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Protests and Trade War Wipe $50 billion off Hong Kong real Estate Stocks

Weeks of pro-democracy protests in Hong Kong are battering shares in the city’s property developers and pushing its benchmark stock index closer to a bear market.

About 446 billion Hong Kong dollars ($56.9 billion) has been wiped off the market value of the nine largest Hong Kong real estate companies since April, according to data from Refinitiv.
The Hang Seng Properties Index, which tracks a bigger pool of real estate developers in Hong Kong, has plunged 19% since its recent peak in April.
The broader Hang Seng index has fallen more than 16% during the same period. Both are at risk of falling into a bear market, which is defined as a drop of 20%.
Hong Kong is the most expensive city in the world to buy a home, with local residents and international investors alike paying huge money for small apartments in the financial hub.
The market slide began earlier this year because of the impact of the trade war on Hong Kong’s economy and China’s slowdown. The city’s political turmoil has piled on the pressure. Some of Hong Kong’s biggest real estate tycoons called Tuesday for the protests to end.
“Recent protests have triggered huge selling pressure for developers’ stocks, because people are jittery about the escalating unrest and no one knows when it could end,” said Louis Wong, director of Phillip Capital Management. “It has already dampened buyers mood on the property market.”
Hong Kong’s economy only grew 0.6% in the second quarter from a year ago, the weakest rate in a decade. Escalating protests have made the outlook even more uncertain, Wong said.
A weakening yuan could also crimp the buying power of mainland Chinese, who are the major buyers of Hong Kong properties. Several developers have postponed sales of luxury home projects this month.
“Developers are turning conservative about the market’s outlook. So they decided to pause and watch,” Wong said.
Sales of new homes plunged 60% in the past three months, compared with the first quarter, partly due to lack of project launches, data from Midland, a real estate agency, showed.
Why are Hong Kong protesters at the airport?
Separately, data from property agency Knight Frank showed Hong Kong’s residential sales volume fell 21% in July from a year prior.
The company predicted prices for mass housing in Hong Kong to drop 5% in the second half of 2019.
Sun Hung Kai Properties (SUHJF), a developer controlled by Asia’s third richest family, has lost HK$115 billion ($14.7 billion) in market value since its peak in April.
That was equivalent to nearly one third of its market value back then.
CK Asset (CHKGF), owned by Hong Kong’s richest man Li Ka-shing, has also lost more than HK$80 billion ($10.2 billion) in market cap since its highest level this year in early April.
Shares in Swire Properties (SWRAY), Henderson Land Development, Sino Land, New Development Development, Wharf Real Estate, Hysan Development and Great Eagle Holdings have all plunged more than 20%over the same period.
Source: cnn

Lagos, Estate Residents Bicker Over Facility Managers

The recent approval of facility managers by the Lagos State government to oversee its own housing estates across the state has pitched some resident associations against the authorities. The state had through the Ministry of Housing announced the engagement of facility managers to oversee its housing estates.

Some of the approved facility managers, include Arthur Momson Limited (Alhaji and Alhaja Adetoun Mustapha Estate Ojokoro); Akinpelu Akinwunmi and Associates (Abraham Adesanya Housing Estate Ajah); Power System Services Ltd, Baba Omojola Estate Gbagada, Jide Taiwo and Company(Millennium Housing Estate, Ibeshe) and Dolphin Direct Limited(Mobolaji Johnson Housing Estate, Lekki) among others.

Under the policy, facility managers will undertake arrangements for security personnel, refuse disposal, lighting of streetlights and cleaning and sanitation of jointly owned facilities and liaise regularly with the government on the state of the facilities.

The facility managers are to act as the agents of government in the management and maintenance of the estates particularly common facilities, while the residents pay the facility managers. Although, the government claimed that the policy was to tackle the deplorable of the estates, residents, however, are not comfortable with it especially when they are paying for the services.

Some of the resident associations, who had employed the services of estate managers for direct handling of the services, felt it was a ploy by government to rake in money from the appointed facility managers especially when it was not done through open bidding.
According to an official of new estate residents association, there was no need for a new facility manager as the estate already has one.

The official, who preferred not to be named, regretted the exclusion of the residents in the appointment. According to him, the estate will only comply after proper consultations with all the stakeholders.The Guardian learnt that several resident associations are averse to the policy because they were not carried along with the appointments.

Some of them, who have already employed estate managers for the maintenance of facilities in their estates, told The Guardian that it is a ploy to take over the jobs from them.They stressed that since government will not be the one paying for the services, there is no basis for such policy as they already have contracts with facility managers for the job.

According to them, what the government should do is to monitor adherence to the rules of engagement to ensure conducive, decent and healthy environment in the estates.

But the State said the policy was to give professional touches to the estates, some of which are in despicable conditions.Permanent Secretary of the State Ministry of Housing, Mr. Wasiu Akewusola, who spoke to The Guardian on the matter said, the policy was made in the best interest of the residents and the state.

According to him, before now, some the residents associations were managing them on their own but the state want professional activities and touches in our estates.The state, he said, do not want some retirees, who are executives of the associations managing the facilities because facility management is a profession on its own that requires skills and expertise not like claiming to be contractors in the construction industry.

He said: “We want professional touches in our estates that is why we said facility managers will be appointed in our estates not that we want to impose facility managers on them. But if any of the estates has a facility manager who is registered with us, they can have them in the estate. But not that the chairman, the secretary or officials of the associations will just be managing things and eventually destroyed many things believing that they are doing good to the estate.”

Akewusola said the ministry would continue to dialogue with the resident associations to resolve the gray areas. He stressed that the facility managers were not imposed on the estates. The Permanent Secretary said if they know that they have facility managers that are tested, that they believe on, they should register with the ministry after which they will be sent them back to them.

According to him, the policy behind it is that the facility managers are allowed to work and if they are not doing well, the residents can complain but not that the person has never work for them and they are complaining that they don’t want them.The Lagos state government has 18 existing housing schemes and 24 new ones; the appointment of facility managers is expected to create new jobs in the state.

Meanwhile, the Nigeria Chapter of International Facility Management Association (IFMA) has commended the State government on its plan to engage facility managers for the professional management of its estates.The groups’s acting President, Mr. Segun Adebayo, expressed readiness to support and complement this laudable initiative through advisory and recommendation of credible and reliable facility managers with professional capability and pedigree.

“This plan in our view is long overdue considering the value–adding benefits the government and the residents of the estates will derive from its effective execution. “It will not only promote the wellbeing of the residents but also create a sustainable model of management of the estate through professionalism and international best practice.

“The plan will also create jobs and employment for artisans and technicians in Lagos which will further translate to the preservation and enhancement of the life cycle of the assets in the estates in particular and the entire estate in general,” he said.

IFMA has been a progressive partner with Lagos State Government through quality collaboration with Lagos State Infrastructure Asset Management Agency and Government Technical Colleges in the State. The strategic partnership and collaboration with the State agencies and technical colleges has led to several initiatives like Facility Management Advocacy, Mentorship Programme for the student of the technical schools and celebration of World Facility Management Day, an annual global celebration of the achievements of facility managers across the world

Source: guardianng

Double-Digit Mortgage Rate Highlights Nigeria’s Fragile Macro-Economic Fundamentals

…NHF incapable of meeting everyone’s housing needs, experts say

High mortgage rate, which continues to deny many Nigerians the privilege of owning homes, portrays how weak macro-economic fundamentals are in Africa’s most populous nation, experts have said.

The experts, who spoke at Real Estate Investment Series (REIS) organised by K. ParkWood in Lagos, added that this weakness undermines the country’s ability to bridge its housing deficit and also provide affordable houses for low-income earners who form the bulk of Nigeria’s population.

In advanced economies, the mortgage industry contributes significantly to economic development with a single digit interest rate. The reverse is the case in Nigeria, where relatively high inflation rate and high mortgage rates hurt demand for housing.

Nigeria needs annual production of about 750, 000 housing units for the next 20 years to close its housing deficit. And this is a herculean task for a country stuck with low growth after a 15-month recession, even as limited access to funds lowers the performance of mortgage industry.

Kayode Omotosho, the executive secretary of Mortgage Banking Association of Nigeria (MBAN), in his presentation at the August edition of REIS with the theme, ‘Financing Home Ownership: A Focus on Mortgages and Housing Funds as Veritable Platforms’, maintained that mortgage rate was in double-digit because it was largely determined by market conditions.

“Market condition is what determines interest rate. We want to assure you that we are mindful that double-digit rate on mortgage is not the best; we are in talks with the Central Bank of Nigeria, but economic issues have to be addressed for mortgage rate to come down to single digit,” he said.

The MBAN boss assured further that his organization remained committed to improving funding sources for housing projects. Part of efforts in this regard, according to him, was the registration of nine mortgage brokerage companies, creation of mortgage default loss of job insurance scheme as well as collateral replacement indemnity scheme.”

“When these schemes are fully implemented, you will begin to see representatives of mortgage banks approaching you to assist with funds to actualize your housing dream,” he said.

Omotosho stressed that the National Housing Fund (NFH) loans are insufficient to meet the housing needs of every Nigerian, saying there is the need for multiple housing vehicles.

“Nigeria cannot survive only on NHF. We need private sector-led public-driven mortgage institutions in the country”, he said, adding that Canada that has less than a quarter of Nigeria’s population has about three housing vehicles.

In his speech, Ahmed Dangiwa, the managing director of Federal Mortgage Bank of Nigeria (FMBN), represented by the bank’s deputy general manager, Abiodun Fashina, stated that accessibility and affordability of mortgage defined the business model of the bank.

Fashina, in his presentation, noted that the lower-income earners, who account for over 70 percent of Nigeria’s population, are most affected by the country’s housing issues. He, however, maintained that low income of workers is the chief constraint to accessing housing facility.

Giving the performance scorecards of the state-owned FBMN, Fashina said as at the end of June 2019, the bank had 23, 199 registered organizations, 4.68 million contributors, 1, 125 registered co-operative societies, 21, 987 co-operative members, 20, 000 NHF loans disbursed, 2, 214 micro-loans worth N4.3 billion disbursed and N750, 000 mortgage loans refinanced.

He added that FMBN would partner National Employers Consultative Association (NECA) and Trade Union Congress (TUC) to construct 100 houses across the country’s six geo-political zones.

Kayode Ogundimu, the chief executive officer at Nigeria Mortgage Refinance Company (NRMC), represented by Dorothy Obata, Head of Business Development, noted that the firm has in the last four years raised N19 billion to refinance mortgages.

“We issued an N8 billion Series I bond in 2015 and another N11 billion series II bond in 2017. This shows how serious we are with our mandate to promote home ownership across Nigeria.”

REIS is the first investor-centric series birthed to deepen the knowledge base of individual and institutional real estate investors.

Source: businessdayng

Lagos Warns Against Alterations of Approved Designs by Residents of Government Estates

Share Lagos State Government has warned residents of state owned housing estates to desist from modifying or altering the approved designs of structures in the residential estates.

The Permanent Secretary in the State Ministry of Housing, Mr. Wasiu Akewusola, gave the warning during a meeting with the representatives  of the  Residents Association of Abraham Adesanya Estate at the State Secretariat last week.

According to Akewusola, it is in the best interest of all residents of government owned estates to stop alterations of buildings in government estates, adding that such alterations by residents   include restyling,  extension of, and additions to existing facilities and in some extreme cases, adding to levels of buildings.

He observed that these alterations  are deviations from the terms and conditions stated  in the deed of sub-lease signed by the two parties  and warned that it could lead to a penalty as stated in the Law. Akewusola noted that “The government owned  estates are designed and built by the state government in compliance  with global environmental and physical planning rules to ensure durability and liveability. Contravention of such standards often result in dire consequences such as reduced durability of structures both  for the home owners and people within the environment”.

Based on this , the Permanent Secretary then advised residents of government estates to desist from any form of redesigning of the buildings they occupy, as this may cause damages to the buildings  and the entire environment in no distant time.

He also underscored  the need for the residents to maintain the original  structural designs to   prevent future disasters, pointing out that “A building is a permanent load which capacity of erection can only be known and  accessed by certified engineers.

Source: vanguardngr

What Investors Need to Know For Profitable Investment in Commercial Real Estate Business

…as Greystone Tower opens for home buyers, investors, corporate tenants

Investing in real estate is an interesting, yet very intricate and challenging business. It is all the more challenging if the investment is in commercial segment of real estate, especially prime office space.

This explains why a prospective investor needs to know a few things this kind of investment needs in order for him to make profitable investment. There is need also to understand what both the external and interior parts of the space should be, or look like.

Professionals and marketers in this space advise that a commercial prime office building must have a flexible and technologically-advanced work environment that is safe, well-designed, well-built, and accessible. It should accommodate the specific space and equipment needs of its occupiers.

Udo Okonjo is the CEO, Fine and Country West Africa International-a real estate marketing, advisory and consultancy firm. The company has been operating consistently at the luxury end of the Nigerian real estate market and is reputed for successfully closing deals on many high end properties in Nigeria.

Okonjo explained to BusinessDay that in building a Grade A prime office space, special attention must be paid to the selection of interior finishes and art installations, particularly in the reception, meeting rooms and common areas. She added that well-maintained restrooms, lifts, provision of cafeteria, gym, crèche, smoking patio’s (terraces) should also be considered.

There are different methods of classifying Grade-A and Grade-B commercial office spaces. Okonjo points out that within the context of the Ikoyi and Victoria Island commercial office space offerings, Grade A buildings, such as the Greystone Tower, are unique in their location (accessibility) with a simple but iconic design and high construction quality.

Greystone Tower is an iconic mixed-use development strategically located at the intersection of two major business hubs in Victoria Island, Lagos. The building, designed by Majoroh Partnership and being built by Dori Construction and Engineering Limited, is standing on 18-floors.

According to the project managers, it has five floors of parking space; one of the floors consists of 4units of 3-bedroom residential apartments; there is a ‘concessionary floor’ with Restaurants, Creche, Clinic, Café & Gym. “Greystone promises to be one of the finest developments redefining the Lagos city skyline with its organic and responsive warm and clear glass façade,” the project managers assure.

Okonjo disclosed that at the building’s ‘Open House’ held a couple of weeks ago, developers, agents and investors were educated on the kinds of facilities that were made available, the selling points of the tower and why it was a great investment for both commercial and residential use.

The finishing of Grade A prime office buildings is always of the highest standards and, like Greystone Tower, they are equipped with technologically-advanced building safety, mechanical, electrical, and communications systems. Grade-A buildings are not only highly rated within their local communities, but are known to compete with similar developments in developed countries across the globe.

They also incorporate sustainability features and are value-engineered from the design stage to be Green/Leadership in Energy and Environmental Design (LEED)-certified developments.

Any standard prime office building must have features such as meeting/conference rooms; cafeteria, coffee shop; reception; with state-of-the art visitor management/access-control systems, as well as information central location for building directory, schedules, and general information.

The building should also have a common space and lounges for informal, multi-purpose recreation e.g the entertainment lounge at the Nestoil Tower and the water-front lounge at The Wings In Victoria Island, environment functionalities e.g. pressurized and fire-rated stairwells, railings at the staircases of the emergency-exits etc.

Provision of adequate alternative power-supply systems e.g. power generators and ups systems is also important just is necessary to incorporate water and sewage treatment plants; accessibility to the building at any time of the day – weekends inclusive

Other important features include provision of information technology dedicated server-room for each office unit, drivers lounge and maintenance room, dedicated kitchen; raised floor systems; energy efficiency – motion-sensored lights and water taps, and air-recycling systems Lagos’ state-of-the art security systems with closed circuit television cameras (CCTV).

There should be technologically advanced fire-alarm and fire-fighting systems – NFPA – 13 implemented; temperature monitoring in the critical areas e.g. Panel, ATS, control rooms etc; installation of health, safety and

Provision of adequate alternative power-supply systems e.g. Power Generators and UPS systems is important just as water and sewage treatment plants; accessibility to the building at any time of the day – weekends inclusive, and provision of information technology dedicated server-room for each office unit.

There is also need for drivers lounge and maintenance room, dedicated kitchen, raised floor systems, energy efficiency – motion-sensored lights and water taps and air-recycling systems.

Source: businessdayng

Africa’s Real Estate Market Upbeat in H1’19 with Over $500m Transactions

…as Nigerian investors close deals, anticipate increased activities in H2’19

African real estate market never had it so good in the previous 24 months as it did in the first six months of 2019 when the market recorded over half a billion dollars in 10 significant transactions across multiple jurisdictions and sectors.

In Nigeria, after 12 straight quarters of negative growth that ended in the first quarter of 2019, the market has started waking up with investors closing deals and hoping to record marginal increase in activities in the second half of this year.

The last six months of the year have been the most promising period in the market and this was reflected in the high number of calls and inspections which the investors reveal they have been receiving for both residential and commercial properties.

“We have seen movements in the market; we may not see what we had in 2008 nor the boom days of 2011 to 2013, but what we see happening now are increased activities and deal closures,” MKO Balogun, CEO, PFI Global, confirmed to BusinessDay on phone.

“Though the economy is passing through a slowdown, I don’t see that affecting real estate, unless something crazy happens which we don’t expect t,” Balogun said.

The growth and opportunity displayed by a diverse spread of international funds, Development Finance Institutions (DFIs), banks, institutional investors and others are evidence that despite apparent indifference to African opportunities in SA boardrooms, the continent’s real estate sector has evolved and become increasingly more liquid and provides value in key nodes and sectors.

Some of the most high-profile deals include well-known listed funds and global investors including Growthpoint Investec African Properties Investment Fund (GIAPF), Grit Real Estate Income Group, WeWork, Centum Real Estate, Nedbank, Standard Bank, the IFC and the UK’s CDC.

Due to subdued growth potential and earnings locally, Central and Eastern Europe become increasingly popular for South Africa’s property sector, but analysts are asking if such funds should not be investing closer to home.

Kfir Rusin, the host of Africa Property Investment (API) Summit, the most significant annual gathering of capital investors in African real estate, is particularly concerned about this growing trend.

API, already in its 10th edition, will be taking place on October 2 & 3, 2019 in Johannesburg. Its stakeholders have been more active in the first half of 2019 than in the previous 24 months.
“For investors and developers looking for data and partners experienced in African development or looking to sell prime assets, there are men and women responsible for structuring and executing these mega deals who will be at this year’s conference,” Rusin disclosed.

These include GIAPF’s managing director, Thomas Reilly; Grit’s CEO, Bronwyn Corbett; multiple senior investment officers from the IFC; Standard Bank’s head of Africa real estate, Niyi Adeleye; CDC’s Illaria Benucci; Centum’s RE MD, Samuel Kariuki, and many more in attendance.

“The market has moved forward in the past six months, and we’re thrilled that so many major dealmakers will be at the API Summit to transact and share their experiences with our delegates,” he said.

These high value transactions, while not a repudiation of the South African-listed sector’s muted view of the African opportunity, do provide a compelling narrative that the continent’s property markets are investable, but require nuance and insights. It’s not simply a copy and paste that what has worked here (SA) will work elsewhere, said Rusin.

According to real estate analyst Craig Smith of Anchor Stockbrokers, Africa’s top markets are “definitely a more attractive entry point than 18-24 months ago” but cautions that investors still need to exercise a “higher level of diligence” when investing.

And while deal many South African funds continue to look at Central and Eastern Europe for scale (sizeable transactions) and positive funding spreads, the transaction spread by API Summit’s investors point to a market that is expanding, which is in line with his view that “the opportunity set over the long term is immense”, said Smith.

“We’re witnessing sophisticated deal structuring in affordable housing; hospitality; logistics; office spaces and mixed use, across countries and regions,” said Rusin.

Top 10 real estate deals in the first half of the year into which billions of investable funds have gone include the Growthpoint Investec African Property Fund to acquire malls in Ghana and Zambia; Centum RE & Nedbank ±$75 million debt deal for their Two Rivers development project, and IFC investment in Hilton in Lusaka and Protea Hotel, both in Zambia.

Others are African Logistics Properties (ALP) which signed debt restructuring deal with Standard Bank; Shelter Afrique in Affordable Housing deal with Habitat International; Grit’s purchase of Senegal Club Med at $12.5 million with development plans of $28.8 million, and CDC’s commitment to mezzanine debt investment in Teyliom Hospitality with a deal size put at $30.7 million.

Within the period, WeWork opened its first of many African office locations in Johannesburg; Actis & Shapoorji launched affordable housing Joint Venture in Kenya with the deal size put at $120 million, while Westpark & Siemens are to build sustainable industrial park.

Regarded among local and international decision makers as Africa’s largest property gathering, the API Summit is recognised as a platform for investing, but it is also vital in developing deeper layers of transparency for investors looking to meet and understand the continent’s divergent and complex markets to avoid previous mistakes committed by SA developers.

“Africa’s markets are still relatively opaque, and it is vital that these markets continue with their efforts to improve transparency,” Smith said. “The experience of GIAPF is crucial in my view as this will provide evidence of performance to the SA market.”

Source: businessdayng

Nigeria’s Failing Economy takes its Toll on Industrial Estates

One of the starkest reminders of the misgovernance of the nation by past leaders was the seemingly deliberate effort to stifle the industrial sector that was expected to tackle unemployment.

As many analysts now agree, Nigerians’preference for imported goods has also weakened the few existing industries, making some of them exit the nation’s landscape for other West African countries.

One of the most stringent criticisms against Nigeria’s industrial policy is its inability to reform the sector and provide succour to the existing and dying industries. Hence, the ugly state of industrial estates created in the 70s to take care of rapid urbanisation, industrialisation and commercialisation in the country.

The industrial sector in Nigeria (comprising manufacturing, mining, and utilities) accounts for a tiny proportion of economic activities (six per cent) while the manufacturing sector contributed only four per cent to Gross Domestic Product (GDP) in 2011. This is despite policy efforts, over the last 50 years, and, in particular, more recently, that have attempted to facilitate industrialisation.

But available data from the Bureau of Statistics (NBS) 2017 revealed that national industrial utilisation is approximately 40 per cent, while in 2018, according to a real estate report by Ubosi Eleh and Company, many warehousing facilities were thrown into the market for outright disposal, few takers as firms and owners continue to seek creative ways to remain in business.

The development of new warehousing either as an investment or for additional storage space still remains limited. The major industrial areas in Ikeja, Oregun, Illupeju, Apapa, Amuwo-Odofin in Lagos, Idu in Abuja, Trans Amadi in Port Harcourt and Bompai in Kano have witnessed low warehousing activities as many of them have been converted to other commercial uses or completely abandoned. In the northern parts of the country particularly Kaduna, the demand for warehousing is virtually non-existent.

For instance, the headquarters of the Dunlop Nigeria Plc, once a beehive of business activities, has become a ghost of their old selves. The case of Dunlop property is a definition of the new role the Lagos industrial community has been given.

The same goes for Iganmu, another ancient industrial layout. Apart from the portion controlled by the Nigerian Breweries Plc, the area has lost its past glory.

With the collapse of the Central Bags Manufacturing Company Nigeria Limited and several other operators that clustered around it, the entire famous Akanbi Onitiri Street has become a shadow of itself.

While the faint industrial activities are still in some other areas, developers have converted most of them to other uses. The same decline could be seen at Ijora, Isolo and Mushin industrial settlements. Abimbola Street and its environs, were the hub of the Lagos plastic industry at a time between 1970 and 1990, when Aswani, a sub-industrial cluster in Isolo, was at the peak of its performance.

But, the industrial life at Abimbola Street and its surroundings has dimmed. Except for the resilience of Johnson Wax Nigeria Limited, an insecticide maker, and dozens of warehouses, Abimbola Street would have been described as a ghost neighbourhood.

With the likes of the comatose Femstar and Company (Limca and Gold Spot bottler) and several other ventures that made the street tick those days, the street has lost its boom.

These areas have suddenly given way to other uses.

The same goes for Abimbola House itself, which used to be a haven for many small-scale manufacturers. A large portion now houses a showroom belonging to the Tecncool Nigeria Limited, a distributor of LG products, and several other marketing companies that are serviced by a branch of Wema Bank Plc, which is situated on the ground floor.

At Matori, Iganmu, Oba Okran, Ijesha and several other industrial estates in Lagos, this is the new order.

For instance, on Kolawale Shonibare, a street on the industrial arm of the estate where the likes of Eleganza Group once commanded a huge influence, new residential buildings and hotels have sprung up.

In the 1990s, Eleganza, a company owned by a doyen of the Nigerian industrial sector, Razaq Okoya, was employing both skilled and unskilled labour from different parts of the country.

Its imposing property on the estate has been turned to other uses. Most of the collapsed companies, like what obtains in several other parts of Lagos, have been transformed to storage facilities for sundry imported goods.

In fact, the average wait time to conclude a lease of a warehouse has continued to increase basically as a result of low demand. Between 2015 and 2016, the average wait time was in the range of 60-90 days, towards the end of 2016, it had doubled to 150-180 days and in 2017, there were still many warehouses that remained in the market for upwards of 300 days or more.

Warehouse rates in Lagos are in the range of N1, 200 – N1, 800 per square metre and increases with proximity to the ports. In Trans Amadi Industrial estate, properties command rent in the range of N1, 500 per square metre per annum while Idu, Abuja attracts about N1, 800 per square metre.

Industry watchers attribute the collapse of the sector to electricity outages, transportation bottlenecks, crime and corruption. Nigerian manufacturing firms suffer acute shortages of infrastructure such as good roads, potable water, and, in particular, power supply.

Contrary to insinuations that urbanisation cut short industrial developments in urban centres, some built environment experts, and especially town planners pointed out that the encroachment by residential developments did not affect the growth of the industrial estates.

Town planners
Reacting, a former President of the Nigerian Institute of Town Planners (NITP), Remi Makinde told The Guardian that what had become the sorry state of most of the industrial estates could be blamed on the poor economic situation in the country.

He observed that since about 20 years ago, the situation has been going down and many of the established industries had to fold up their businesses.

“At Ikeja industrial estate, we used to have Michelin and Dunlop tyres and the Nigerian Textile Mills. Regrettably, most of them have been taken over by churches after they folded up completely whereas the churches can’t employ such a huge number of people accommodated by the manufacturers and industries. These are industries employing thousands of Nigerians and feeding many families. The industrial estate in Apapa still maintains its status but bad roads and accessibility problems have run it down and Apapa is now a slum”, he said.

On solutions to the problem, he said there had to be a conscious government policy and amelioration project to revitalise industrial estates in the country. According to him, there would be a need for a conscious urban renewal scheme to upscale infrastructure in the estates for industrialists to move back to the country.

Makinde said irrespective of a master plan designed for an area and no matter how intelligently built, the economic situation would determine whether it would be successful or otherwise.

“ That is why master plans are being revised from five to ten years in accordance with the economic direction. The economic situation has changed so many things. A conscious policy by the federal, state and local governments will help to rejig the situation,” he said.

Corroborating his views, the Chairman, Lagos branch, Nigeria Institution of Town Planners (NITP), Bisi Adedire, regretted the abuse of the master plans for areas zoned for industrial purposes.

He, however, noted that complementary uses might be allowed in any master plan. According to him, many of the industries have moved out of that environment while some of them are no longer functional.

He stressed that when government wants to do a review of the master plans, some owners of the industries along the area complained that they are no longer interested in using the place for industrial purposes.

While some cleverly changed the use, others sold out for religious activities and they turned them to places of worship. Others cleverly said they wanted residential apartments for their staff, thereby out of the land that is supposed to be for industrial use, they now have residential houses inside the industrial complex.

“We now have a couple of legal changes but the government lacks the instrument for monitoring. Had it been there was adequate monitoring, it could not have reached this level.”

According to him, there is a model city plan for Ikeja, Lagos State embarked on the preparation of a model city plan for areas like Ikoyi, Victoria Island, Apapa, Badagry, Epe, Ikorodu and Agege. Those of Ikorodu and Epe are still being worked out.

“Recently, I saw a filings station close to Vita foam, without approval, a lot of things like that.

“As a branch, we are embarking upon a project called ‘Change the City Project’, we are seeking the support of the government so that we have various groups.

“ Each of these groups will identify some of the challenges in the areas of housing, transportation and waste management so that we come out with a policy.

“We are asking the government to allow private individual consultants by engaging professionals in the monitoring of activities in the state.
“With that, all these haphazard developments will stop in these areas. The government cannot do it alone, that is what we are trying to put across”, he added.

Another town planner, former NITP Lagos branch chairman and past president, Association of Town Planning Consultants of Nigeria (ATOPCON), Moses Ogunleye, explained that there is always proper designation in zoning land uses, as such no land use is expected to encroach on another, except the plan of the area has been reviewed or rezoned.

According to him, property developers are not allowed to build residential apartments in industrial areas. But he admitted that some industrial plots were being leased temporarily for places of worship, event centres and banking services.

MAN speaks
But the Chairman, Ikeja branch, Manufacturers Association of Nigeria (MAN), Otunba Francis Meshioye, said the reason for the displacement of industrial estates was not basically an encroachment by residential occupants but the fact that occupants vacated the zone to other areas because of the issues they had in terms of meeting up with their production and business demands.

He said pertinent issues, which the association had also been talking about overtime, include the overall poor business climate, the high-interest rate, monetary policy, poor electricity, bad road network and insecurity in the locations.

“The industrialists vacated the places because they were not good for their businesses and so they have to look for better areas and so you have a vacancy for people to buy their warehouses and so convert them to residential buildings. If you look at Dunlop, they left and anybody could occupy where it had been before. In Acme road, Ikeja, many companies there, left also. They either moved out or relocated from the country, ” he said.

“They are displaced because the places are vacant and when they see good money offered to them, they get swallowed up. If you have a factory and you are occupying one-third of it and somebody offers good money to relocate, owners may be tempted to oblige. Now industrial zones have become something else.

“It should really give concerns to the government that a place meant for an industrial estate is being displaced. I believed the government knows why they are being displaced and should map out solutions that will bring them back”, he said.

Meshioye said it’s not enough to have industrial revolution plans and others, but must be seen to work to bring economic prosperity.

He said, “The high exchange rate for dollar to naira in recent times is not good for business. Only those who have a strong backup could manage to survive. Businesses have been impacted adversely and those that could not take the shock moved out of business.”

He declares that the government should formulate policies that would support industrial growth because if the established industrial estates had been functioning well, the nation would have experienced a high employment rate.

“Lagos in general and Ikeja, in particular, are industrial hubs. If things have been working in full capacity, there would have been high statistics for employment, high production of products, low prices of goods, reduction in crime rate, peace, innovation and more investment because investors would be comfortable with the environment, more taxes to government from employees/companies and other positive effects”, he stated.

Going forward, Mr Meshioye charged the government to work hard on the existing industrial policy.

“Government is putting in place low interest, this could be fine if industrialists could access it easily. Access to special funds by manufacturers would be very helpful. More support and the provision of infrastructure like good road network, stable electricity is key. Water is needed for a gradual reversal of the displacement.”

The government must ensure that an industrial estate is used for nothing else but the purpose for which it has been planned and things that would sustain industrial parks must be put in place.

“We may not need to bother about new industrial zones if those in place are maintained. In Lagos, industrialists are moving now to Sango-Ota, Shagamu zone and basically Ogun State. Nestle and Nigerian Breweries have relocated there. For Nigeria, it is a good development but Lagos is losing out. The government needs to provide industrial parks for industrialists and not just Small and Medium Scale Enterprises. We need bigger parks for big companies.”

Lagos State government 
But the acting Head, Regional Master Plan, Lagos State Ministry of Physical Planning and Urban Development, Prince Ogunlewe Adebisi, said there were still industrial estates, stressing that residential estates could not come in industrial areas except where they shared boundaries.

He said: “We still retain Oregun, Ikeja and other industrial areas, but there are certain areas within Oregun dedicated for mixed-use. It is a new master plan. We took into consideration the existing development pattern, those sides we felt can be accommodated. In some cases, people bought residential areas and turned them to industrial use because they shared boundaries.

“But now that industrial development is not thriving again they want to revert. At times, it could have been a road that separated residential from industrial and some people because of the cost of land within the industrial area, they bought close to the industrial areas and use it for industrial purpose or lease, where there are warehouses or light industries.

“When activities are not thriving again, they want to revert and change the use. In the case of worship centres, there are other permissive uses within an industrial area. There are areas, where they allowed for a place of worship or institutional use. Personally, I will not like to see where an industrial area will be sold for a place of worship, because it is killing the economy.

“The government has not come up with a policy to forbid people from buying such property and when they want to buy they will not tell you that they want to use it for church and you give them the consent. Except you put the name of the church there that is when you will see the consent. But most institutional uses are permissible in an industrial estate.

“But the sale of an industrial area for church purposes should be discouraged because it is killing our employment opportunities. Because the number of employees a church could grant is lower than industries. We should wait for somebody else who wants to establish an industry to get. Right now, the government has no control over it, the land belongs to them, they got it from the government. There must be certain conditions too because there must be a distance.

“Most worship centres are industrial buildings or warehouses being converted legally because there is still no policy in place to check that. It is now a lucrative thing to build churches in industrial areas than residential areas because of the existence of infrastructures like roads and electricity”, he said.

Source: guardianng

LASG Warns Against Alteration of Estate Designs

The Lagos State Government has issued a warning to the residents of state-owned housing schemes to desist from modifying the approved designs of structures within such estates.

The Permanent Secretary, Ministry of Housing, Mr Wasiu Akewusola, gave the warning during a meeting with representatives of the Residents Association of Abraham Adesanya Estate at the state secretariat.

According to him, it is in the best interest of all residents of government-owned estates to stop alterations of structures and buildings in such estates.

Akewusola said such reconstruction included restyling, extension of and additions to existing facilities and in some extreme cases increase in levels of buildings.

He said that these alterations were deviations from the terms and conditions stated  in the deed of sub-lease signed by the two parties and warned that it could lead to a penalty as stated in the law.

“Government-owned estates are designed and built by the state government in compliance with global environmental and physical planning rules to ensure durability and liveability. Contravention of such standards often results in dire consequences such as reduced durability of the structure both for the homeowner and the other people in the environment,” he said.

Akewusola urged residents to desist from any form of redesigning of any building as this might cause damage to not only the house but the entire environment.

He stated that there was the need for the residents to maintain the original structural design to prevent future disaster.

“A building is a permanent load whose capacity of erection can only be known and accessed by certified engineers. This capability, which is environmentally determined, had already been quantified before the building was erected. Any plans to overload the capacity may result in disaster,” he said.

He also said all unapproved remodelling contravened the physical and urban planning law of the state government, adding that the affected buildings would be demolished by the appropriate agency of the state government.

“The demolition of illegal and unapproved structures in government-owned estates will commence very soon without any further warning,” he said.

Akewusola added that the state government was aware of some residents who had turned such estates’ setbacks into marketplaces and cautioned that it would no longer be business as usual as the state would ensure that sanity returned to such estates.

According to him, the state monitoring team has improved on its surveillance activities to ensure compliance with set environmental standards.

He said the state government had also concluded plans to upgrade the drainage system in the area to combat incessant flooding in the estate, adding that the government would continue to be responsive to the challenges confronting the people in the estates and the state in general.

Source: punchng

India’s Real state sector on growth trajectory: CREDAI-CBRE Report

India’s economic transition, workforce expansion and urbanisation will boost investment opportunities in real estate sector in the next decade, leading to significant growth in housing, office, retail and warehousing space, says a CREDAI and CBRE report.

In its joint report released at a real estate conference held here, property consultant CBRE said the sector would expand tremendously by 2030, led by new asset classes such as coworking, coliving, student housing and real estate invest .real estate investment trusts (REITs).

The report estimated that office space stock will touch one billion sq ft by 2030, with flexible workspace accounting for 8-10 per cent of the total stock.

The retail shopping centre stock is estimated to cross 120 million sq ft by 2030, while warehousing stock could touch 500 million sq ft by then.

By 2030, residential real estate has the potential to almost double from the current stock of 1.5 million units in key cities, the report said.

“As the Indian economy transitions and its workforce expands, it will offer vast development and investment opportunities for the real estate sector,” CREDAI-CBRE report said.

The growth of cities is going to further influence the country’s built environment, while technology, demographics and environmental issues will become the new value drivers, it added.

Commenting on the report, CREDAI President Satish Magar said, “India continues to remain a high-priority market for long term growth potential as is evident from the increased investment flows in the last few years.

“In the wake of positive policy reforms and emergence of a strong workforce, the momentum of India’s economic growth is steady and it will only grow stronger in the next 10 years,” said Anshuman Magazine, Chairman and CEO, India, South East Asia, Middle East and Africa, CBRE.

The factors which will further facilitate this growth trajectory are investment, improved governance, human capital upgrade, improved connectivity, infrastructure enhancement, strengthened institutions, policy reforms and integrated sustainability of the entire ecosystem, he added.

Source: economictimes

Harnessing Mortgage Industry Potential to Grow Economy

The mortgage industry in Nigeria has got a lot of potentials that close industry watchers say, if harnessed, could lead to the growth of the industry and the wider economy.

A lot still needs to be done for the mortgage industry in Nigeria to get out of the woods. Apparently, the industry is in perpetual growth challenge that has kept its contribution to the gross domestic product (GDP) at a very low level.

Many factors have been fingered for this slow growth, including the Land Use Act of 1978 which rests land ownership rights on the state governors, the right to easily foreclose on delinquent borrowers, ease of creating a legal mortgage and perfecting titles and the ease of falling back on one’s collateral to recover bad loan, etc.

The relative newness of the industry, lack of understanding of its dynamics and operational models by many Nigerians, and poor appreciation of the need and the ultimate benefits of keeping money in a mortgage bank are other militating factors.

Another major impediment to the growth of the sector is low investment in the industry. This accounts significantly for the low contribution of the industry to Nigeria’s gross domestic product (GDP). In advanced economies of the world, the mortgage industry makes significant contribution to economic development, but in Nigeria, this is not the case.

Mortgage finance as a percentage of Gross Domestic Product (GDP) is as low as 0.5 percent which is several steps behind other economies including Mexico, Malaysia and South Africa where mortgage contributions to GDP are as high as 10 percent, 25 percent and 29 percent respectively.

However, notwithstanding the industry’s low contribution to GDP coupled with the challenging business environment, the industry has all the potential to stimulate the economy when all the identified obstacles inhibiting its growth are removed.

An economy like Nigeria’s can benefit a lot from a flourishing mortgage industry as it will help in directing the economy in the desired direction. As part of efforts at growing the economy, government can make the necessary investment aimed to grow the industry. Enabling policies should also be put in place, leading to reduced high interest rate that can encourage more people to embrace mortgage loans.

Operators are of the view that on account of the identified obstacles, some primary mortgage banks (PMBs) are going through very difficult times, such they are not able to meet loan applications from home seekers.

The operators insist that until all those issues are resolved in a way that encourages the provider of capital, in this case, the mortgage bank, to give out loans, the sector will not grow as desired.

But they hope that when these obstacles are removed, the supplier of mortgage will allocate more funds towards the provision of home loans while home buyers will better appreciate the implication of prompt interest and capital repayments as well as ensure discipline on the part of the people.

Some finance experts argue that limiting a mortgage institution to a fixed capital base of, say N10 billion, is wrong because that amount is too meager; even N100 billion is also meager given the kind of projects they finance.

For this reason, the Federal Government needs to come in, look at what is happening in other civilised world and copy because, these days, “copying is no longer an act of deception but actually something that is done even in the civilised world,” says Okika Ekwem, a US-based realtor.

Ekwem says that in the advanced economies like US and UK, there is a secondary market for real estate financing where commercial banks or individual brokerage banks lend money to people and thereafter sell the securitised certificate to the secondary market and come back again to lend to individuals.

Mortgage industry growth that can impact the economy, according to Meckson Innocent Okoro, is possible if the Federal Mortgage Bank of Nigeria (FMBN) plays the role of a regulator while the federal government, through the CBN, should empower the PMBs.

To have a viable mortgage industry that can have significant impact on the economy, more PMBs have to be licensed such that there could be as many as 40 in each of the big cities, while each of the smaller cities could get as many as 10.

This is to discourage the concentration of these banks in urban centres and when this is done, access to housing finance will be increased. The PMBs must be positioned to champion the whole issue of affordable or social housing for the low income earners in the country.

Mortgage finance as it is today, is not particularly established as a structure and as it exists in developed economies. The culture of mortgage finance is just gradually catching on with Nigerians and mortgage is financed the same way as every other commercial financing.

It is curious that after the recapitalisation and consolidation of the PMBs, Nigerians are yet to feel the impact in the economy. As at today, the interest rate as it is cannot mobilise the industry and the situation is such that even at 10 percent, the level of income in the country cannot still support mortgage growth.

There was a time in this country when the economy and the financial system were highly regulated, there was different interest rates structure for different sectors of the economy and within that period, lending to the housing sector was as low as seven to eight percent which underscored the importance attached to the sector and the government needs to look into this.

Source: businessdayng

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