Investors now delight in Abuja outskirts

 

Buoyed by the high cost of rentals in Abuja, the Federal Capital territory, which has slowed down returns, investors in the real estate sector have shifted their focuses to the outskirts for ease of sales and returns.

The outskirts has thus become a new mecca for developers resulting to new developments in these areas with no fewer than fourteen locations identified as the most fast developing areas.

The areas so identified by players are: Karu, Kuje, Old Nyanya, Kubwa, Gwagwalada, Lugbe, Lokogoma, Kiyami, Kasanna, Wumba, Duboyi, Waru,Apo/Dutse District.

The Guardian investigations revealed that these locations have become a construction hub as property developers, and estate surveyors and valuers are seen at sites constructing mass housing units.

Although, these areas, are noted for huge traffic in the morning period and close of work in the evening, they however have some positives as they boost of cluster of social, educational, commercial and public institutions springing up daily.

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Before now it takes about 15 to 20 minutes drive from these districts to these areas but the shift has resulted to heavy traffic build ups in the morning and evening.

Explaining the shift, Site Supervisor of Abuja Property Development Company (APDC), Suleiman Saidu, the outskirts are particularly attractive to servants cannot afford rental fees in Abuja city, hence their preference to the suburbs.

He explained that a one bedroom apartment rent goes between N300, 000 and N350, 000; N650, 000 to N700, 000 for two bedroom bungalow, while 3 bedroom apartment goes for N800, 000 to N950, 000 per annum.

“So, APDC is constructing 1,000 housing units in Dei-Dei axis, a suburb of the capital city.

Managing Director, Queenville Real Estate Group, Princess Eno Essien affirmed the existence of massive housing estates in Orozo,Jikwuyi,Karishi axis.

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She added that standard properties are being developed in the outskirts of Abuja, and their prices are affordable for low-income earners, adding that workers are making use of it.

According to her, government approved Zero equity contribution for housing loans below N5 million, stressing that as citizens, we are entitled to housing loan to get houses.

An estate surveyor and Valuer, Eric Okafor, argued that public servants who have access to bank mortgage facility have resorted to new districts for the purchase of houses.

He also added that those who ordinarily wouldn’t want to leave the city centre, would be left with no option than to relocate to the new area where cost of living is cheap.

Okafor maintained that houses are really on the increase, and rents are low as well as outright purchase of the properties in suburb adding, prospective buyer have choices to make there.

He argued, some public servants who access to mortgage facility resort to the new areas to build houses, adding, those who wouldn’t want to leave the city centre, now left with no option than to relocate to the new districts.

‘There are no road networks in the districts as per the massive housing estates.

The FCDA can only provide roads leading the entrance of the place, while developers or, allottees have to do the remaining road network in their domain.”

However, a prospective tenant must have to cough out N500,000 for one bedroom; N700,000 for two bedroom M1 million for three bedroom, while 4bedroom duplex goes for N1.5million per annum.

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Ferdinard Enyi is a House Agent, said in Wumba for example, price tag for one bedroom is N450, 000; two bedroom N600, 000; three bedroom N800, 000.

“Similarly, in Kiyami one bedroom goes for N400, 000; two bedroom N550, 000,and three Bedrooms is up to N650,000 per annum.”

However, buying houses in the districts vary in amount depending on the bargaining power of the buyers and property owners. At time, there are cases of ‘special purchase’

In Lokogoma district, for example, one bedroom sells for N8million; two bedroom flat cost N15million; three bedroom is N22million and four bedroom duplex goes for N30 million.

These prices depend on whether one buys from the allocating authority or from the third party.

Cornelius Essen

Using mortgage finance to tackle housing deficit

 

The housing sector is one of the indices for measuring the standard of living of people across societies.

It also plays a more critical role in a country’s welfare than is always recognised, as it directly affects not only the well-being of the citizenry, but also the performance of other sectors of the economy.

Consequently, governments designed mortgage finance to enhance its adequate delivery as housing provision requires huge capital outlay, which is often beyond the capacity of the medium income/low income earners.

Despite its recognized economic and social importance, housing finance often remains underdeveloped.

The low levels of lending reflect the small numbers who can afford mortgages because of the high cost of houses in relation to incomes.

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It also includes the perceptions of risk that are based on, amongst other things, the informal nature of most title deeds and property.

The National Housing Policy of 1991 created a two-tier housing finance structure with Primary Mortgage Banks (PMBs) at the first tier and the Federal Mortgage Bank of Nigeria (FMBN), the supervisor and regulator, at the second tier.

The Mortgage Institutions Act (No. 53 of 1989) prescribed the regulatory/supervisory framework for the establishment and operation of Primary Mortgage Banks (PMBs).

Later, the Banks and other Financial Institutions Act of 1991, “BOFIA”, as amended, transferred the licensing, supervision and regulation of PMBs and FMBN to the Central Bank of Nigeria (CBN).

Under the process, the PMBs are to mobilise funds for their lending operations.

Some of such loans (mortgages) can be off-loaded to the Federal Mortgage Bank of Nigeria to sustain continuous liquidity in the National Housing Fund (NHF) Scheme.

This flow has unfortunately been constrained by the provisions of the Land Use Act, which restricts access to legal title to land.

To encourage the penetration of the mortgage finance and homeownership, the National Housing Fund Law (Act No.3 of 1992) was promulgated to create an alternative and continuous flow of funds from which loans could be granted to contributors on affordable repayment terms.

The law stipulates compulsory contributions of two and a half per cent (2.5per cent) of basic salary by employees earning N3, 000.00 or above in the public and private sectors, which attracts attract yearly interest at compound rates, refundable to contributors on attainment of 60 years of age or on retirement from employment after 35 years of service.

The loan attracts a fixed interest rate of not more than six per cent and repayment is for a maximum period of 30 years while maximum amount loanable is N15 million.

In its strategic move designed to make homeownership more accessible and affordable for Nigerian workers, FMBN recently approved the implementation of a Rent-To-Own Housing Scheme, an innovative affordable housing product, which provides an easy and convenient payment plan towards homeownership for Nigerian workers.

The scheme is specifically designed to make it possible for Nigerian workers to move into FMBN homes as tenants, pay for and own the properties through monthly or yearly rent payments spread over periods of up to 30- years.

To further increase affordability, the properties will also attract a single digit interest rate of 9per cent on the price of the property on an annuity basis.

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The product will cover properties with the maximum value of N15million.

The rent-to-own housing product targets Nigerian workers who are contributors to the NHF and will be implemented in phases. About 3,000 houses are planned for the pilot phase.

To deliver on the rent-to-own housing scheme, FMBN will partner with reputable estate developers for the construction of quality, cost-effective housing stock nationwide.

Payments for the houses will be domiciled with the CBN through the Treasury Single Account (TSA).

Properties that are planned for the rent-to-own scheme are existing estates that are funded by FMBN nationwide and non-funded estates.

FMBN Managing Director/Chief Executive Officer, Ahmed Dangiwa stated that the programme is targeted at increasing access to affordable housing by Nigerian workers who fall into the low- medium income brackets.

In addition, he stated that the implementation of the scheme will totally eliminate the burden of equity contributions by workers for housing loans, complement the existing products of the bank by widening the home ownership bracket, increase housing stock, and help the bank to utilize abandoned estates that are to be transferred to the scheme.

To further deepen the housing finance, the private investors are also being enlisted to boost affordable social housing delivery for Nigerians.

Alhaji Aliko Dangote and Alhaji Abdul Samad Isyaku Rabiu, Chairmen & CEOs of Dangote and BUA Groups of Companies respectively plan to partner the FMBN.

While on a joint courtesy call on the bank’s Board of Directors, they entered into partnership agreement and lent their support to the proposed N500billion recapitalization of the bank, stating that it is a much needed development that will help power FMBN’s efforts to more effectively discharge its mandate.

The Chairman, Dangote Group commended FMBN for the renewed aggressive drive to provide affordable housing for Nigerians.

Additionally, he said that his company is ready to collaborate with FMBN towards lowering the housing deficit by increasing the tempo and scale of social housing provision across the country.

His words: “Count me as a friend of FMBN. We are open to collaborating and supporting the good work that your bank is doing towards ensuring the provision of affordable housing to medium and low income earners in Nigeria.”

In the same vein, the Chairman, BUA Group of Companies, Abdul Samad Isyaku Rabiu also said that he is committed to a close partnership with FMBN.

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“I am committed to forging a partnership that will add value to FMBN’s work and look forward to further engagements in this regard,” he said.

In his response, the FMBN Board Chairman, Dr. Adewale Adeeyo on behalf of the board and management thanked and applauded the two distinguished business moguls for their visit and good intentions to partner with FMBN.

He said that FMBN will work closely with them towards the consolidation and implementation of the partnerships.

Another boost to housing development is currently underway through a strategic collaboration between FMBN and leading labour unions, aimed at addressing in a structured and sustainable manner, the housing requirement of their members currently estimated to be about 3,750,000 housing units.

The FMBN in conjunction with the Nigeria Labor Congress (NLC), Trade Union Congress (TUC) and the Nigeria Employers’ Consultative Association (NECA) plans to commence the implementation of a national affordable housing delivery programme for Nigerian workers.

This includes fast-tracking the provision of safe, decent, quality and affordable housing to registered members of NLC, TUC, and NECA that also contribute to NHF, which the FMBN manages.

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

FMBN Group Head, Corporate Communications, Mrs. Zubaida Umar said the key features of the housing program are the emphasis on affordability and the focus on low and middle-income classes of workers.

Planned house types therefore include fully finished semi-detached bungalows and blocks of 1 bedroom, 2 bedrooms, and 3 bedrooms.

She revealed that the designs of the houses are based on local and international social housing models that have been tested and proven to deliver housing units that are structurally strong, livable and at cost effective rates that fit the income of the targeted beneficiaries.

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

They drew from the theoretical and practical experiences of housing stakeholders, varied inputs, and consultations with developers, private sector players, research and analysis of housing projects locally and abroad,” she said.

Chinedum Uwaegbulam

Estate surveyors plan to focus on mass housing delivery

 

Estate surveyors and valuers in the country plan to hold a forum on how the country can reduce its housing deficit through effective mass housing delivery.

The forum, known as the 6th National Housing Summit, and scheduled to hold in Abuja on October 8 and 9, is being organised by the Faculty of Housing, Nigerian Institution of Estate Surveyors and Valuers.

The faculty said it was worried about the lack of political will to solve the problem of housing in the country, hence, the need to take the forum to the seat of power.

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The Planning Committee Chairman, Mr Kehinde Abayomi, said the theme of the summit would be ‘Alternative building techniques for mass housing delivery’ and would focus, among other things, on a new innovation capable of producing up to 1,000 units of quality and affordable houses from foundation to the roof within one month.

Abayomi, who represented the Chairman of the Faculty of Housing, NIESV, Mr Chika Okafor, at a press briefing ahead of the summit, said stakeholders would also be educated on how to finance mass housing delivery.

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He stated, “The main reason for our steady housing problems in Nigeria can be traced to lack of leadership, vision and political will as well as a well-structured institution to drive government policies and programmes.

“We have private real estate developers, who among others, can collaborate with the relevant government agencies to build houses for a target group and such houses being allocated to be acquired based on need, but not sold in the open market based on highest bidders as it is the practice now.”

He stated that the target group for the innovation could be the low and medium income earners who desired accommodation.

The Secretary of the faculty, Mr Tosin Kadiri, said the summit would be specific about affordability and alternative building methods.

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A former Chairman of the faculty, Mr Casmir Anyanwu, said the summit was part of advocacy.

“The faculty is mainly about advocacy, pointing out the direction to go for both the government and the people,” he stated.

Maureen Ihua-Maduenyi

Low-income earners can’t afford govt housing units – Experts

 

Stakeholders at a seminar organised by the Ogun State chapter of the Nigerian Institute of Quantity Surveyors have chided the federal and state governments for constructing housing units only for the rich.

The seminar held in Abeokuta and had as its theme: ‘Effective housing delivery in a developing economy.’

The President, NIQS, Obafemi Onashile, noted that there was the need for the government to evolve an effective housing policy, which would guarantee more affordable houses to the low-income earners and the masses.

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Onashile, who was represented by the Vice-President of the institute, Mr Olayemi Sonubi, said Nigeria, with a growing economy, needed more affordable housing units.

He noted that the government’s housing policy had failed because there was no systematic plan to build houses, adding, however, that it was not enough to build houses that the low-income earners might not afford.

He called on the government to bring the interest rates on mortgage loans to one digit, because according to him, a two-digit mortgage loan regime would take a long time to pay back.

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Onashile added, “Mortgage loans should not attract more than five or six per cent interest, having such loans at 19 per cent is quite high.

“There is the need for the government at the state and federal levels to build affordable housing units that low-income earners can afford.”

In his keynote address, a former General Manager, Ogun State Broadcasting Corporation, TundeAwolana, an engineer, said not many low-income earners could afford the housing units being built by the government and private developers.

He stated, “Housing corporations are building prohibitive housing units, which can only be afforded by criminally-minded people.

“They are supposed to build housing units for low and medium-income earners. Some wealthy Nigerians are also building big houses their children may not like to inherit.”

Awolana called on professional in the built environment to rise up to the occasion in tackling the challenge of housing deficit in the country.

The Ogun State Chairman, NIQS, Mr Kayode Dipeolu, said the workshop was aimed at examining the effective delivery of housing units in the country.

 

Samuel Awoyinfa, Abeokuta

OPIC’s 80% local inputs sourcing raises hope for low-cost housing

 

Nigeria is today the second most expensive housing market in Africa, after Angola, and one of the reasons frequently cited for the high house price in the country is the cost of building materials which are largely (about 60 percent) imported.

It is estimated that building material constitutes 20-30 percent of total construction cost, making the new initiative by the Ogun State Property and Investment Corporation (OPIC) on sourcing building materials locally not only attractive, but also a source of hope for low cost housing.

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OPIC is now offering prospective buyers houses constructed with 80 percent locally sourced inputs. Apart from its capacity to reduce house price, the initiative is also part of efforts to boost the country’s economy, creating direct and indirect job opportunities for Nigerians.

The corporation is an arm of Ogun State’s Ministries of Housing and Commerce and Industry. It is a frontline property investment and development company in Nigeria, currently making efforts to create housing hubs along the Lagos-Ibadan Expressway corridor.

The expansive New Makun City housing project at Sagamu interchange and the MTR Garden Estates at Isheri end of the expressway are testaments of the corporation’s drive towards providing affordable housing for home buyers and investors.

According to Jide Odusolu, managing director of OPIC, 256 housing units will be completed in the first phase and delivered to prospective allottees in the second quarter of this year. This is in addition to constructing several kilometres of link roads from Lagos-Ibadan expressway to the new estates.

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OPIC has earmarked N4.5 billion for capital projects to cover the development of housing units and link roads to both New Makun City and MTR Garden Estates; rehabilitate roads, repair and upgrade housing units in both Agbara Residential Estates in Agbara and Alamala Estates in Abeokuta.

There is high expectation that with this drive to open up local communities with good roads network coupled with the local sourcing of building inputs, access to housing will be a lot easier for a good number of people, especially the low income earners.

Building materials prices in Nigeria are way out of the reach of many would-be builders. There was however, a significant drop in the prices of these materials in the first half of this year (H1 2018).

BusinessDay had, in an earlier report, disclosed that in the material prices was a good reason for builders who had abandoned their projects at the peak of economic recession to return to site and those wishing to start new projects to move to site.

Michael Jideofor, a building technologist, notes that the twin evils of high inflation and exchange rates escalated commodity prices, including those of building materials, leading to meteoric and unsustainable rise in construction cost and stalling of many building projects.

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Depending on the brand, the price of cement, a major building component, has dropped to between N2,550 and N2,600 in H1,2018, down from between N2,700 and N2,900 in corresponding period in 2017, representing about 8 percent drop in price.

This means where a builder would have spent close to N300, 000 to buy 100 bags of cement in H1,2017, he would now spend about N260,000, gaining close to N40,000 which is enough for him to buy a tipper load of gravel.

But while the price of sandcrete (9inch) block has dropped to 210 in H1 2018 and to N170 at the moment, down from N220 in H1 2017, the price of aluminum roofing sheets (0.55mm) has gone up 7 percent to N2,700 in H1 2018, up from N2,500 in H1,2017.

The price of cables (6mm/coil) has also come down to N35,000 in H1 2018, down from N38,000 in H1 2017, representing -9 percent drop. Similarly, the price of paving stone 60mm (local), which is very much in vogue for builders, has dropped from N2,100 in H1 2017 to N1,800, representing -17 percent drop in price.

CHUKA UROKO

70% of Abuja’s residents live in slumps – Senatorial aspirant

 

According to a senatorial aspirant Mr. Olanrewaju Lawrence, about 70% of the Federal Capital Territory (FCT) citizens are living in the slumps.
Mr. Lawrence, who is contesting on the platform of Abundant Nigeria Renewal Party (ANRP) for a Senatorial seat in FCT in the 2019 general elections, said the situation was caused by past leaders who refused to plan well for the people.
The aspirant who made this know during the ANRP-FCT chapter primaries in Abuja, added that the capital needed a pragmatic shift in leadership in order to bring about the desired development.
“FCT is over 35 years and those elected has not brought the desired development”, he lamented.
“FCT ought to be having more than 10 million tourists as a revenue generating area for the government and creating jobs for the citizens duelling in the capital but look around, you will see infrastructure that are not well conceived”, he added.
Mr. Olanrewaju lamented that money politics was responsible for poor leadership in the capital city.
While noting that Abuja was created to be the proud black capital of the world, he called on the Abuja residents to vote wisely during the 2019 elections.

 

Housing: A Health Issue

 

Affordable housing, it’s a hot-button issue in Rochester and something so many struggles with on a daily basis, medical experts from across the nation were addressing the topic in a way we don’t always think about –from a health perspective.

“When people don’t have housing, when they don’t have a place to call home when they don’t have a place to lay their head, number one, their stress levels go through the roof,” said Dave Dunn, executive director at Olmsted County Housing and Redevelopment Authority.

In the past five years, 5,000 housing units were built in Olmsted County, but only 10 percent are considered “affordable.”

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“Having poor quality or unstable housing is one of the most potent forms of toxic stress, so what we’re finding is that it really is directly negatively affecting the well-being of people who are living in low-quality housing or have to move often,” said Dr. Douglas Jutte, who’s been studying health as it relates to housing, for years.

“We’ve seen more and more that your zip code, your health depends on your zip code,” Dunn said.

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At Mayo’s Transform Conference, Dr. Jutte talked about how health happens in neighborhoods.

“Things like housing, things like access to a park, like grocery stores, good transportation, decent jobs, how are the schools,” Dr. Jutte said.

“How do we help an area holistically with the physical improvements and looking at the people inside,” Dunn said, explaining it’s something the OCHRA has been incorporating.

Dr. Jutte said despite appearances, affordable housing is a great investment.

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“There are lots – billions, trillions of dollars being spent on medical care for avoidable, chronic diseases. Some of that money could be spent to help keep people healthy in the first place,” he said.

ABC6News

London’s affordable homes in expensive locations, a lesson for Nigeria

The London borough of Kensington and Chelsea, like the Banana Island in Lagos and Maitama District in Abuja, Nigeria, has some of the most expensive properties in the UK, but a new development of affordable homes has been approved for that location.

In the Nigerian highbrow locations, especially Banana Island, property values are such that the houses built on that island are targeted at a particular class of people. Any other person is a total stranger who is expected to leave immediately after his visit because he does not belong here.

But the story is different elsewhere. The Mayor of London, Sadiq Khan, has taken over the Notting Hill Gate scheme and doubled the amount of affordable housing being built to 35 percent, up from 17 percent. Under the new plans, about two thirds of new affordable homes will be available at social rent levels, others capped below the London Living Rent level.

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The application to redevelop Newcombe House in Kensington and Chelsea was turned down by the local council in March, before the Mayor took over the application later that month. The borough has consistently failed to meet targets for new and affordable homes.

Khan pointed out that last year no affordable homes were given planning permission by the council. But through his takeover, the Mayor has secured amendments to the plans that increase the level of affordable housing from 17 to 35 percent.

This is a big lesson for government’s at all levels in Nigeria. The mayor in London who is influencing the redevelopment of affordable homes in expensive areas is an equivalent of a local government chairman in Nigeria.

This underscores the importance the government attaches to housing the citizens but in Africa’s largest economy, housing is a luxury. The expensive locations in the country are exclusive for only the rich and high net-worth individuals who have chosen to live in such locations for a number of reasons including affordability, class, taste, and above all exclusivity of that location where only men of means are found which widens the inequality gap in society.

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For the London borough of Kensington and Chelsea to have chosen to develop more affordable homes in the expensive locations means there is a deliberate attempt to close the inequality gap in the society.

The development will include a medical centre, step-free access to the nearby Notting Hill Gate, underground station and a new public square with permanent pedestrian and cycle access.
“Since taking office, I’ve been clear I will use all the levers at my disposal to increase the supply of council, social rented, and other genuinely affordable homes that Londoners need across the capital,” said Khan.

Continuing, he explained, “having considered all the evidence available to me, and following hardwork by my planning team to increase the level of affordable housing, I have decided to grant permission for this development”.

This is a huge lesson for Nigeria where affordable homes for low income earners is not part of the concerns of government. Majority of private sector operators don’t factor affordable housing into their calculations and those who do usually go to the hinterland to develop. Demand here is not strong because many people would rather rent at the city centre than own a home in the ‘bush’.

The proposed development in London will also include important new step-free access to Notting Hill Gate station, a major improvement benefitting local residents and visitors coming to enjoy this vibrant and exciting part of the capital. This is unimaginable in a location like Banana Island where such a development will not be permitted because it will impact negatively on the exclusivity of the location.

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London has housing crisis like Nigeria, but unlike Nigeria, the government at various levels are addressing the crisis. Nigeria has a deficit estimated at 17 million units that requires an annual housing delivery of about 700,000.

But, Chudi Ubosi, an estate surveyor and valuer, says aggregate output at the moment is not up to 100,000 units.

Khan believes that ‘London’s housing crisis won’t be solved overnight, but hopes “this will send a clear message that I expect developments to include more genuinely affordable housing and other benefits for local people,’ he added.

CHUKA UROKO

Bamboo: A Viable Alternative to Steel Reinforcement?

 

A steel-reinforced concrete, is so much needed material in the countries in a development. But, many of them do not have it and is very expensive and too much is needed to buy or produce it. But, in order to be saved from such crises the Laboratory of Future Cities in Singapore suggested the bamboo as a great alternative. It is abundant, sustainable, extremely resilient, which are great specifics for construction materials.

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Developing countries have the highest demand for steel-reinforced concrete, but often do not have the means to produce the steel to meet that demand. Rather than put themselves at the mercy of a global MARKET dominated by developed countries, Singapore’s Future Cities Laboratory suggests an alternative to this manufactured rarity: bamboo. Abundant, sustainable, and extremely resilient, bamboo has potential in the future to become an ideal replacement in places where steel cannot easily be produced.

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In trials of tensile strength, bamboo outperforms most other materials, reinforcement steel included. It achieves this strength through its hollow, tubular structure, evolved over millennia to resist wind forces in its natural habitat. This lightweight structure also makes it easy to harvest and transport. Due to its incredibly rapid growth cycle and the variety of areas in which it is able to grow, bamboo is also extremely cheap. Such rapid growth plant growth requires the grass to absorb large quantities of CO2, meaning that its cultivation as a building material would help reduce the rate of climate change. These factors alone are incentive for INVESTMENT in developing bamboo as reinforcement.

Indeed, despite these benefits, there is still work to do in overcoming bamboo’s limitations. Contraction and expansion is one such limitation, caused by both temperature changes and water absorption. The grass is also susceptible to structural weakness caused by fungus and simple biodegradation. Ironically, many of the countries that would benefit from bamboo reinforcement also lack the resources to develop it as a viable alternative to the steel on which they currently rely.

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The Future Cities Laboratory is currently conducting research to determine the full gamut of applications that bamboo has as a construction material. Their experimentation in this field has earned them a Zumtobel Group Award.

Kekanaan

Home sellers slash prices, especially in California

A home awaits sale at a reduced asking price  in Glendale, California.

After three years of soaring home prices, the heat is coming off the U.S. housing market. Home sellers are slashing prices at the highest rate in at least eight years, especially in the West, where the price gains were hottest.

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In the four weeks ended Sept. 16, more than one-quarter of the homes listed for sale had a price drop, according to Redfin, a real estate brokerage. That is the highest level since the company began tracking the metric in 2010. Redfin defines a price drop as a reduction in the list price of more than 1 percent and less than 50 percent.

Home Sales Declining in Southern California  

“After years of strong price growth and intense competition for homes, buyers are taking advantage of the market’s easing pressure by being selective about which homes to offer on and how high to bid,” said Taylor Marr, senior economist at Redfin, in a release. “But there are some early signs of a softening market, and the increase in price drops may be another indicator that sellers are going to have trouble getting the prices, and the bidding wars, that they may have just months ago.”

Critical shortage remains

There is still a critical shortage of homes for sale, especially on the lower end of the housing market, but supplies did increase annually in August for the first time in more than three years, according to the National Association of Realtors. At the same time, the increase in the median home value is now in the 4 percent range, rather than the 6 to 8 percent range where it has been for the past two years.

“While inventory continues to show modest year-over-year gains, it is still far from a healthy level and new home construction is not keeping up to satisfy demand,” said Lawrence Yun, chief economist for the Realtors. “Homes continue to fly off the shelves with a majority of properties selling within a month, indicating that more inventory — especially moderately priced, entry-level homes — would propel sales.”

That may be true on a national level, but in California, where home price gains were in double digits, active listings were 17 percent higher in August compared with August 2017, and sales dropped to the slowest pace in two years, according to the California Association of Realtors. California home prices were still up 5.5 percent annually, but that is down significantly from recent gains, and the median number of days it took to sell a home rose from 18 to 21.

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California ‘market shift’

“While home prices continued to rise modestly in August, the deceleration in price growth and the surge in housing supply suggest that a market shift is underway,” said Leslie Appleton-Young, senior vice president and chief economist at the California Realtors group. “We are seeing active listings increasing and more price reductions in the market, and as such, the question remains, ‘How long will it take for the market to close the price expectation gap between buyers and sellers?'”

The price gap may close even more quickly if mortgage rates continue their trend higher. The average rate on the popular 30-year fixed mortgage loan is up more than a quarter of a percentage point in the past month and is knocking on the door of 5 percent, a level not seen in nearly a decade.

Diana Olick

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