Property & Real Estate | |
Property & Real Estate | |
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Sunday, May 02, 2020 12:40PM / Bukola Akinyele for WebTV /
Header Image Credit: The Guardian Nigeria
The Founder and Chief Executive Officer of Eximia Realty Co
Ltd, Mr. Hakeem Ogunniran has
identified liquidity, titling and the adoption of technology as three key areas
that can transform Nigeria's real estate sector. He said this as a guest on a
WebTV Economy and Politics programme.
According
to Oguniran, there is need for innovation, a review of the national
housing policy, while embracing newer technology, as real estate investors
unlock opportunities and begin to address the challenge of a domestic housing
deficit.
Discussing
the $3.4billion funds approved by the International Monetary Fund (IMF) as an
intervention support for the problems associated with COVID-19, Oguniran
said the approved fund was a welcome gesture as the country needed all
the outside support it could get. He stated that, COVID-19 has been both
instructive and destructive, it has exposed the weak underbelly of the economy.
According
to Oguniran, Nigeria is now in a fragile state as Crude Oil prices have fallen
to their lowest levels in the past two decades. He observed that Nigeria
equally failed to invest wisely in infrastructure and currently suffers from a
massive infrastructure gap necessitating the Central Bank of Nigeria (CBN) to
create a purpose-specific vehicle, INFRACO Plc, to address the problem with a
proposed N1.5trillion.
Reviewing
the real estate sector, he noted that the real estate market has had trouble
since 2016 when it experienced negative growth of -6.8%,
negative growth of -4.7% in 2017, negative growth of -4.2% in 2018 ,
and a slight recovery of -2.3% in 2019.
The property
expert observed that in 2020 the real estate market started on a very
optimistic note but the COVID-19 pandemic has obviously upturned previous
expectations.
Speaking
on the challenges facing the sector amidst COVID-19, he highlighted unfavourable
macroeconomic factors such as crash of returns on fixed income assets (treasury
bills and bonds), and a fall in returns on other alternative asset classes
including foreign exchange. He was of the view that the pandemic was unique in
the sense that people have stayed more focused on survival, staying afloat,
feeding, basic needs rather than asset purchases such as houses.
Speaking
on the opportunities amidst the pandemic, the Oguniran believed Nigeria needed
strong macroeconomic fundamentals, in the sense that when the economy is strong
real estate will thrive.
He
explained that healthcare tourism was a strong segment of the real estate market,
noting that before the coronavirus pandemic part of the challenge of the sector
was the sourcing of patient long-term funding. He said, there was a need to
create a long-term funding platform in the sector noting that the Finance Act
2020 has through provisions relating to real estate investment trusts helped in
promoting longer-term funding options.
Oguniran
believed it was time to look at alternative asset classes beyond the
traditional commercial retail residential assets that involve in logistic which
will call for solutions that come from deliberate strategic approach.
The real estate
expert spoke on mortgages market in Nigeria and issues of mass housing, according
to him, mortgage penetration is very low in Nigeria currently the country has
only 20,000 mortgages in Nigeria, the ratio of mortgage finance to GDP in
Nigeria is 0.6% , Ghana 2%, South Africa 30% , the United Kingdom (UK) 60%, and
the United State of America (U.S) 70%. He pointed out that Nigeria is still far
below a desirable ratio, and the first approach to solving the problem is to
review the structure of the economy and see how it can be aligned to generating
patient finance to fund the mortgage sector.
Looking
at the housing deficit in the country he said, the Home Ownership Rate in the
country was less than 25%, in Romania 96.4%, and in Singapore mass housing
is 90.8%. he believed there is a need to commoditised housing, to industrialize
the process of housing delivery.
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