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Drop in Real Estate Investment Affecting Nigeria’s Job Market

Amidst a large and growing population, Nigeria has a high unemployment rate which increased from 18.8 percent in the third quarter of 2017 to 23.1 percent in the third quarter of 2018, according to the National Bureau of Statistics (NBS).

Contrary to what obtains in most economies, a growing population in Nigeria means more citizens are getting poorer. A recent Bloomberg report quotes the International Monetary Fund (IMF) as saying that the country’s population is growing while gross domestic product per capita is shrinking, adding that the trend would continue until at least 2024.

But this trend could be reversed or halted if more investment is encouraged and made in the country’s construction and real estate sector, analysts say. The construction industry, they note, has high growth prospects, predicting that by 2020, the country alongside India will enjoy higher growth rates than notable nations like China.

According to a 2012 report by Business Monitor International, investment inflows into Nigeria’s construction industry are expected to reach $9.4 billion (about N1.5 trillion) by 2021, giving the industry very bright prospects and outlook, especially in the areas of job creation and wealth generation.

However, these bright prospects are being eroded by heavy debt burden arising from unpaid contract jobs by the federal, state and local governments which runs into hundreds of billions of naira, discouraging fresh and increased investments in the sector.

Solomon Ogunbusola, former president, Federation of Construction Industries (FOCI), affirms that despite the prospects in the sector, investment in the sector remains very low because industry players are operating under serious constraints including high interest rate on bank loans.

Ogunbusola notes further that low investment in the sector means heavy job loss, explaining that even N100 million invested in the construction sector has the capacity to create jobs for over 100 workers besides the multiplier effect of job creation.

Paul Onwuanibe, CEO, Landmark Group, agrees, pointing out that millions of jobs are held back by low investment in the real estate sector where the construction of one square metre of real estate space creates three jobs.

Onwuanibe lamented that in spite of the growth potential coupled with opportunities in the sector, investment is still very low for reasons that ranged from unfavourable tax system to long, costly and cumbersome property registration and titling procedures.

“Some quality discussions one has had in the last six to eight weeks show that investors are ready and willing to come into this country to invest, but everybody is looking to see how things get better and easier. We are looking at $2-3 billion investment that is waiting to come into Lagos State alone,” Onwuanibe said.

“In real estate, that will make a huge difference. It is estimated that every one square metre space of construction creates employment for three people. So, when there is a real estate activity on 1,000 square metres of real estate, 3,000 jobs are created,” he added.

Onwuanibe argued that if an investor has $1 billion, he could build 200 housing units which translate to several thousands of jobs to be created “and those who are employed will be spending money they earn in the economy and the economy will be growing”.

“It is understandable that the government here is still emerging and so needs money upfront, but it is important not to kill the future by over-taxing and punishing businesses,” he warned, contending that Nigeria could change its unemployment and poverty story by making simple policy changes.

Only recently, Steve Hanke, a renowned professor of Applied Economics at Johns Hopkins University in the United States, released the Misery Index 2018 which ranked Nigeria as the 6th most miserable nation in the world with a Misery Index score of 43.0.

Hanke explained that Misery Index score for any country was simply the sum of unemployment, inflation and bank lending rates minus the percentage change in real GDP per capita. This means that unemployment is a major source of misery and poverty both of which are prevalent in Nigeria.

Nigeria was recently adjudged the headquarters of poverty-stricken people in the world and, according to the World Poverty Clock, six Nigerians fall into extreme poverty every minute.
The Bloomberg report expressed the fear that if this current trend persists, more than 120 million Nigerians, or 45 percent of the population, will be living in extreme poverty, that’s less than $1.90 a day, by 2030.

Source: By Chuka Uroko

Smart housing could help reduce environmental impact of rapidly urbanising Africa

Hundreds of millions more Africans are predicted to live in cities over the next three decades as the continent rapidly urbanises. Many of these new urban Africans, however, are likely to end up in informal settlements. Already an estimated 200 million Africans live in informal settlements – often without access to energy and sanitation.

The growing class of urban poor need access to decent housing. But the challenge is that the global housing sector already emits almost a third of global greenhouse gas emissions and uses up to 40% of the planet’s total resources. New approaches are clearly needed.

As the housing sector grows — and it must grow if we want an equitable world — we need to reduce its environmental impact, not raise it,” said UN Environment acting executive director Joyce Msuya. “Smart design is the only way to meet our housing needs and stay within planetary boundaries.”

UN Environment, UN Habitat, the Yale Center for Ecosystems in Architecture and associated partners are working on these designs, one of which is on display at the UN Environment headquarters in Nairobi, Kenya.

3D-printed modular structure

First unveiled at the fourth United Nations Environment Assembly, the 3D-printed modular structure, made from biodegradable bamboo, aims to spark ideas and debate on how future biomaterial processes can help meet the Sustainable Development Goals, Habitat III New Urban Agenda and Paris Agreement.

The pavilion shows how post-agricultural waste — like bamboo, coconut, rice, soy and corn — can be turned into construction materials. It demonstrates solar energy and water systems that make homes self-sufficient and zero carbon. It highlights how micro-farming can be achieved with plant walls. All these features, and more, are integrated, monitored and managed by sensors and digital controls.

“As urbanisation gallops forward, people around the world are tired of seeing precious natural habitats paved over with toxic, energy-intensive materials such as concrete and steel,” said Anna Dyson, director of the Center for Ecosystems in Architecture at Yale University. “In the 21st century, global construction practices must innovate towards nature-based solutions for future cities. Our research consortium with East African collaborators is devoted to advancing state-of-the-art locally produced building systems.”

It is fitting that the pavilion is based in Kenya, as the government there has prioritised affordable housing as a key pillar of its Big Four Agenda, which aims to make the East African nation an upper middle-income country by 2030. Over the next five years, the government plans to build over 500,000 affordable houses across the country to meet the ever-growing housing demand.

Sustainable construction

To achieve the low-cost housing agenda, however, the industry needs to embrace technological changes that will result in the use of innovative sustainable construction, the aggregate effect of which would be to lower the embodied energy and average cost of manufacturing and housing.

“Architecture must address the global housing challenge by integrating critically needed scientific and technical advances in energy, water, and material systems while remaining sensitive to the cultural and aesthetic aspirations of different regions,” said Deborah Berke, dean of the Yale School of Architecture.

The pavilion serves as a starting point for those in government and industry to think about what they can do better. It is part of a series of demonstration buildings, which started with a 22m2 “Ecological Living Module”, powered by renewable energy and designed to minimise the use of resources such as water. This module was displayed at the United Nations High-level Political Forum on Sustainable Development in 2018.

Source: Biz Community

Price falls in London now spreading out beyond the capital, latest analysis suggests

While prices have been falling in London, the latest analysis of the property market shows that prices are also now falling in England and Wales.

The LCPA residential index says that there is little doubt that Brexit uncertainty is derailing home owners now, not just investors and plans are being put on hold, adding that the economic fall-out of a bad Brexit could impact the housing market for years to come.

In England and Wales, excluding Greater London, prices growth it at its lowest since 2013, down by 0.7% in the final quarter of 2018 to an average of £262,126 while sales fell by 3.7%, the largest drop since 2008.

In the new build market there is more buoyancy with sales up 3.6% year on year and prices at an average of £299,617, representing a 14.8% premium over existing stock.

In Greater London prices fell 1.9% in the final quarter of 2018 to an average of £610,708 and sales were down by 4.8%. The data show that new build prices increased by 20.4% to £661,677, but sales in this sector fell by 18.2%, to the lowest level seen since 2015.

In the prime central London market average annual prices fell by 12.7% on a quarterly basis to £1,812,051 but annual transactions were just above historic lows, down by 16.5% over the year.

New build average prices were £2,268,219, a 61.4% premium over existing stock and as with Greater London, sales fell, down by 46.1% to just 73 and prices fell by 29.6%. Naomi Heaton, chief executive officer of LCP, described it as unprecedented period.

‘On a more optimistic note, there has been evidence of a pickup in interest as investors seek to capitalise on extremely soft prices. However, with Brexit rolling on beyond March and neither the Prime Minister nor European Union leaders able to state what is going to happen, investors may now wait to see if sterling weakens further. This limbo continues to have a suffocating effect on prime central London and is now extending to the whole of the UK property market,’ she said.

‘The circus that is Brexit also continues to derail many people’s plans to move or invest. Some positive news may provide the impetus to get the Greater London housing market moving again. Although annual prices for new builds have increased, Brexit has not done anything to improve the flow of new developments,’ she explained.

‘The low level of transactions throughout the UK is already having a damaging effect on estate agents. With sales figures so low, many rely more and more on their lettings departments. With the imminent ban on tenant fees coming into effect on 01 June 2019, agencies are going to suffer reduced revenue at a time when many are already struggling,’ she added.

‘It is also likely that many tenants will hold back any move until this date passes. The combination of low sales volumes and reduced revenue may well bring further agency consolidation and closures throughout the rest of 2019,’ she concluded.

Source: Property Wire

Saudi Real Estate Refinance Company’s $199 Million Sukuk Notes Offering

White & Case advised the Saudi Real Estate Refinance Company (SRC) on the establishment of its inaugural domestic SAR 11 billion Sukuk Issuance Programme, and the issuance thereunder of SAR 750 million across four Series.

The transaction has been recognized by Islamic Finance News as ‘Real Estate Deal of the Year’ and ‘Saudi Arabia Deal of the Year’.

The four fixed rate Series of Sukuk issued comprised a SAR 150,000,000 Series due 2023, a SAR 50,000,000 Series due 2025, a SAR 50,000,000 Series due 2028 and a SAR 500,000,000 Series due 2024. All of the Sukuk were privately placed, with HSBC Saudi Arabia the sole Arranger of the Programme and Manager of the issuances.

White & Case, together with its associated firm in Riyadh, The Law Firm of AlSalloum and AlToaimi, advised on the transaction with a team led by partner Debashis Dey (Picture) and association partner Zeyad AlSalloum (Riyadh), with support from counsel Xuan Jin (Dubai) and associate Majed Alkuraydis (Riyadh).

Source: Global Legal Chronicle

Housing Bills that 9th National Assembly Must Not Ignore

Following the inability of the 8th National Assembly to successfully amend and pass into law a number of critical bills bordering on housing, land and construction, stakeholders in the industry are calling on the incoming 9th Assembly to give those bills the deserved priority that is due to them in order to help address Nigeria’s housing deficit.

Worried by unimpressive growth of the real estate sector, housing experts are demanding the immediate passage of 11 housing and mortgage-related bills pending before the National Assembly.

According to them, if the bills are eventually passed into laws, they would impact positively on the sector by guaranteeing huge local and foreign investments in the housing and mortgage industries. According to Managing Director/ Chief Executive Director, Fesadeb Communications and Promoter of Abuja International Housing Show, Mr. Festus Adebayo, no good investor would invest in the real estate sector that does not have the requisite laws to guarantee investment. Our findings show that the bills have been before the lawmakers for more than eight years.

assembly

While many of the bills have not been read, a few have passed through second reading without further action. These bills are the Land Use Act 1978; Mortgage Banks Act 1989 (Subsumed in BOFIA); Federal Mortgage Bank of Nigeria (FMBN) Act 1993; the Trustees Investment Act 1962; and the Nigeria Social Insurance Trust Fund (NSITF) Act 1993.

The National Housing Fund (NHF) Scheme Act 1992 was actually amended, passed and sent to the President for assent, but it was declined after the realisation that the bill was defective and put together without a wide consultation and input from all relevant stakeholders.

READ ALSO: NIGERIAS HOUSING DEMAND INCREASES AGAINST SUPPLY ECONOMIC GROWTH

Others are the Insurance Act 2002; Investment and Securities Act 1999; Federal Housing Authority (FHA) Act 1990; Securitization Bill; Foreclosure Law Bills – Residential Mortgage Act and Residential Mortgages (Incentives) Act, among others. Adebayo stated that no effective mortgage system would be possible in the housing sector without reviewing and amending some sections of the Land Use Act of 1978.

He pointed out that without foreclosure law, developers would continue to be at risk of selling via mortgage or on instalment payment, hence the need for urgent passage. Many of the experts, through their advocacy platform, “Housing Development Group”, called on Nigerians to join them on a rally on August 18, to ask members of National Assembly to embark on speedy passage of the bills.

Corroborating Adebayo, former Managing Director, Lagos State Property Development Corporation, John Bede Anthonio, an architect, said that non-passage of these bills had impeded very much, the development of mortgage and housing for the average Nigerian.

He said that, it would be difficult to attract investments into housing and mortgage sectors without proper regulations. Anthonio said: “If you don’t have laws to govern, how can investors invest in the housing market, which is huge?”

READ ALSO: BUHARI SIGNS MINIMUM WAGE BILL

Presently, Nigeria is in shortage of over 17 million housing deficit and would require one million units yearly in the next 20 years to bridge the gap. Some of the challenges to affordable housing provision in the country include difficulty in accessing buildable land, lack of virile secondary mortgage system, weak regulations, high cost of building materials, and lack of capacity in modern building technology, high cost of fund and foreclosure laws among others. Despite impressive outlook predicted for the sector, the industry is performing dismally due to un-synchronized macroeconomic indices.

assembly

According to some experts, factors holding down real estate sector are multifaceted, blaming absence of funds, unhealthy politics and victimization of political opponents, among others. Antonio lamented that the sector was being held down by high inflation, double-digit interest, lack of mortgage system and high construction’s cost. Besides, he said scarcity of land, absence of infrastructure, unenlightened public, low purchasing power accommodation seekers and high cost of housing units were also inhibiting factors.

Chairman, HOB Estates Limited, Olusegun Bamgbade, stated that apart from inadequate funding, which he said was a major factor, nepotism in the disbursements of the little available funds by the relevant authorities, has stalled recovery of the sector from slump. For these reasons, Nigeria’s mortgage market has remained in slow growth.

By Felix Ojonugbwa

Why National Real Estate Data is A Giant Step in Solving Nigeria’s Housing Crisis

Nigeria has a worrisome crisis of housing deficit, but even worse is the absence of reliable data on this problem. Many believe that it will be difficult to effectively address this problem without the aid of an updatable and reliable data.

There should be dependable information on the number of houses needed for each part of the country and their unique and adaptable specifications. For better management, information on house types, unoccupied houses, deficient areas etc. should be available and used for planning and execution. The importance of data, especially in today’s world can never be overstated. According to the President of Africa Development Bank, Akinwumi Adesina, those who own data, owns the world.

READ ALSO: UNDER EMPLOYMENT, NOT UNEMPLOYMENT IS INDIA’S BIG PROBLEM

Against this backdrop, Real Estate Developers’ Association of Nigeria (REDAN) in collaboration with the Central Bank of Nigeria, the Federal Ministry of Power, Works and Housing, Federal Mortgage Bank of Nigeria, Nigeria Mortgage Refinance Company, The German Society for International Cooperation, National Bureau of Statistics, National Population Commission, Mortgage Banking Association of Nigeria, World Bank, Growth and Empowerment in States, Pison Housing Company, Building Materials Producers Association of Nigeria, Association of Housing Corporations of Nigeria and Value chain have established the National Real Estate Data Collation and Management Programme (NRE-DCMP).

The programme is to ensure comprehensive collation and management of data for planning, pre-construction, construction and post construction in the sector.

According to the President and Chairman of Council for REDAN, Ugochukwu Chime, the sectoral information would help in policy formulation for the development of the industry and unleash the potentials in the sector for employment generation, inclusive socio-economic growth, and shelter provision in the country. He stressed the need for effective collaborative efforts among stakeholders to ensure that risks and rewards in the built industry could be redistributed with the aim of enhancing organisational efficiency.

According to Chime, the misrepresentation of housing data in the country which has not really helped the sector before now doesn’t sit well with him.

“I have been in different fora where ministers representing different various ministries in Nigeria outside this country were giving different data about the same issue, which is embarrassing.

“We need data for planning; we need to know where we need those houses, so we organised it in such a way that the CBN agreed to work with us to tackle housing sector crisis.

“The data emerged from developers profile and capacity, demand and affordability profile of the market within a given locality and household condition survey.

“We went a step further to ensure that all the parties who are involved in the planning of various aspects have data for it,’’ he said.

Safe to say that introduction of the National Real Estate Data is a landmark achievement with significant expectations in Nigeria’s housing sector. With this, it will be possible to collate property price index nationwide to solve housing problems in the country.

According to Chime, the data collated from national land administrators on pre-construction, construction and post construction activities nationwide would be hoisted on the Nigeria Mortgage Refinance Company (NMRC)’s website for public usage. One can only imagine the significance of such accessible pool of data.

Housing

Another impressive fact is that the data had input on land administration and the 37 land administration entities in Nigeria including the improvement that could be brought to bear on them. The collated data included issues of mortgage law and foreclosure law as well as how to standardise operations of various institutions to ensure a developer received a standardized allocation letter.

The collated data according to Chime would also dwell on how to standardise the deed of legal mortgage and deed of assignments in various registries to ensure its financial acceptance.

READ ALSO: NIGERIA NEEDS GROWTH TO DEFUSE POVERTY TIME BOMB

“On affordability we want to know the numbers and the people in the 774 LGAs who need the houses and their affordability reach so that we will stop the issues of having duplexes everywhere or building houses people cannot buy.

“So we can now do targeted construction that can only happen when we have the data on affordability and business data to know the people who are developing the houses.

“We also have housing condition which is the baseline to ascertain the condition of existing houses in the 774 local government or the 37 entities we have in 36 states and FCT.

Housing

“These components are what we have gone on to do by organising the NREDCMP,” he said.

According to him, the association has been able to ensure the various stakeholders have understanding of how all the data they want to work upon were collated, gathered and analysed.

READ ALSO: NIGERIA FACING DAUNTING ECONOMIC CHALLENGES

This has been commended as a giant leap for Nigeria and in addressing the country’s age-long housing crisis.

The president of housing development advocacy network, and convener of Abuja Housing Show Barrister Festus Adebayo has applauded the giant step taken by all stakeholders who are involved in providing for Nigeria for the first time a reliable data that can help us solve the country’s housing problem.

By Felix Ojonugbwa

How to Become a Real Estate Investor

If you are looking for a way to invest your savings, why not consider real estate? Such investments are always very lucrative. If you are in doubt, just look up any of the wealthiest people in Nigeria, or the world; you will find one form of real estate investment or the other in their portfolio.

Today, we are going to look at how you can make your first investment in real estate and earn some serious profit, regardless of the amount of money you want to put in.

What is real estate?

Real estate is property comprised of land and any structure(s) or natural resource on it, including water bodies and mineral deposits, as well as any flora or fauna.

Real Estate Investor
Based on its use, real estate can be grouped into three broad categories:

  • Industrial properties, e.g. factories and mines.
  • Commercial properties, e.g. office buildings, retail store buildings, and warehouses.
  •  Residential properties, e.g. undeveloped land, condominiums, and private residences.

Investment opportunities in real estate

Buying a house or building one is not the only way you can make a real estate investment. The market has lots of opportunities. Here are some of them:

1. Real Estate Investment Trusts (REITs):

This is one of the easiest ways to make real estate investments without actually acquiring a physical property. REITs are regulated by the Securities and Exchange Commission (SEC). They are a form of collective investment scheme, which pools funds from investors and use them to acquire income-generating real estate.

The portfolio of underlying assets is managed by a professional whose job is to maximize your returns. With REITs, you hold an indirect interest in real estate on a flow-through basis, which means that you hold the property as if it were a direct investment.

REITs are traded on the Nigerian Stock Exchange (NSE). To buy one, you have to go through your stock broker. It’s just like buying or selling shares.

REITs are a solid investment stock that can earn you regular income. The benefits include the following:

  • Requires no minimum investment.
  • Offers tax advantages.
  •  It’s a highly liquid way to invest in real estate. You won’t need a realtor to cash out your investment.
  •  REITs pay high yields in the form of dividends.
  • Provides you the opportunity to share in non-residential properties like malls, industries, and hotels.

2. Land flipping

Another great way to invest is to buy land and sell it at a higher price. It is particularly profitable when you buy in a rapidly developing area, in which case you can make up to 300% in profits within a few months, or years, as the case may be.

You can start small by buying just a plot. Or if you have enough capital, buy as much land as you can and keep selling all year round.

While acquiring lands, keep the following in mind:

  • Buy in areas that are rapidly developing if you want to sell within a couple of months. Some areas are faster than others.
  • Ensure you obtain all the documents for the land that show you are buying from the legitimate owner. The documents should include a Certificate of Occupancy or a Governor’s consent. Ensure that you don’t get mixed up in land issues. Acquire lands with the appropriate land titles.

Benefits

• Low or zero maintenance costs.
• Ease of sale
• High profits

3. Become a real estate agent

This is a good option if you don’t have the capital to make an investment. You can simply offer your services to property owners who are looking for a buyer.

Becoming an agent means you get a commission after you find a buyer for the property. The common rate is 10%. So let’s say you find a buyer for a 40 million naira property, you stand to get a commission of 4 million naira.

To become a successful agent, you need to possess good networking skills in order to locate buyers and sellers. Here are some of the roles you’d have to play:

  • List the property to the public through notices, banners, fliers, and so on. But things have become very easy in the 21st century, in which case, advertising on the internet is the easiest and cheapest method you can use.
  • Be readily available to answer any questions buyers may have.
  • Take buyers to see the property (property inspection) and negotiate prices on behalf of the seller.
  • Screen the buyers to make sure that they are qualified to buy the property.
    Benefits.
  • Grow your network.
  • Great earning potential.
  • Little or no investment capital required

4. Open space leasing

In this scenario, you buy land in a good location. While you wait for the property value to rise, earn monthly fees by leasing the land to people for temporary use. For instance, you can lease it to a church, mechanics or car wash, or other businesses that can construct a makeshift structure that will be easily dismantled when you are ready to sell.

READ ALSO: GERMAN DORMS ARE SO PRICEY, STUDENTS ARE BUILDING THEIR OWN

Benefits

• Extra monthly profits before actual land sale, etc.

5. Property development

Property development requires a huge capital investment. It involves acquiring depreciated properties that you can renovate and rent or sell at a very high profit margin. As with any real estate investment, a good location is crucial if you want to make reasonable profits.

Before you go ahead to invest in property development, you have to make sure that the development costs will be far outweighed by the asking price of the property when the renovation is done. So if you spend like 2million naira in renovations, make sure you can sell the property for at least 3 or 4 million naira.
Listed bellow is one of the benefits:

• Earn a higher profit than when you buy and sell undeveloped land.

6. Franchising

Franchising is a brilliant way to acquire and hold land in different fast growing locations. It however requires considerable capital.

It’s as simple as when you acquire land and use it to establish a business, such as a fast food restaurant. You then buy land in various other locations, build your structures and find franchisees who will manage the restaurants on your behalf.

It may seem that brands, such as Mr. Biggs, McDonalds, Chicken Republic, and many others that exist today are only involved in the fast food business. But real estate acquisition is a major part of it. These lands quickly appreciate in value over time.

Real Estate Investor

• Run a sustainable business while acquiring high value real estate.
• Own land in several major locations across the country.

7. Build or purchase rental properties

Investing in rental properties is one way to keep earning for life. As a landlord, you receive monthly or yearly income after you build or buy properties and rent them out to tenants. You’d have to regularly maintain the building to keep it in good shape, so that you can attract new tenants or keep up with the competition from other landlords in the neighborhood.

You’d also have to find out the price other landlords in the area charge on rent so that you can fix a reasonable price. Over time, your property will appreciate in value, especially if you are in an area of high demand.

The biggest difference between investing in a rental property and other types of real estate investments is the time and effort it demands, especially if you accept bad tenants who damage your property or delay rent payments. If you are not in a good location or don’t invest in maintenance, you face the risk of not attracting any tenants at all.
Benefits including:

• Earning passive income for the rest of your life.

Top tips to keep in mind before investing in real estate

Now that you have seen the various ways you can make an investment, there are certain things you should keep in mind to give you that push you need to take the first step. Some of these tips will also see that you don’t experience any difficulties down the line. Keep reading to discover what you need to know.

1. It’s possible to invest without putting down any money

You can invest in real estate with other people’s money if you can find a lender. This is especially so if you can purchase and sell the land for profit within a few short months, or years. This way, you don’t have to keep waiting till you build considerable savings before you can spring into action.

Once you find a good land in a good location that can appreciate in value quickly, find a way to source for funds. After all, real estate is a stable investment that won’t slip through your fingers, as long as you follow due process and acquire all the necessary titles for the property from the appropriate authorities.

Another option is to collaborate with close friends or family and save up the required capital. Let’s say that 4 or 5 of you save 50, 000 naira every month, in a year, you would have saved up 3 million naira. After you buy a land and it appreciates in value after some years, you can sell and split the profits. However, be sure to sign well-structured agreements before going into such collaborations.

2. Conduct proper research

Ask a lot of questions before you commit your money to any property. Also make sure that you are familiar with the location. If you buy land in an area that has a bad history, experiences flooding, or is in a location that does not have good road access, you may have a hard time to get it sold.

You have to be able to identify areas with a high potential to develop quickly in some years’ time. If the area is in high demand and consequently overpriced, consider purchasing your property from the outskirts.

3. Negotiate

To get the best deals, you have to be able to negotiate. It is the one quality that differentiates a successful investor. When you get the price for a property and you see that you can afford it, don’t be in a hurry to agree at once. You may be able to negotiate a lower price. The same idea also applies when you are ready to sell.

4. Renovations may not necessarily mean an increase in value

Buyers have different tastes. You may find that you won’t be able to sell for as much profit as you had in mind.

Real Estate Investor

5. Always put it in writing

This is very important. Before you part with your money, make sure you acquire all the necessary documents that show proof of ownership. There are many scam artists out there waiting to take advantage of unsuspecting victims. Make sure you ask questions.

Benefits of Investing in real estate

Why should you consider investing in real estate? Here’s a list of some of the benefits:

1. Build equity for your future: Equity is an asset that makes up your net worth.
2. Real estate value appreciates over time
3. Generate passive income and cash flow for your retirement
4. Enjoy tax benefits

In conclusion

Investments are essential for wealth creation. It’s not enough to leave your cash in the bank, where you will get negligible monthly interests. Invest in real estate today. It is something you have to do at some point before you retire, if you want to be comfortable financially. Why not give yourself a good head start?

Tobenna Nnabeze

 

Real Estate Sector Growth Excites Investors

Without a doubt, the real estate sector has continued to be one of the most important sectors in the Nigerian economy. Figures have shown that the sector contributed immensely to Nigeria’s gross domestic product (GDP). For instance, in 2018, it contributed ?1.26 trillion to the country’s national income. Moreover,  the sector grew by 38% between the first and last quarter of 2018. However, the percentage contribution of real estate to GDP declined to 6.41% in 2018 from 6.85% in 2017. Notwithstanding, the real estate sector is engulfed with big potentials, according to Nairametrics, an agency report.

The report said “In developed climes, the mortgage sub-sector plays an important role in stimulating the real estate sector. But while there have been several mortgage schemes and initiatives in Nigeria , the impact has remained somewhat unfelt. File photo: Residential Housing Estate  In the meantime, investment analysts have expressed different views on the outlook of the real estate sector.

Executive Director and Co-founder of Pertinence Limited, an investment firm, Mr. Sunday Olorunsheyi, said earlier in January: “It will be difficult to project the the fortunes of the real estate sector, owing to factors such as lack of clear and consistent policies from regulators and a high degree of uncertainty”, Olorunsheyi stated. On the other hand, the Chief Executive Officer of Lifepage Group, an investment holding firm, Oladipupo Clement, scored the industry high.

According to him, “More landed properties were sold and bought in 2018 than apartments and houses, due to high capital requirement and cost of fund. Despite uncertainties, such as a decline in oil prices, political instability, inflation and the rising cost of funding, the real estate sector will still thrive”. Windfall for investors and the growth potentials The experts were of the view that investors in the real estate sector are likely to smile to the banks soon,  as they get returns on their investments.

They argued that generally, Nigeria’s real estate sector was sluggish in 2018 because of the lull in the nation’s economy, pointing out however, that real estate investors will likely experience better performance this year because of improvements in the economy, and the anticipated political and economic stability in the country after the just concluded general elections. According to them, “There was excess liquidity in the economy during the election period. Recall that the President recently expressed concerns over the huge amount of foreign currency flooding the country, intended to influence the general elections.

“With the conclusion of the general elections, the movements of both foreign and domestic currencies for electioneering processes will likely spread and drive patronage in the residential and commercial angles of the real estate sector. Eventually, what this does sometimes is to pressure the price of estate properties to increase, which implies higher revenue for investors.

“Similarly, 2019 will spark the beginning of new governments in some states across the federation. These states will have either consolidated or new policies, which may drive economic activities uniquely away from past administrations. Again, contracts and appointments lobbying will also form a block on its own.

“All these interplays are likely to redistribute income in some ways, and the real estate sector is likely to benefit in no small measure. How the economy reacts- Growth in the real estate sector in Nigeria will have impact on the economy significantly, from the jobs it creates to revenue generation. “Specifically, the real estate’s multiplier effect in terms of job creation is significant. Also, real estate activity stimulates the economy indirectly through the value-added impacts of the purchase of goods and services that stem from real estate-related businesses and transactions”, they opined.

Kingsley Adegboye

100, 000 Persons Set to Receive Support from Pertinence in Real Estate

Real estate development firm, Pertinence Limited, says it plans to empower about 100, 000 people in real estate business and other money-making ventures in the next 10 years.

The firm said it had commenced the process through its ‘Zero to Hero’ platform, which it initiated about three years ago.

According to the Executive Director of Pertinence Limited, Mr Sunday Olorunseyi, ‘Zero to Hero’ is a quarterly programme and an avenue for aspiring entrepreneurs to learn and earn, leveraging on the platform of a real estate company which gives them an opportunity to be mentored by the management of the company.

Olorunseyi said it also offered an opportunity to join a fast growing team of millionaires working as a network in Pertinence Limited.

He said, “When we started ‘Zero to Hero’, it was to share our story and those of people whose lives have been transformed through our platform. When you share stories, people can relate with it. The second reason is to empower people.

“In 10 years of doing business, we should be able to empower not less than 100, 000 Nigerians. The journey is still very far, we have done 5,000 so far, so we still have over 95, 000 to go and we are in our third year; we are doing our best to achieve that.”

He said the ultimate goal would be to empower about one million people in phases.

The second Executive Director of Pertinence Limited, Mr Wisdom Ezekiel, said the management of the company discovered that people were inspired each time they heard the story of how the company began, and decided to create a platform to empower and encourage people to create their own success stories.

He said, “We discovered that a lot of people come to ‘Zero to Hero’ to hear our stories and get inspired so we decided to add some guidelines on things they can do so they can practice the principles behind the story.

“This year, we have also introduced the hall of fame to encourage people to do better. We did an increase and factored it in the commission of our marketers across board. So we introduced the hall of fame to celebrate our most productive marketers.”

At the 2019 first quarter ‘Zero to Hero’ conference, Benita Charles was inducted into the Pertinence hall of fame as the first beneficiary of the initiative.

Maureen Ihua-Maduenyi

Mixed feelings about African Real Estate

While Attacq, famous for developing one of SA’s largest retail centres, Mall of Africa, and Hyprop investments, the owner of some of the best rated shopping centres, are trying to divest from the African continent, Grit Real Estate is spreading itself across the continent.

JSE-listed Hyprop which owns the likes of Rosebank Mall, Clearwater Mall and Canal Walk in SA wants to sell its stake in AttAfrica. This comes after its Nigerian and Ghanaian property portfolio displayed lacklustre performance in the half year results which ended December 2018.

Hyprop has exposure to five malls across three African countries in partnership with JSE listed real estate investment trust, Attacq and developer, Atterbury. The joint venture runs as AttAfrica Limited based in Mauritius.

Understandably adopting a more cautious view on the outlook for Africa as a real estate investment destination, given that several SA property players that have entered the continent over the past five years got burnt on the back of the sharp oil and commodity price slump and currency crises that hit a number of countries in 2015/2016.

Attacq and Resilient Reit, among others, have all reported impairments on their shopping centre portfolios in Nigeria, Ghana and Zambia in the past year or two as higher vacancies and negative rental reversions placed pressure on valuations.

“Although quite a few African economies offer good growth opportunities, there are ongoing regulatory and fiscal challenges. Lower commodity prices have also impacted the economies relying on these to generate foreign inflows. This has made accessing foreign currency in these markets a challenge,” said Ortneil Kutama, Africa Property News Media Director. .

But Grit Real Estate, the JSE’s only Africa-focused property play remains committed to the continent even as others are looking to exit. Its CEO, Bronwyn Corbett and her team have set up a base in Africa, over a period which took more than five years. The company owns around US800m worth of property spread across Morocco, Botswana, Ghana, Kenya, Mauritius, Zambia and Mozambique.

Unlike their SA counterparts, it seems that UK investors didn’t need much convincing to buy into the African growth story. UK fund managers have already increased their exposure to Grit from 12% to 20% since the Africa-focused company’s listing on the main market of the London Stock Exchange (LSE) at the end of July 2018.

There are countries in which Grit has not invested and these include the likes of Nigeria, Zimbabwe, DRC, Angola and Ethiopia. Investors in Nigeria, which is Africa’s largest economy, have struggled to get their money out of the country. Zimbabwe wants to change from the US dollar to a new currency which has created uncertainty and led to a fall in values of assets in the sub Saharan country.

“From the outset, we’ve deliberately avoided countries that were experiencing a boom economy, which were mostly resources dependent. Grit’s objective is to partner with blue chip multinationals on their corporate accommodation needs across the continent, and therefore we’ve been very selective of the tenants we engage with. This forms a very important part of our risk mitigation strategy,” Corbett said.

Corbett has grown Grit’s assets under management nearly fourfold since 2012, from $220m to about $800m. The company is also looking to invest $160m this year to buy two or three more hotels in Mauritius and, potentially, nearby Reunion Island.

Hyprop decided Africa isn’t working as such the fund will not invest in the continent further as it believes it can be more successful in south eastern Europe where it co-owns malls in a partnership with Hystead Limited.

Attacq has decided to stop buying more assets in Africa because it hasn’t been able to generate good enough returns from its assets on the continent. The company’s management believes it can better use its funds developing Waterfall City wherein the Mall of Africa is situated.

So who will buy AttAfrica’s assets? Grit stands out as a potential buyer. However, Grit likes to buy office assets in Africa which have one or two tenants signed to long term leases. It also tends to buy hotel assets which have long term leases signed to international operators.

“We are also selective of the assets we acquire in a particular country. Some economies lend itself better to corporate offices, others to hospitality and others to corporate accommodation. In this regard Grit is asset agnostic, again focusing on the counter party, quality and tenure of the lease as opposed to a specific asset class,” Corbett said.

SA’s largest listed property fund, Growthpoint Properties may also take an interest in AttAfrica’s assets. The company has committed itself to investing on the continent and has funding and debt facilities available, but it is yet to buy any assets. Group CEO Norbert Sasse says Growthpoint which owns assets worth more than R100bn is interested in diversifying and growing its income streams.

It already invests in Poland and Romania through its investment in Globalworth and in Australia through Growthpoint Australia. In its recent results for the six months to December, it highlighted that offshore investments had actually been responsible for most of the growth in its earnings and dividend.

But it will invest in Africa cautiously as it it likely to spend less than R1bn there in 2019.

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