Nigeria’s housing and real estate sector has experienced remarkable growth and development in recent years. However, despite these notable achievements, which have been fueled by factors, such as population growth, urbanization, and rising demand for housing, the sector still struggles with challenges that must be addressed for sustainable growth and improved investor confidence.
On this note, experts in the sector have reiterated the importance of providing an enabling environment for operatives in order to advance the housing and real estate industry, expressing worries that the absence of the enablers for growth has worsened the housing deficit, which is now over 22 million with the country’s population exceeding 220 million and projected to reach 400 million by 2050.
The call was made during the third edition of the Pan-Africa Real Estate Summit, themed “Building a Better Africa: Real Estate Investment Opportunities in Africa,” which held concurrently in Lagos and Abuja. The keynote speaker at the summit, Mr. Tunde Obileye, said that the government should make the industry more viable by removing obstacles to its growth and restoring its past glory. He observed that in the past, real estate investment used to be safe and profitable, but that currently, all that has changed.
In his own words, “investing in real estate has become too risky as the value of the naira keeps dropping and because of challenges like poor workmanship, weak policies, and zero regulations, as well as poor income. Policy somersault is another issue affecting this sector that needs to be addressed once and for all.”
Another expert, a Partner and a Member of Bloomgate Solicitors, Sesi Hundeyin, lamented that land-grabbing is still a major problem that operatives have to deal with, adding that the development is preventing people from investing in the sector. He urged the government and security forces to protect landowners and real estate investors.
Also, a Senior Associate at Aluko & Oyebode firm, Osinachi Nwandem, who spoke on “Contracting Strategies for Investors and Protection for Developers” at the summit, stated that investor confidence must be secured above all things, advising developers to think about the long-term in order to stay afloat and include Price Adjustment Clauses (PAC) in any agreement with clients and investors.
Nwandem also urged them to comply with all the laws and regulations, use only qualified workers and good materials, as well as uphold integrity and be fair in all their dealings.
This comes just as the Ministry of Housing and Urban Development has revealed plans to introduce an initiative that is aimed at revolutionizing inclusivity and affordability in Nigeria through the introduction of cross-subsidies in housing projects.
According to a statement signed by the Special Adviser on Media to the Minister of Housing and Urban Development, Mark Chieshe, the visionary strategy, which is championed by the Honorable Minister, Ahmed Dangiwa, promises to redefine housing accessibility by integrating a mix of low, medium, and high-end housing projects, ensuring inclusivity for Nigerians of all income brackets.
The Minister unveiled the innovative approach while reviewing affordable housing options presented by the Ministry’s Affordable Housing Building Design Committee. He had established the Committee during his first week in office to review designs of the Ministry’s projects and ensure that houses that the Ministry promotes fall within price ranges that both low and medium income earners can afford.
The revised designs feature several cost-saving changes, including organic one-bedroom bungalows to lower the cost of purchase, while allowing beneficiaries the latitude to expand to two and three-bedrooms as their income increases. Other features include optimized space management, smart roofing techniques, and basic internal finishing.
In his remarks, Dangiwa commended the Design Team for their creativity. He also emphasized the need to embrace innovative concepts like cross-subsidies in order to counter the challenges posed by inflation and the soaring costs of building materials, which have led to an increase in planned house prices.
“I am impressed with the work that the affordable housing design Team has accomplished thus far in reducing the cost of houses that we plan to promote so that all Nigerians can benefit” said the Minister.
He further stressed that “while there is progress, the increasing cost of building materials has almost taken off all the savings from the revised designs.
“For us to achieve our goals, we have to think out of the box and embrace creative solutions. This is why we plan to work out a comprehensive framework for introducing cross-subsidies in projects delivered through Public Private Partnerships (PPP) and the agencies under the Ministry.”
Dangiwa also explained that cross-subsidies were important policy tools used by governments and urban planners to address housing affordability issues and promote inclusive urban development. He added that the approach involved redistributing the costs and benefits of housing development across different income groups.