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Dearth of Mortgage Products and Challenge of Homeownership

In most economies of the world, including Nigeria, housing is one of the major economic indicators that shows how well the economy is performing. The growth of the housing sector is buoyed by the existence of a functional mortgage system that offers mortgage products and services.

The immediate fall out of the banking sector consolidation in 2005 which saw the emergence of 25 ‘strong’ deposit banks, was the increase in the number of mortgage institutions set up mainly by these consolidated and recapitalized banks.

Almost all of these mortgage institutions were ‘doing well’, churning out mortgage products and services that enabled their customers buy or build houses, or renovate existing ones. There were also products that enabled customers to acquire home equipment and other consumer products.

But in the last decade, for a combination of factors and, sometimes, inexplicable reasons, most of these institutions and their products are no longer seen on the streets, which speaks much about Nigeria.

Nigeria, most times, exhibits what could be termed growth paradox. As the country progresses, many of the things that could be used to measure growth and development are either retrogressing or diminishing. And the country’s mortgage market comes handy as an example.

The banking sector consolidation and recapitalisation led to the evolution of a competitive business environment and a culture of efficiency and innovation among the operators.

Institutions had to develop this competitive spirit not only to remain in business but also to increase and make good returns on shareholders’ funds such that innovative ideas, especially in product origination, became the norm.

The market was awash with products, especially those that would enable consumers have easy access to homeownership. Some of the mortgage institutions took it a step higher with the creation of products that would enable property owners build wealth from their property and yet enjoy the comfort of such property.

The First City Monument Bank (FCMB)’s ‘Unlock your Cash’ and defunct Bank PHB’s ‘Home Owner’s Advantage’ readily come to mind here and these are the kind of products that consumers need today in the face of the crippling economic downturn.

Unlock Your Cash, a variant of the bank’s flagship mortgage product, ‘MyHome’ was one of the most popular refinance products in Nigerian mortgage market then. People who have worked hard to build or buy their homes had the opportunity of letting those homes work for them by releasing the funds commensurate to the value of the property towards meeting other life needs.

Some customers who had been forced in the past to borrow short tenured loans of 3 to 5 years had the opportunity, through this refinancing option, to access the product where the bank paid off the offending loan owed the financial institution and provided more manageable repayment amounts that eased customer’s cash flow through the bank’s longer tenor.

For existing home owners, the bank allowed them to unlock up to 70 percent of the value of the property if they lived in it and 60 percent if they didn’t. It also provided home owners the opportunity of registering their titles making their properties mobile and ensuring that they were working for them just like share certificates made stocks fluid.

“We have been able to offer long tenured loans to the Nigerian mortgage market. Our observation before we entered the market was that only short term loans were available, making mortgages very unaffordable to the average salary earner. Now, with a longer pay back period, repayments are more manageable, with the option of reducing one’s principal outstanding when his economy improves or even leveraging more funds as the property price appreciates”, Ladi Balogun, former GMD/CEO of the bank, explained.

Home Owners Advantage was a wealth building product that, by its name, gave advantage to homeowners to build wealth on such homes. The product was different from traditional mortgage financing in the sense that it allowed those who owned their homes and had legal titles to them, to raise finance out of their property for a fixed period. The finance they raised could be used to buy new assets or create new investments, grow their wealth and have a good life.

The foregoing are just a few examples of the kind of products that the mortgage market enjoyed in “those good years” and both home owners and those who wanted to own one enjoyed them. Today, several years after, there is hardly any mortgage product that gives that kind of advantages or opportunities these ones offered.

Most of the products in the market today are those that enable subscribers pay house rent or school fees, and they come with impossible conditions and at outrageous interest rates.

Consumers are insisting that mortgage products should be able to meet ds their needs.What obtains in the market presently are generally unaffordable and do not give any advantage to existing and prospective homeowners.

However, not too long ago, Safetrust Mortgage Bank, one of Nigeria’s leading primary mortgage banks (PMBs), offered small business, traders and professional firms what it called Safe Annual Rental Scheme (SARS) to enable them pay rent for their homes, shops and offices

The facility is for subscribers who have established business relationship with the bank for a minimum of six months while a fixed amount is saved monthly with the intention of taking twice their contribution for rent purposes.

The product which offers a maximum amount of N1.5 million, a repayment period of 9 months, attractive and competitive interest rate, is coming on the heels of the company’s call on federal government to put in place measures to ensure lower interest rate regime so as to support economic activities that will lead to sustained growth of the national economy.

Source: businessdayng

Making Good Campaign Promises on Housing

Because Nigeria is a country where, it seems, anything goes, it is easy for politicians to make spurious promises and never fulfil them. Housing is one of such promises.

Muhammadu Buhari as the presidential candidate of the ruling All Progressive Congress (APC) promised, during his campaign, to provide one million housing units every year as part of efforts to fix the housing problem in the country.

That promise remains unfulfilled four years after and may remain so for another four years simply because government has never tackled the problem the right way. Experience in Nigeria shows that, in matters of delivering mass housing, government is not a good “business man”. The government’s approach to housing as encapsulated in the minister’s blueprint tends towards welfarism which, in our view, does not work. It is difficult to determine how many people government has to build houses for, and which state needs houses the most.

Government’s interest in housing should be focused on developing a housing policy which will assist millions of citizens to obtain mortgages at decent interestrates. This is how most citizens acquire houses in countries with successful housing policies such as Singapore, South Africa and Malaysia.

The housing situation in Nigeria is dire. There is a supply gap of over 20 million units and the level of home ownership is a little above 10 percent as against about 30 percent in South Africa, over 60 and 70 percent in US and UK respectively.

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

The country changed its housing story by simply creating a pool of funds into which everybody contributed monthly and from which everybody borrowed to buy flats or houses. That model succeeded not by magic, but because the government was determined, through a deliberate policy, to make it work. Government is expected to “top up” these contributions with, at least, N10 billion every year.

A pool of funds into which all workers must contribute 20 percent of their salary and from which they can also borrow to buy houses could be the impetus for 20 to 30-year low interest mortgages in Nigeria.

As things stand the president risks being remembered for overseeing the descent of Nigeria into the poverty capital of the world. This narrative can be changed with policies that enable private estate developers build more houses and, by so doing, generate jobs for unemployed Nigerians.

Sani Abacha is on record as a maximum ruler in Nigeria but he made a mark with the take-off of the Nigerian Liquefied Natural Gas (NLNG) which contributes today about 4 percent to the GDP.

Despite his undemocratic antics as president, Olusegun Obasanjo as was responsible for telecoms revolution, pension reform and the Fiscal Responsibility Act as well as reduction of foreign debts, among others. Goodluck Jonathan as president was adjudged clueless but he kick-started the privatisation of the power sector.

What mark, therefore, should Nigerians expect Buhari to make on the economy, beyond the minimal strides in power and infrastructure? The Buhari administration can replicate in the housing sector what Obasanjo did in the telecoms and pension sectors. But he must allow the private sector lead the way.

Source:  Businessdayng

Real Estate Investments Fall Short of Growth Expectations on Crawling Economy

It’s almost six months since the real estate sector exited recession in the first quarter of 2019 but not so much has changed for the lagging industry as investors are yet to see a meeting point between their investments and projected growth.

Industry players have revealed that investments in the sector has failed to respond positively to predicted growth, owing to the slow but positive pace of the Nigerian economy.

“We are nowhere near the place where investments in real estate projects will surpasses or meet our growth projection; this is because the economy is not yet zooming, it is just there,” Chiedu Nweke, CEO of CZAR Project Limited, told BusinessDay.

After contracting for 12 consecutive quarters, Nigerian real estate sector saw the break of dawn in Q1 2019, six quarters after the larger economy exited its 15 month contraction in Q2 of 2017.

In real terms, the property industry expanded by 0.93 percent in the first quarter of 2019, the first positive value reported for the industry since Q1 2016 when National Bureau of Statistics (NBS) started collating the data.

“The economy really improved but real estate lagged behind. But this is understandable. Not much progress can be made in this sector with a large portion of Nigeria’s population outside the housing market and mortgage still remains too expensive for many people to access and afford,” Adeniyi Akinlusi, CEO, Trustbond Mortgage Bank explained.

In the first quarter of 2019,, Nigerian economy grew by 2.01 percent, a slow down by 0.37 percentage points when compared to the 2.38 percent it reported in the previous quarter.

Despite reporting positive figures in Q1 2019, the real estate sector’s contribution to the overall real GDP slowed to 5.58 percent, lower than contribution recorded in the preceding quarter, as well as the corresponding quarters of 2018.

When BusinessDay asked Sa’adiya Aminu, MD/CEO of Urban Shelter on the sidelines of the 2019 edition of the Africa Real Estate Conference & Awards (AFRECA 2019) which held recently in Lagos, if returns on investment were meeting projections, she said “the real estate sector is suffering and money is a major challenge,” adding, “you and l can afford a million dollar house if there is mortgage.”

Nigeria has one of the world’s lowest mortgage-to-Gross Domestic Product (GDP) rate at 0.6 percent. This lags Ghana’s 2 percent, South Africa’s 30 percent and crawls after the U.S and UK rates of 60 percent and 70 percent respectively.

Nigeria has more than 17 million housing deficit and more than 90 percent of new homes that are built in the country is funded from personal savings.

According to Femi Akintunde, Group MD, Alpha Mead Group, “if Nigerian real estate sector must play the role of providing Nigerians with the basic need of shelter, there must be that enabling environment and infrastructure that will allow the sector to prosper

“There is a serious constraint around financing because the real estate sector sucks capital and the ability of the economy to support the kind of growth and development we’ll like to see in the real estate sector is not happening yet,” he said.

Bank lending to real estate sector tumbled to its lowest level at 3.92 percent in four years as at March 2019. Sectoral credit allocation to the estate shed 0.2 percentage point quarter-on-quarter and 2.49 percentage point year-on-year.

Of the N15.21 trillion combined credit disbursed to 17 sectors by the Nigerian deposit money banks, real estate got N596 billion in the first quarter of 2019, N26 billion or 4 percent lower than N622 billion received in the preceding quarter.

For real estate investments to deliver expected growth, Akintunde said, there would have to be some actions on the part of the government in terms of regulatory framework and also the discipline to enforce compliance and application of those laws.

“Capital is not a problem, there is money all over the world but they’re not coming to this direction because we’re not treating investment well; the environment in which investment can thrive and make adequate returns is not created and so investments flow in other direction, be it local or foreign,” he noted.

Checks by BusinessDay revealed that since exiting recession in the first quarter of this year, Nigerian property market has been on a growth trajectory and expectation is that it will record an estimated 2.5 percent growth before the end of the year.

‘We are optimistic and believe that by Q1 or Q2 of 2020, the sector will be better and, at that point, I think every businessman will start enjoying because the middle class will start emerging again,” Nweke, told BusinessDay.

Source: BusinessDayng

Experts List Strategies For Sustainable Real Estate Growth

To achieve sustainable growth in the nation’s real estate sector, stakeholders have listed ways in which the industry could overcome its temporary setbacks.

They noted that the sector is still recovering with a contribution to the national Gross Domestic product staggering between one and two percent.

According to them, the development of a modern mortgage system and appropriate technology in building construction that supports the use of local materials can drive the sector to the path of sustenance.

These were the fulcrum of discussions at the 2019 African Real Estate Conference and Award, themed: “Bridging Investment Gaps in Africa’s Real Estate Markets for Sustainable Growth”, organized by Propertyprop.ng in Lagos.

Discussants at the event include investors, developers, real estate consultants, government agents and manufacturers of real estate products.

Chief Executive Officer of Alpha Mead facilities, Mr. Femi Akintunde, noted the disruptive effect of technology in the sector, stressing that its entrance in the real estate has created the need for the provision of quality data, to arrive at quality decisions.

Akintunde, who was one of the panelists on “Optimising and Restructuring Commercial Real Estate Investments in Africa”, said the challenge posed by lack of national database for the actualization of such information and urged operators and investors to employ artificial intelligence and re-organise their firms to operate within their peculiar environment and attract the right tenants.

According to him, there is a need to ensure maintenance stability by reducing overhead costs, which will ensure a faster construction.

Akintunde also advised players against stretching themselves beyond limits.

“ We need to guarantee our asset value, improve our assets by putting the right policy until the right environment for expansion arises”, he said.

For the Chairman, Eximia Realty, Hakeem Oguniran, there is a need for proper planning right from the designing stage.

Investors, he said, should not overburden their cost all through the value chain but should keep everything lean to ensure return on investment.

Oguniran also urged investors to look go beyond the short term to medium and long-term investments to make headway.

“ You should choose rightly, making a good choice of location will help in getting the right balance between the rent and occupiers because high turn over of tenancy is not good for returns on equity”, he added.

For the Chief Executive officer of Novare Equity Partners, Derick Roger, with its huge population, Nigeria posses huge investment potentials.

He stressed that his firm is making a long-term investment of between five to 10 years in commercial real estate because of the huge potentials in the country.

Also, the Founder of Troloppe Property Services, Leye Taiwo, stressed the importance of a data-driven approach to optimize the potentials in commercial real estate.

According to him, this will lead to understanding the market, the different buildings, occupiers of the buildings, their backgrounds and the total size of the market.

On his part, the chairman of African Real Estate Society (AFRES), Mr. Kunle Awolaja urged the government to improve on the ease of doing business by providing institutional framework for sustainable real estate investment.

The Head of Business Development of Rendeavour, Chinwe Ajene-Sagna, however, stressed the need for diversification of projects to allow flexibility of the projects.

She stated that Rendeavour adopted this approach in its projects to adapt to the harsh operating environment.

Applauding the significant of the event, the state governor, Babajide Sanwo-Olu, said the modern mortgage system, appropriate building, and local materials are critical to the issues of affordability, decent housing, economic growth, and development.

He noted that shelter remains one of the very important needs of man and a critical factor to determines the quality of living, stressing that the focus should be on the development of sustainable urban settlement with adequate infrastructure for a decent living.

The governor represented by the Housing Commissioner, Mr. Moruf Akinderu-Fatai said, in all major cities of the world especially those with challenges of the rising population; provision of affordable shelter and the bridging of the deficit in the housing sector is both a social and economic issue.

The challenge, he said, becomes more pronounced with growing urbanisation as a result of migration of people from rural areas seeking economic opportunities.

According to him, although a number of steps have been taken in the past to develop appropriate and sustainable solutions in partnership with the private sector, what is clear however considering the increasing needs of affordable and decent shelter is that the desired objectives are yet to be met.

The situation at hand, he said, calls for a review of existing policies and strategies with a view to aligning them with current realities and policy objectives.

The governor said bridging the housing deficit is not a responsibility for government to shoulder alone, as the investment required is huge and can only be provided by the private sector.

He noted that the housing sector in Lagos is viable for investment and stressed the state’s willingness to partner with the private sector to meet the housing needs of the state’s growing population, which is in excess of 22 million people.

Source: guardianng

Mega PMB on the Way as Shareholders Approve Trustbond, First Mortgages Merger

A mega primary mortgage bank (PMB) that is expected to introduce a major boost in the Nigerian mortgage market emerged Wednesday as the shareholders of Trustbond Mortgage Bank Plc today approved the merger of the bank with First Mortgages Limited.

Both Trustbond and First Mortgages are major players in the Nigerian mortgage market. Trust bond is a first generation primary mortgage bank operating with national licence, meaning that its capital base is in excess of N5 billion.

First Bank Mortgages is also an old generation PMB incorporated in 2003 by the CBN to carry out mortgage business in 2004.

This proposed merger of the two banks, which signposts what is to be expected in the struggling mortgage market in the months and years ahead, will be birthing a bigger and stronger primary mortgage bank that may change the narrative in the mortgage industry.

The shareholders at a Court-Ordered Meeting in Lagos on Wednesday approved the merger as proposed by the management of the bank.

They also approved the transfer of the assets and liabilities of First Mortgages to Trustbond Mortgages; the change of the name of the bank to First Trust Mortgage Bank, and to put the share capital of Trustbond at four shares to 23 shares of First Mortgages.

Though the shareholders welcomed the merger as a good move, they had their concerns regarding what becomes of the staff of their bank and their shareholding.

Etiwe Uwa, chairman of the bank, assured that there would be no job losses, adding that at four shares to 23 of First Mortgages, they were the gainers.

Uwa assured further that the merger would come with immense benefits, including value addition/creation, cost efficiency and innovative technology.

He explained that the new bank would be repositioned through continuous improvement in advanced cutting edge technology that will enhance access to innovative mortgage bank products.

Source: Businesdayng

Lagos Reacts as Estate Agent Swindles 250 House Seekers N65m

An estate agent has swindled 250 house seekers in Lagos of the sum of N65 million, even as the Lagos State Government raised the alarm over increasing fraud in real estate transactions, vowing to explore legal option to protect residents.

The Lagos State Commissioner for Housing, Mr Moruf Akinderu-Fatai, said that government would explore legal options to ensure dubious real estate swindlers were punished.

Akinderu-Fatai, while receiving some victims of accommodation scam from Alapere in Ketu area of the state, said: “The state government has declared a war against fraudulent practitioners in the real estate sector. Government is determined to make Lagos a no go area for unscrupulous individuals who prey on Lagosians under the guise of real estate business.’’

Akinderu-Fatai assured the victims who lost N65 million to a swindler who collected money from over 250 prospective tenants that the fraudulent developer would be prosecuted.

He said that the state government had instituted legal actions against the said developer on behalf of the victims.

Akinderu-Fatai advised Lagos residents to report suspected dubious estate agents and developers to the office of Lagos State Real Estate Transaction Department (LASRETRAD) at Block 7 at the Secretariat, Alausa, Ikeja.

“I want to assure you that the state government, under the leadership of Mr Babajide Sanwo-Olu, is very responsive. It will leave no stone unturned in ensuring that the culprits are brought to book,” the commissioner said in a statement by Mrs Adeola Salako, Director, Public Affairs in the ministry.

Akinderu-Fatai also advised victims to remain calm and be law abiding since the matter was already in court.

Also, Mr Wasiu Akewusola, the Permanent Secretary, state Ministry of Housing, urged accommodation seekers to always transact business with the estate agents and developers registered with LASRETRAD.

Akewusola said LASRETRAD is a directorate under the state Ministry of Housing, and was responsible for registering, regulating and monitoring real estate operators across the state.

He appealed to the victims to maintain peace and order while the state government takes necessary action on their matter.

Earlier, Mr Aliyu Toyin, who spoke on behalf of the victims, expressed fears that the swindlers might not be brought to book. Toyin urged the state government to assist them in seeking for the immediate refund of the rents the victims had paid.

Source: pmnewsnigeria

Role of Real Estate Valuation in the Economic Development of Nigeria

Today, real estate is a cliché in every country. Real estate property is attributed as a sure-bank investment for persons who can afford this intangible form of assets, and unlike money, it is ranked higher than financial instruments.

This article is not to argue about its societal placement as a form of an asset over other forms of assets but its role through valuation in the economic growth and development especially Nigeria.

There are several determinants of Economic development in the world. They include real estate development, inflation, money supply and interest rates, to mention a few. The main focus is on real estate as other determinants evolve around the statistical calculations of demand and supply.

Demand and supply are not really a major factor in valuing real estate, as there are other significant factors such as the people’s purchasing power, the category of the real estate, the soil composition and geographical location of the land which would also factor in natural and man-made disasters, etc.

Real estate is synonymous to land and everything that is permanently affixed to it. This includes buildings, structures, etc.

Real estate has various categories such as residential, industrial, commercial and development, and agriculture. These categories are usually depicted in the Certificate of Occupancy granted to either statutory or customary holder of the land for a term of years.

The Land Use Act of 1978 is the primary law governing land in Nigeria. The act vests all land in the state, that is, land in its entirety within each 36 states territory and boundary in the Governor of each state.

Just like every profession has its representatives, real estate has its representatives and they are called Estate Surveyors and Valuers (ESV).

These set of people provide information, contribute and advise persons (individuals, corporate entities, and governments) on the knowledge and strategies to build infrastructures, maintain infrastructures, and on national development.

Some roles of real estate valuation include:

Auctioneering: arriving at the initial value which the property will be auctioned i.e. guide price

Evaluating and valuing monetary value for property either for loan purpose, mortgage purpose, Construction purpose, assignment or transfer purpose, business startup, etc.

Consulting on statistical compensation required for the revocation of property for public interest

Splitting businesses based on its assets

Economic Development and Growth

Economic growth is defined as the process of growing or expanding a country’s economy geometrically through macro-economic indicators especially gross domestic product (GDP) per capita.

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It is also defined as the expansion of an economy’s total output which is measured with GDP to determine the improved standard of living and quality of life among the population. Therefore, when the output per capita is greater than or outgrows the population, there is economic growth.

Economic growth remains sustainable through economic development. Economic development is synonymous to an environment which is synonymous to Real Estate or Land.

As reiterated earlier, there are determinants of economic growth such as real estate development, interest rate, money supply, and inflation but the focus is on real estate development.

The Role of Real Estate Valuation in the Economic Development of Nigeria

The role of real estate valuation cannot be overemphasized. Valuing a property goes to the root of establishing the propensity of appreciations or stagnation over a certain period of time. Property valuation determines the exact value or worth of a property.

This determination gives the owner an insight into the possible returns on his investment or informs a seller on the value of his or her property before sale; likewise buyer.

When valuing a property, an Estate Surveyor and Valuer consider three key approaches: a cost approach, comparable sales approach, and the income approach. These three approaches determine the return on investment on a property in any geographical location.

In Nigeria, real estate valuation plays a role in economic development as real estate is one of the contributory factors of the economic GDP. A property rightly valued, can either be developed, maintained or sold.

When public infrastructures or assets are developed or built and maintained to serve the growing populations, especially in urban and semi-urban areas targeting low and middle-income earners, the outputs generated from these infrastructures will be one of the contributory factors of economic development and growth in Nigeria.

Conclusion

Valuing real estate is crucial for economic development. Several countries in the world turn to experts in the field to consult on the worth of a property and its projected value in future before committing to it.

Source: businesspost

How Family Homes Funds is leading ‘Next Level’ Affordable Housing Delivery

Against all odds, Family Homes Funds has established itself as a reliable social housing scheme for low and medium income earners in Nigeria. At its conception, sceptics were unsure – and rightly so – about how a federal government plan to build at least 500, 000 homes and create up to 1.5 million jobs in the process within 5 years through Family Homes Funds can be achieved. This scepticism was based on how replete Nigeria’s history is with many failed attempts to address the country’s embarrassing housing deficit.

It has been barely a year since kick-off, but the Fund has so far developed at least 1050 homes with another 3000 at different stages of development. They have been able to create about 1400 jobs through these projects. Over 500 units have been completed in Nasarawa state, 750 in Kano, 650 in Delta and many more all over the country.

Giving Nigeria’s housing deficit, these numbers might indeed seem like a drop in the ocean, but if previous projects were this consistent and result oriented, the deficit which many believe stands at least 17 – 20 million today wouldn’t have been.

With nearly 200 million people, Nigeria has the largest population in Africa, and it is the 7th in world population ranking. In spite of this huge population, the country has struggled over decades to come up with a sustainable action plan that will reduce the incredible housing gap in the country.

Governments in many countries take the responsibility for the provision of housing through a mortgage financing system that simplifies home ownership for employed citizens, and a social security system for the unemployed. And this is why China with a population of 1.3 billion people has a housing surplus yet Nigeria with a population of about 200 million has a housing deficit.

It is against this backdrop that the current administration under the leadership President Muhammadu Buhari and the Ministry of Works, Power and Housing, introduced new policy measures and initiatives to address the housing challenges in the country.

The Family Homes Fund Limited is one of such new initiatives. The Fund is a partnership between the Federal Ministry of Finance and the Nigerian Sovereign Investment Authority as founding shareholders. The Fund is the largest affordable housing-focused fund in Sub-Sahara Africa, leveraging its significant capital (in excess of N500billion by 2023) to facilitate access to affordable housing for millions of Nigerians on low to medium income groups. Through strategic partnerships with various players in the sector and some of the world’s main Development Finance Institutions, the Fund has an ambitious commitment to facilitate and supply 500,000 homes and 1.5million jobs for the low income earners by 2023.

Through its Rental Housing and Help-to-Buy Schemes, beneficiaries of the project enjoy a deferred loan for up to 40% of the cost of their home. For the first 5 years of the loan, no payments need to be made. From the 6th year, monthly payments will be made to start repaying both interest and capital to assist the purchaser. The amount paid starts low and increases each year in gradual steps (average 6.5% per annum) in order for the Help-To-Buy loan to be fully repaid by the 20th year, the same year the mortgage is expected to be fully repaid.

To qualify, households will have earnings between N600k to N1.2m per annum and the Fund ensures that 1 bedroom unit should not be more than N3 million; 2 bedroom unit should not be more than N4.5 million, and 3 bedroom should not be more than N6.5 million. An exception is made in Abuja, Lagos, Port Harcourt and Kano where the cost of a new home can be as high as N9m. Households benefiting from Loan Assistance will not be owners of a suitable home and will include one income earner who is under 35 years of age and does not have to be one of the people applying for the scheme or the loan but must be available to help with repayments.

The Fund is in strategic partnership with housing stakeholders like the NMRC, with which it is currently working on affordable mortgages specifically through the Help-to-Own product where low income earners can enjoy the most affordable and flexible mortgage system in the country.

Family Homes Funds is most likely the only agency today in the country that is providing financing for affordable housing outside of the commercial banks where the interest rates, requirements, affordability and development costs are usually high. The fact that they are able to provide financing at no more than 10 percent per annum which is about one third of the market rate is a significant and novel intervention.

Most states that are in partnership with the Fund are now keying into the program to provide housing for their staff through the fund. In Borno state, the Fund is providing about 4700 homes, with 3000 of those being very low cost homes for Internally Displaced Persons (IDPs).

Having signed a Memorandum of Understanding (MoU) with Construction Skills Training and Empowerment Project Ltd/Gte C-STEMP, an organization with a vision to build a pool and database of certified artisans with the requisite skills to meet industry needs that translate to better quality of work and life for all stakeholders – Family Homes Funds has shown commitment to incorporate training, assessment and certification as a condition for beneficiaries to access its programs and to ensure that only skilled labour are utilized on its projects. Its laudable partnership with C-STEMP is to provide affordable and quality homes while creating jobs for highly qualified persons.

What makes Family Homes Funds stand out? The motivation behind the establishment of Family Homes Funds is based on the fact that it is not just enough to supply houses without taking care of the demand side. The Fund dedicates sufficient strategy to ensuring that the supply of houses meets the demand for it.

As calls for sustainable building rings loud in the air, Family Homes Funds already leads the way through its collaboration with other agencies in the development and application of building innovations that can be cost effective. Family Homes Funds is working with bodies like MBRI to commercialise innovative building systems that rely very little on concrete and cement, which is a significant step in not only advancing local content, but ensuring sustainability.

As a testament to their hard-work, Family Homes Funds won the Affordable Housing Promoter of the Year Award at the 2019 Nigeria Housing Awards. The prestigious award is in recognition of ongoing affordable housing projects being financed by the fund for low and middle income earners across the country.

While the excellent progress of Family Homes Funds excites stakeholders, there is the need for government to ensure that the kind of bureaucracy and political interference that have prevented previous and ongoing housing initiatives in the country from achieving their set aims do not affect Family Homes Funds. Its independence and all-round support from the government ought to be uninterrupted if set goals are to be reached in the allotted time frame of delivering the 500, 000 homes.

Investing in Technology and Real Estate

Investment in technology for real estate, also known as “proptech,” has seen exponential growth in the past decade. In 2010, only a handful of companies invested about $25 million in technology; a mere 8 years later that amount had surpassed $12 billion – a 400-fold increase. Having watched technology-based start-ups upend the transportation and hotel industries for years, investors are starting to realize that there is significant opportunity and incentive to continue to invest heavily in proptech for the foreseeable future.

Firstly, the sheer size of the real estate market is staggering – after all real estate is the largest asset class in the world. The residential real estate sector alone transacts nearly $1.5 trillion in sales annually, while commercial transactions contribute a hefty $2 trillion per year. While this considerable volume on its own should be sufficiently enticing for investors, the fact that real estate has not experienced the same degree of technological innovation as other industries provides an added incentive.

While the emergence of companies such as Compass, Opendoor, Redfin and Zillow have served to further meld real estate and technology, there still remains ample opportunity for growth.  Specifically, segments within real estate, such as appraisals, mortgages, co-working, co-living, retail space and building management have lagged behind in the race to develop and implement software that could enhance their efficiency, thereby providing start-ups with opportunities to incorporate technology within these real estate sectors.

The concept of a technology company operating as a real estate brokerage is nothing new – in fact there are dozens of players, big and small currently in the market.  Compass has distinguished itself from its competitors by ensuring that the Client-Agent relationship always comes first.  To better serve its clients, Compass has built the first modern real estate platform, pairing top talent with technology to make the search and sell experience intelligent and seamless.

To maintain its technological advantage, Compass is constantly innovating and enhancing its already comprehensive suite of services. One of its creations is the “Compass Collection,” a collaborative platform for buyers and agents to review new and “coming soon” listings in real time, allowing the buyer a more integrated experience when searching for homes.

Compass has employed the strategy of utilizing its competitive market advantages, which are its technology, its people, superior marketing and access to capital, to ensure that it is able to entice the best professionals, from agents to engineers, to join its ranks.  While most of its new hires are still agents, to ensure seamlessness between agents, clients and technology, Compass has significantly increased the number of technology personnel.

Compass is one of only two real estate tech companies that have been able to raise over $1 billion in equity. Strategic use of these funds in technology and people has seen a substantial increase in transaction volume and consequently revenue, resulting in its meteoric rise to become the third-largest brokerage in the U.S. in under a decade. This is especially impressive when taking into consideration that the real estate sector has traditionally had a handful of big players that have retained a firm grip over the market.

Compass’ modern, sleek and luxury branding, combined with its cemented status as a technology-driven brokerage has resulted in not just investor interest, but also from sellers and buyers looking to utilize modern methods to enhance their real estate experience. Compass’ rise to prominence is a reflection of the market demonstrating that real estate brokerages that invest heavily in technology will be rewarded with an increased sales volume – which undoubtedly means that technology will continue to shape the future of the real estate industry.

Source: washingtonblade

How to Ensure Your Real Estate Investment is Profitable

Real estate investments are one of the best ways to build up your net worth. When done right, it can be a very lucrative business, but if done wrong, it can be a costly venture. One of the biggest benefits, though, is that you can start investing in real estate with minimal cash compared to the total asset value you’re able to control. This allows investors to experience huge increases in net worth, much quicker than other investment opportunities.

But how exactly can you guarantee that this will be a worthwhile investment? Listed below are some tips that will help you successfully navigate the real estate market:

Choose a Good Location

When people search for a property, whether it’s for residential, commercial, or vacation purposes, the first thing that they usually consider is its location. Is it near their school or workplace? Is it in the center of a busy thoroughfare where many people can see their products and services? Is it readily accessible to tourist spots and other notable city landmarks?

The common theme around these questions is convenience. Basically, the easier it is for people to get to your property, the higher your chances are of getting in your target market’s radar. Additionally, even if your property isn’t in the best condition possible, you are still bound to attract clients purely because of location.

Also, the nature of your investment will also determine what makes a particular location “good” or “bad.” For example, if you are investing in a dormitory-type building for students, or in a residential building for young professionals, you must choose a location that is easily accessible to public transportation. On the other hand, if you are investing in vacation rentals targeted at affluent individuals, you’re better off going for a location with an exclusive vibe.

Upgrade Your Property’s Features

Depending on what you present your property to be, it may do better with added features, such as home automation. This DIY home automation guidehas some ideas on how to get this done. If your property is situated in a convenient location, and has features that will make things more convenient (e.g. automated lighting, Google Home, etc.), then someone will always have their eye on it.

Of course, this also applies to commercial real estate investments. One way of doing this is improving accessibility for people with disabilities, such as adding wheelchair lifts. Although the default target market of your property might be able-bodied people, providing access for people with disabilities is bound to attract more clients into your building.

Again, it all boils down to convenience. If you add features that will make people’s lives easier, then more people will find themselves in your property, whether it’s commercial or residential.

Improve Property Conditions

Clients are more likely to shortlist your property and ultimately choose it if it looks well-maintained. You don’t have to go overboard with this, though. One of the most common mistakes investors can make is to spend too much on beautifying their properties, thinking that it would instantly increase its value. While this might be worth it in some situations, the overspending is generally caused by grandiose goals for the wrong audience.

How can you make your property look well-maintained? Here are some renovation projects that you can look into:

    • KitchenKitchen renovations, if done right, can increase a property’s value by 80% to 100% of the renovations’ value. So, if you spend $15,000 on a supposedly $150,000 home, it can be sold for $162,000 to $165,000.
    • Plumbing: Clean running water is a necessity at all times. Rusty pipes are not only an aesthetic turn-off, they are also a health hazard.
  • Landscaping: A properly landscaped yard isn’t only pretty to look at; it also provides a more relaxing ambience to the property. Additionally, it can help decrease the monthly total of your energy bills.

Do Your Market Research

Of course, you also have to profile the kind of people you hope to rent or sell your properties to. To get the most out of your investment, you have to be in touch with people who can rightfully give you your property’s worth. Otherwise, no matter how profitable your property seems, it won’t pay off if you don’t study your target market. Choosing the right clients will help you avoid a significant mismatch with your target profit.

Conclusion

To make your real estate investment profitable, you must always keep in mind what its real purpose is. That way, you will be able to choose the best location and the best features that would attract your target market.

Source: nuwireinvestor

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