estimation of  its shareholders, is a good and commendable outing.

Though there was relative stability in 2017 compared to the year before it in terms of the impact of recession on macro-economic environment, analysts’ expectation was a dismal performance by the organised private sector operators, especially those in the financial system for whom hyper inflation and volatile exchange rate regime meant so much.

Again, a pervading perception is that the mortgage industry in Nigeria is under-performing. To some people, Nigeria has no mortgage industry at all and so they do not expect anything wonderful from that industry  in terms of performance, more so in a recessing economy.

But  at their 9th Annual General Meeting in Lagos recently, TrustBond excited its shareholders, disclosing that during their financial year that ended December 31, 2017, their profit after tax from continuing operation rose about 13 percent to N23,443 million, up from N18,016 million in the previous year.

Adeniyi Akinlusi, the bank’s CEO, who gave this hint, added that despite the economic headwinds that characterized the year under review, particularly the high inflationary environment,  the bank was able to reduce its cost-to-income ratio to 0.64, down from 0.89 in 2016. It also recorded total assets of N13, 593 billion in December 2017, representing 9 percent increase over the previous year’s figure of N12,411 billion.

Akinlusi told the bank’s shareholders that besides some business restructuring and the adoption of a new one  that they did which yielded these results, they also undertook what he called ‘Share Reconstruction’, leading to the reduction of an accumulated loss to N886 million in their balance sheet, down from N2,177 billion.

The shareholders were excited by this performance and, according to Sunny Nwosu, a shareholder and member of the audit committee, “this shows that the management worked very hard and followed our advice.   They were advised not to do certain things and they followed the advice. That caught shareholders’ admiration and they were happy”.

Though there was no dividend pay-out, the shareholders were happy and optimistic. Binuyo Sharafa Teju, another shareholder, reasoned that for the management to have been able to reduce the bank’s debt burden to N886 million from N2,177 billion, in the next three years, they would wiped it out and be able to pay dividend.

“From what we have seen today, I want to believe that by the time we will be doing 2018 account, they shall  have wiped off the debt, creating avenue for dividend payment”, he said, adding that compared to other mortgage banks in the same market, Trustbond had done pretty well and was well ahead.

Akinlusi  assured of a better performance in their 2018 results, saying, “in 2018, we will place greater emphasis on growing our mortgage business volume, while impacting positively on our environment by working with other stakeholders to improve home ownership for Nigerians”.

Etigwe Uwa, the chairman of the bank, shared this optimism even though he acknowledged that mortgage sector’s 1 percent contribution to GDP remained dismal considering its huge prospects.

He noted that there have been interventions by the government, through programmes and policies, to increase mortgage finance and promote home ownership in Nigeria, citing the ‘My Own Home Scheme’ which is a public private partnership that seeks to increase access to housing finance in Nigeria through mortgages, mortgage guarantee/insurance and housing micro-finance.

He recalled that in 2017, the federal ministry of finance and the Nigerian Sovereign Investment Authority (NSIA) also created the Family  Homes Fund (FHF)and voted N1 trillion for affordable housing for Nigerians with potential capacity to generate up to 1.5 percent increase in GDP by 2023.

Uwa declared that the outlook for the bank for 2018 financial year was positive, considering the relative stability experienced in the last quarter of 2017, the improved macro-economic indices, improving business climate and economic growth.

“With government’s renewed interest in prioritizing affordable housing, particularly for the low-income earners, the potentials in the mortgage market continue to increase while we are positioned to impact positively on the mortgage space; we will continue to seek and implement systems and processes to enhance efficient service delivery, achieve cost optimization and strengthen risk management system”, he assured.

Source: Chuka Uroko

Fragile economy, low income, credit keep real estate sector in recession

Nigerian real estate  sector has yet again contracted in Q3 2018, in what is the 11th consecutive quarter in recession since the first quarter of 2016, figures available on the sector on the National Bureau of Statistics (NBS) website reveal.

At the end of the 9th month of 2018, the real estate sector reported growth of -2.68 percent as against the -3.88 percent growth rate recorded for Q2. The sector performance in the review period was linked by economists to Nigeria’s fragile economy, low credit and insufficient income.

Although the Q3 figure released by NBS was better than Q2 figures by 1.21 percentage points.

Responding to the report, Rafiq Raji, chief economist at Macroafricaintel said real estate prices were previously driven by a booming economy fuelled by higher oil prices.

“A loose public purse was also a catalyst. The current depression in the sector is symptomatic of the slow pace of the economy and perhaps the anti-corruption efforts of the current government,” Raji told BusinessDay.

The sector growth rate in the review quarter was, however, higher than the growth recorded in Q3 2017 by 1.44 percentage points.  It contributed 6.50 percent to real GDP in Q3 2018, which is 0.30 percent lower than the 6.80percent it recorded in the corresponding quarter of 2017 and 6.83 percent in the preceding quarter.

Nigeria with the highest population in Africa has about 20 million housing deficit and BusinessDay survey has revealed that about 90 percent of house acquisition in the country is funded by individual savings, owing to the funding challenges in the country’s property industry.

Again, the country has one of the highest mortgage rates in Africa. Its mortgage to GDP ratio is less than 1 percent, as against 2 percent in Ghana and over 30 percent in the more developed countries.

“Mass housing, for which there is huge demand, is probably not attractive because incomes are low and credit is dear. More high-end property, plenty of which are empty in places like Abuja, have not enjoyed much customer-patronage because the rent economy, fuelled by political patronage, has been in dire straits for the past 3 or more years. That is good for Nigeria but bad for the real estate economy, Raji explained.

Nigeria’s real estate industry was also among the least attractive sectors to the country’s commercial banks as it got one of the smallest portions of loan in the 3rd quarter of 2018.

The figures compiled from the state stats showed that Nigeria’s property sector was only able to attract N710.2 billion in the third quarter of 2018 as against the N744.56 billion and N784.2 billion it got in Q2 and Q1 2018 respectively.

“For the banks, before they were saying let’s take a bit of risk by investing in the real estate sector but now what you hear is let’s not even take any risk at all,” Olurogba Orimalade, the current chairman of the Nigerian Institution of Estate Surveyors and Valuers (NIESV), Lagos State Branch,  told BusinessDay.

Meanwhile, Nigeria’s GDP in the third quarter of 2018 grew by 1.81 percent (year-on-year) in real terms, driven by non-oil sector. The growth rate report in the review quarter represents an increase of 0.64 percentage points when compared to the 1.17 percent rate recorded in the third quarter of 2017.

Q3 GDP figures was 0.31 percentage points better than Q2 2018 figures of 1.50 percent. The non-oil sector grew by 2.32 percent in real terms in Q3. This is higher by 3.08 percentage points compared to the rate recorded same quarter of 2017 and 0.28 percentage point higher than the second quarter of 2018.

The -2.68 percent contraction figures reported by the real estate sector in the quarter under review is the fourth lowest negative growth of the real estate sector after Q2 2018, Q1 and Q2 figures of 2017, as they reported -3.88 percent, -3.10 percent and -3.53percent respectively.

BusinessDay analysis of the  real estate sector revealed that the contraction recorded for the first quarter of 2018 is so far the worst contraction the property market has reported since BusinessDay started tracking it in Q1 of 2016.

The worst quarter contraction of the sector that follows after the Q1 2018 figures was in the fourth quarter of 2017 when the sector expanded negatively by -9.27 which was 0.13 percent points better than the 2018 Q1 figures.

Source: Endurance Okafor

Minister: only 35% of infrastructure developed in Abuja

The Minister of the Federal Capital Territory (FCT), Mallam Muhammed Bello has revealed that only 35% of Abuja’s infrastructure has been developed.

Bello said that the FCT was projected with a 3.1 million population when fully built within a projected 25-year-period.

He added that the capital city is the fourth largest in the country and one of the fastest growing in Africa with over 2.75 million population squeezed within just two phases of the planned five phases.

Speaking at the commemoration of the movement of seat of government from Lagos to Abuja, he said that it has been 42 years since its creation and 27 years after the movement from Lagos.

The Minister who was represented by Executive Secretary, FCDA, Mr Umar Gambo Jibrin, urged everyone to see Abuja as a national heritage.

He said, “42 years since its creation and 27 years after the movement from Lagos, Abuja indeed, has come of age. It has surpassed Logos as the destination for foreign direct investments. It has become a major aviation and conference hub for West Africa. We have also inaugurated a modern light rail transport system that is the first of its kind in the sub-region and FCT, indeed, has become the melting pot of Nigeria that it was conceived to be.

“However, the city’s demographic expansion has proceeded beyond the protected growth plan when the city was founded. FCT was projected for 3.1 million population when fully built within a projected 25 years period.

“I urge all of us to see Abuja as our national heritage and join hands to protect it. This is because so much hes been invested in the building of the new capital -infrastructure, public utilities, institutions etc. Today, however, we are confronted with a new set of challenges, namely; vandalism of public utilities like manhole covers, bridge railings, transformers and streetlight poles and components, transformers as well as plain acts of sabotage and disobedience to rules that make for orderly living.”

Executive Head, Editorial Board, The Guardian newspaper, Mr Martins Oloja who was the keynote speaker of the occasion, stated that Abuja has been an orphan of some sort.

He said, “Abuja has been an orphan of some sort perhaps because of near absence of democracy in its governance processes. All the 36 states’ governors are elected but the ‘militicians’ who gave us this constitution made Abuja just a part of the Office of the President, no thanks to Sections 299-302 of the 1999 Constitution as amended. Even the original inhabitants, who have been agonising without organising well about unfulfilled promises since 1976, could not remember Abuja @ 40 and I said so in February 2016.”

Source: Grace Obike

What joint venture means to real estate consumers

Though joint venture (JV) agreements may not be new in the Nigerian real estate market, in the last couple of years, the market has seen growing interest and confidence in JVs now sweeping across private and public sectors of the economy.

While JVs means shared risk, guaranteed capital inflow, increased volume of production and increased expertise based on experience, to the products and services consumers, JVs mean quality assurance and timely delivery of products and services, all things being equal.

This, exactly, is what the new JV involving CEBRE and Excellerate promises to offer. Following the end of its JV agreement with Broll Property Group CBRE Group, Inc. (CBRE) formed a joint venture with Excellerate Property Services (Excellerate) to meet the growing demand for high-quality real estate services in Africa and the Middle East.

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Broll, a leading African commercial property services firm, has been in an affiliate agreement with CBRE since 2004 to serve their global clients in key countries such as Nigeria, Ghana and South Africa among others.  Since coming into Nigeria, Broll has been offering top notch services in the country’s real estate market.

In most cases in Nigeria, investors or developers collaborate or go into JVs for reasons of capital inadequacy, inaccessibility or unaffordability. Udo Okonjo, Fine & Country’s CEO/Vice Chair, underscored this at a recent real estate forum in Lagos where she stressed the need for collaboration in environment where credit is dry and risk is high.

“The case for collaborating in real estate cannot be stronger than now with a sluggishly recovering economy, where there’s not only massive infrastructure and protracted housing deficit, but also huge amount of underutilised and idle asset,” she said.

But for CBRE Excellerate JV, it is a case of shared expertise which is why, according to an Estate intel report, the JV will merge CBRE’s facilities management operations in Africa and the Middle East with several of Excellerate’s businesses, including corporate real estate services, facilities management, valuation and project management services.

“Our partnership with CBRE aligns with our core values and by structuring our relationship as a joint venture, rather than an alliance, we will pool our respective skills and expertise and foster intense collaboration, which will drive superior client outcomes,” Gordon Hulley, CEO, Excellerate Holdings, assured in his comment on the new JV.

The new JV will find the Nigerian market an interesting destination which is confirmed by Andrei Ugarov, partner at PricewaterhouseCoopers (PwC) who said, “Nigeria is still a viable market. Capital is a challenge but deals are happening. It means funds are available. Players in the industry are making use of other financing options to fund real estate development project ts”.

Meanwhile, Broll Group has moved on and is currently pursuing a Black Economic Empowerment (BEE) acquisition deal. The BEE programme was launched by the South African government to redress the inequalities of Apartheid by giving black  South African citizens economic privileges not available to Whites.

Explaining the circumstances that led to their over a decade agreement with CEBRE, Jonathan Broll,  chair of the Broll Group, said, “as South African society changed, we realised we have a responsibility to ourselves, our shareholders and the public to conclude a BEE deal as soon as possible. After a protracted period of negotiations to be acquired by CBRE, it became apparent that an agreement satisfying this condition would not be reached. I believe that events have therefore unfolded to the advantage of all parties”.

Malcolm Horne, Broll’s Group CEO, also explained, “we maintain a diversified portfolio of clients and services across 16 countries in Sub-Saharan Africa…Our success is built on relationships, high performance and service excellence, and we continue to actively seek out new business opportunities.”

It should be noted, however, that the formation of CBRE Excellerate is subject to customary closing conditions, including government approvals, and is expected to be completed in the first half of 2019.

Excellerate’s property management operations in South Africa and its soft-services business, which provides cleaning, security, and catering services across Africa, will not be part of the joint venture and CBRE will continue to operate a wholly-owned advisory services business in the Middle East and North Africa.



Cargotecture can bridge housing deficit in Lagos- Agusto & co

Agusto & Co. Limited, the foremost Pan African Credit Rating Agency and one of the leading providers of industry research, in its 2018 real estate (Lagos Residential) industry report suggested Cargotecture innovations for solving housing problems in the state.

“Going forward, Agusto & Co. believes that Cargotecture innovations in housing may be a solution to the rising housing deficit in Lagos, especially for low-income residential real estates, as this solution combines low cost, speed and environmental friendliness,” it said in the report.

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Cargotecture or shipping container architecture is a form of architecture using steel intermodal containers (shipping containers) as structural element. It is also referred to as a portmanteau of cargo with architecture, or ‘arkitainer’.

Data obtained from Agust & Co revealed that Lagos government requires about N3.5 trillion to deliver one million housing units annually in line with the government’s desire.

If the state’s 2018 budget for capital expenditure is fully devoted for housing, it will only be able to cover less than 10 percent of its annual housing requirement. Thus, an estimated 19 years of similar expenditure will be required to bridge the current housing deficit, estimated at 3million units.

Lagos population in 1871 stood at 28,000 and grew to about 252,000 in the 1970’s. Today, Lagos population is about 20 million and it is the most populous city in Africa—almost same size as the population of Ghana.

BusinessDay survey reveals that the use of containers as building material has grown in popularity in other parts of the world due to their inherent strength, wide availability, and relatively low expense.

But in Nigeria, it is not an initiative that is well known or frequently used as a means of constructing   housing project.

Tempohousing Nigeria (THN), one of the real estate firms that uses cargotecture, while addressing misgivings of Nigerians on houses not done with bricks, said one of the biggest hurdles they have with alternative building methods is education and knowledge about cargotecture.

“What we hear is, this is container; going forward we intend to educate people and let them see what the so called container actually looks and feels like, and once you enter you realize that it even looks better than a normal building. It’s easier to control, not using cement, no cracks and all that. It’s just about education and doing things that people can walk in and see,” Tempohousing Nigeria said in statement.

Agust & Co’s survey of the residential real estate market in Lagos reveals that, as at the end of March 2018, Yaba had the highest rental yields in the mid-income residential segment, thus showing steady appreciation in rental yields.

Whereas Apapa (degraded by major traffic gridlock caused by indiscriminate parking of trucks on major roads) had the lowest annual rental yield of 3.1percent as at end of March 2018, evidencing weak demand for residential housing as well as decline in real estate values.

Agust & Co expects continued improvements in the near term regarding new residential real estate developments mainly in the mid-income segment as well as mixed-use developments.

“We believe developers will start construction of some erstwhile abandoned residential projects and new developments especially in the mixed-use segment,” it said in its 2018 report.

The report by the rating agency provides information on the Lagos residential Real Estate Market (‘the Industry’) and covers the following:  overview, size and structure of the Nigerian real estate industry and that of  Lagos residential Real Estate Industry.



HUD continues to report increases in homelessness

Like last year, the U.S. Department of Housing and Urban Development reported yet another annual increase in homelessness.

“Our state and local partners are increasingly focused on finding lasting solutions to homelessness even as they struggle against the headwinds of rising rents,” HUD Secretary Ben Carson said. “Much progress is being made and much work remains to be done but I have great hope that communities all across our nation are intent on preventing and ending homelessness.”


However, even this is a slowdown from previous years. Last year, veteran homelessness increased for the first time in seven years. And the chart below, released by HUD earlier this year, shows even this year’s decrease is down significantly from previous years.


(Source: HUD)

And this slowdown comes despite HUD’s multiple funding efforts for homelessness. Some of those efforts include when HUD announced it was awarding $2 billion to homeless assistance programs, when HUD and the U.S. Department of Veterans Affairs gave $43 million to find homes for homeless veterans and when HUD granted $43 million to help end youth homelessness.

Back in 2017, former HUD Secretary Julián Castro said in an exclusive interview with HousingWire that President Donald Trump’s budget lacked vision and that it would create more homeless veterans.

As the chart above shows, homeless veterans did increase in 2017. However, they decreased again in 2018. And Trump’s 2019 budget proposal would boost HUD’s funding by 1% from the previous cuts he made to the department. When Trump first took office, he cut HUD’s budget by 13.2%.

HUD also pointed out that Hurricanes Harvey, Irma, Maria and Nate, along with western wildfires and other storms and events, caused an increase of 4,000 people living in emergency shelters.

While 31 states and the District of Columbia reported a decrease in homelessness in 2018, 19 states offset this and reported increases.

“Communities across the country are getting better and better at making sure that people exit homelessness quickly through Housing First approaches,” said Matthew Doherty, U.S. Interagency Council on Homelessness executive director. “We know, however, that a lack of housing that people can afford is the fundamental obstacle to making further progress in many communities.”

The chart below shows the estimate of people experiencing homelessness from 2007 to 2018.



(Source: HUD)

While most of the homeless population lives in shelters, the chart shows 194,467 were unsheltered.

Source: Kelsey Ramírez

Goodnews for East-bound travellers on Lagos-Ibadan expressway

As part of efforts to reduce travel time and ease hardship suffered by travelers on the Lagos-Ibadan expressway, the federal government has temporarily opened the section one of the expressway, stretching from Lagos toll gate to Shagamu Interchange.

The expressway which appears to be in perpetual reconstruction has garnered notoriety for frequent motor accidents which have claimed many lives.

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Adedamola Kuti, the federal controller of works in Lagos, explained that the reconstruction of the expressway is benefiting from the federal government’s over $600 million infrastructure fund.

It is expected that the opening of the express way would save both time and money for motorists and travelers as well.

Idris Adebayo, a motorist who spoke to journalists at the opening this morning, hoped that he would be saving about two hours travel time from Lagos to Abeokuta which used to take four to five hours on a ‘good’ day.

Source: Chuka Uroko

Why many completed houses remain unoccupied

The Registrar of Estate Surveyors and Valuers Registration Board of Nigeria (ESVARBON), Ifeanyi Uzowanne, has attributed the large number of vacant houses across the country to the fact that most developers of the properties failed to consider market demands.

Uzowanne disclosed this while speaking on the sidelines of the 2018 Estate Surveyors and Valuers Assembly held recently in Abuja, which also culminated in the launching  of the Nigerian Valuation Standards (known as Green Book) to standardize, align and boost the quality of valuations for financial reporting purposes.

Uzowanne said there were many completed but unoccupied houses in virtually all states in Nigeria because the cost of most of the vacant buildings was far beyond the purchasing power of many Nigerians.

He said, “Why are these houses unoccupied? Is it because they are built without reference to what the market wants or that the rents are exorbitant?

“As the regulatory body of a profession that has to do with housing, we are concerned and that is why we say people should go to practitioners when they are making investments in housing so that they can put up houses that will meet the needs of consumers.”

The registrar added, “Most products are made based on what the market wants. When the people want two bedroom apartments and you give them duplexes, you are not building to what they need; if you build duplexes you are not meeting the needs of the people.”

He explained that the valuation standard unveiled by ESVARBON would help both dealers and consumers of properties in that regard.

“The standards that we’ve unveiled will help address this issue in a way, because most times it is not only estate valuers who produce houses. So the public is also expected to make sure that they don’t overprice properties and keep it out of the reach of some others who want it,” Uzowanne said.

Also speaking on the Green Book, the immediate past chairman of the Nigerian Institute of Estate Surveyors and Valuers (NIESV), Abuja chapter, Adamu Kasimu, said the objective was in keeping up with global best practices in the real estate valuation industry.

He said the Green Book incorporates Professional Standards (PS) and Valuation Practice Statements (VPS) that all members providing a written valuation would be required to comply with and also sets out procedural rules and guidance for valuers, covering matters not only relating to ethics and conduct, but also establish a framework for uniformity and best practice in the execution and delivery of valuations.

“The Green Book dictates the manner in which every estate surveyor and valuer should behave – meaning the valuation of all professionals should tally in terms of form, context and reliability.

Source: Daniel Adugbo

Seeking lessons from China’s long economic boom

THAT CHINA has had decades of stellar growth is beyond doubt. More controversial is what can be learned from it. Does China prove that the basic tenets of developmental economics are right? Or does it argue for an overhaul? These questions brought together an august group of Chinese and foreign economists on December 9th in Beijing. They debated a new report that distils China’s experience into a handful of lessons which, the authors argue, belong in textbooks. But judging from the reaction, publishers will not be rushing to pulp current editions just yet.

The exercise, held at Tsinghua University, was a reflection on the start four decades ago of China’s “reform and opening” period, the rebirth of the economy following Mao’s disastrous rule. The anniversary is intensely political. Yet it is also a good moment to ask how China has done so well. Forty years ago, it had a 2% share of global GDP in terms of purchasing-power parity; now it has more than 18%.

Source: economist

Surveyors decry rising number of fake survey plans

The Nigerian Institution of Surveyors says the rising number of fake survey plans in circulation has become worrisome.

The Chairman, Lagos State branch of the institution, Mr Adeleke Adeshina, attributed the high number of fake survey plans in existence to activities of quacks who avoid recording copies with relevant government agencies.

he said the number would reduce if people stopped indulging in backdating of survey plans and quit patronising fake and unregistered surveyors.

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Adeshina made this known at a town hall meeting at the palace of the Elejinrin of Ejinrin Land, Ishola Balogun in Ikosi Ejinrin, Lagos as part of activities marking the NIS Lagos Annual General Meeting.

he said, “It is very important for members of the public to desist from patronising touts and impostors who would assure them of helping to backdate survey plans and other land documents.

“Apart from the fact that such move is against the law establishing the institution, no registered member of the association will ever promise to do such, as it is against the law and ethics of the profession.”

The immediate past Chairman of NIS Lagos branch, Gbenga Alara, said backdating copies of survey plans had been the most controversial issue in surveying in recent times.

According to him a surveyor must obtain a consent plan before they can embark on a survey job and also get permit for the record copy as well as apply for the pillar number and place, before an authentic survey plan can be produced.

“A fake surveyor would never undertake all these tasks,” he said

In his response, Balogun described the surveying profession as noble and very important in the society.

he said he would help to educate and enlighten his subjects, and urged the public to always support professionals trained to deliver on the job.

Source: Maureen Ihu-Maduenyi

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