Experts in the nation’s real estate sector have described lack of good infrastructure as the reason for the slow pace of real estate growth in the country.

They spoke at the national conference and yearly general meeting of the Nigerian Institute of Quantity and Surveyors (NIQS) entitled: “Infrastructure cost management: contemporary issues and emerging trends” in Lagos.

Speaking at the forum, the Associate Partner, Consol Associates, Akintunde Munis, said lack of good infrastructure has been slowing down the growth of the country’s construction industry.

Munis stressed the need for good maintenance of existing infrastructure, adding that infrastructure cost management, facilitates Infrastructure effectiveness.

He said: “Why is Africa lagging behind other countries in terms of economic growth and poverty alleviation? There are many reasons and answers to these questions. However, one of the reasons, which is important, is that they have very good physical infrastructure. No nation develops without investing in infrastructure and indeed, this is why in the aftermath of the Second World War, the Western countries massively invested in infrastructure. It is also the reason Japan and South Korea and later China undertook a drastic improvement in their infrastructure.

By and large, be it contemporary or emerging infrastructure trends, their cost management requires techniques and skills. Therefore, as construction cost professionals, we must position ourselves for this mega business opening.”

Speaking on International Construction Measurement Standards, Framework and Implementation Strategy, the Managing Partner, Projects Associates, Mr. Adebowale Oyinleye, noted that consistent practice in presenting construction costs globally will bring significant benefits to construction cost management.

Delivery of affordable housing suffered setbacks, say experts

Notwithstanding the poor performance of the economy in the outgoing year, the real estate industry has show resilience amid high inflationary trend, flooding and other unfriendly policies that almost crippled investment.

The Guardian gathered that the recorded gains could be attributed to ability of the industry to withstand socio-economic shocks, being private sector led and carefulness by operatives in financial transaction management.

A more worrisome development within the year was the high rate of insecurity and low value of the naira, which forced many investors to become risk averse as developers reviewed prices while others suspended construction.

Nigeria’s inflation rate surged to 21.47 per cent in November 2022, up from 20.47 per cent recorded in the previous month. This affected the costs of building materials such as reinforcement, sand, roofing sheet, tiles, cement and granite, whose prices rose by over 80 per cent.

Over 60 per cent of the total cost of housing construction is spent on materials, which are mostly imported, while the remaining 40 per cent is spent on labour. Many estate managers and developers did not enjoy the best of times in the sector as they experienced slowed transactions due to other issues like cost of acquiring land/title, scarcity of skilled labour, fluctuating foreign exchange, logistics problems, and supply bottlenecks that affected projections.

These impacted the price of rentals in major cities like Lagos, Abuja, Ogun, Ibadan, Port Harcourt and Kano, with homeowners and property managers increasing rent by 80 per cent in almost all locations across the country. The average price of one-bedroom flats for rent in a highbrow location in Lagos rose to about N900, 000 yearly. Rentals for three bedrooms start from N1.9 million to over N4 million.

The National Housing Programme (NHP) of the Federal Government although on course, could not make much impact in bridging existing housing deficit due to paucity of funds and outstanding liabilities of about N191.75 billion as revealed by the government.

Despite the challenges, the nation’s construction and real estate sectors contributed N20 trillion to the Gross Domestic Product (GDP) as attested to in a recent report by the National Bureau of Statistics (NBS). The report showed that the construction and real estate sectors contributed the amount in the first three quarters of 2022 while construction services earned N12.9tr, real estate contributed N7tr to the GDP.

It further indicated that construction contributed 9.5 per cent to nominal GDP in the third quarter of 2022. This was higher than the 9.26 per cent it contributed a year earlier and higher than the 7.95 per cent contributed in the second quarter of 2022.

The industry also grew by 18.92 per cent year-on-year in the third quarter of 2022. On a Quarter-on-Quarter basis, the sector growth rate was placed at 16.38 per cent. The contribution to nominal GDP in Q3, 2022 stood at 4.96 per cent, relative to 5.27 per cent recorded in the third quarter of 2021 and higher than the 4.95 per cent reported in the second quarter of 2022.

Industry experts say the scorecard for the industry is, however, relative. They noted that the recorded gains could be attributed to ability of real estate to withstand socio-economic shocks witnessed within the year.

The Executive Director, Housing Development Advocacy Network, Mr. Festus Adebayo, said the sector performed well in the year, adding that the major challenge to housing in the year was the impact of flooding that rendered many Nigerians homeless and triggered international sympathy.

He affirmed that in the first quarter of the year, the sector performed better than the last quarter of 2021 while in the second quarter, the contribution also increased, stressing that the last report from the National Bureau of Statistics, affirmed that the performance of the sector has increased despite the inflation pressures, which led to high cost of building materials. However, Adebayo said what has suffered in the sector, is the delivery of affordable housing.

“This has become an issue that is difficult for private developers to build low cost or social housing without the intervention of government. Inflation has brought the sector to the reality that it is only the government that can build social housing. The residential market, from the middle to high income has done very well. In the commercial segment, those who cannot build their own houses are looking for where to do businesses, “ he said.

Although, Adebayo said the performance of the sector has not been satisfactory, he revealed that in other countries the contribution of housing sector/mortgage sector is more than what is witnessed in Nigeria. He explained that interest rate is a big barrier to the growth of housing industry in Nigeria.

“ Presently, the housing sector has not contributed up to 10 per cent to the Gross Domestic Product. It is still a little above five points. I will be satisfied when the Nigerian housing/construction and mortgage sectors are able to contribute more. The contribution of the sector in Ghana is still higher than that of Nigeria but l can tell you that we are improving.”

“ You don’t have double digit interest rate and expect that the industry will not face some challenges. More efforts must be made by state governors to give access to land. It becomes cumbersome for investors to invest in the sector when access to land and title perfection is difficult. To get building approvals, some state governors have turned it into a source of generating revenue. Government must have strong political will to address these issues because with housing the economy of Nigeria can be turned around.”

On National Housing Programme, he tasked the Federal Ministry of Works and Housing to lead by example, noting that the Ministry is still building for people who already have houses whereas their focus should be to build for Nigerians who cannot afford homes.

He said: “ If the National Housing Programme (NHP) two-bedroom flat is sold to the public at N7. 5 million, who are they building for? I think the National Housing Programme should target those who are at the low and middle echelon of the society. Who among civil servants can afford the N7.5m in Taraba, Sokoto, Kano and Ekiti States? The same NHP got lands free of charge, we need to know what the Federal Government paid on the land. The same national housing programme has budgetary allocation yet they said there is no money to complete the project. What have they done with the money received that benefited Nigerians.”

He emphasised that if there is any reason the Federal Government should get involved in direct construction of housing, it should be for social housing.

“ The business of the Federal Ministry of Works and Housing should be creating enabling environment, policies and programmes that will make private sector invest in housing. Building houses is like competing with private developers,” he added.

The former Chairman, Faculty of Estate Agency and Marketing, Nigerian Institution of Estate Surveyors and Valuers (NIESV), Mr. Sam Eboigbe, said the performance of the sector regarding whether it showed resilience in the outgoing year is relative and depends on the angle of perception.

He said: “There are some areas enjoying wonderful turnover from investment while others are actually regretting. In the hinterland parts of Lagos like Surulere and Yaba areas, as an investor, you are smiling because whatever project you have, you cannot have sales voids because people are always looking for houses in those areas.”

“But there are some areas now on the Island where you put housing units in the market, they are there for long until you have to effect a reduction in prices, you won’t be able to make headway.

“In Banana lsland, it is unthinkable that we should be talking about over N1 million per square metres for land. Who would have imagined three or four years ago that land value in Banana lsland, Lagos, will be that high. If you have land in Banana lsland, people want to buy it. So, as an investor in that location it means you will be smiling while others are complaining.”

On office market, Eboigbe said since the outbreak of COVID-19 Pandemic, where the culture of remote work has been embraced by many people, some have given up on letting office spaces. This, he said, still creates some void in that market.

“Some people have realised the need to collapse offices to ensure that they don’t pay so much money. And so everybody tries to minimise exposure financially,” Eboigbe added.

The President, Real Estate Developers Association of Nigeria (REDAN), Dr. Aliyu Wamakko, confirmed that the sector performed well despite the economic meltdown from 2020, adding that the sector contributed about 6.4 per cent to the GDP.

He said operatives look forward to the government to stop unfriendly policies in housing construction, create enabling environment for the private sector and better opportunities to thrive.

Wamakko said policies of the next government should be different because in housing construction, there are no incubation periods rather it is an upfront generation of employment for the country.

According to him, the sector can help to rejuvenate the Nigerian economy and make it vibrant by constructing houses, emphasizing that in each houses built, 25 jobs can be created. He further want the Federal Government to redirect budgetary fund for housing construction into real estate private sector at single digit interest so that the developers can pay interests, taxes, build houses and create employment.

“I believed the sector is doing fine. The only challenge we are having is the issue of money laundering into the real estate, which is a big problem. We are working with the Independent Corrupt Practices and Other Related Offences Commission (ICPC), and Special Control Unit Against Money Laundering (SCUML), an arm of Economic and Financial Crimes Commission (EFCC), to eliminate that and get a better real estate sector in Nigeria. Mostly, the real estate is private sector driven and operatives are more careful in the aspect of financial transactions than what is obtainable in government circle. The decorum in the industry contributed to its success,” he said.

The immediate past Managing Director of Family Homes Funds Limited, Mr. Femi Adewole, has reinforced the need for improved funding of mass housing projects in the country to increase stock with 300,000 homes by 2025.

He noted that if funds were adequately provided, Nigeria would be able to bridge the existing housing gap and adequately shelter the citizens.

Adewole spoke at the second edition of the yearly memorial lecture organised by the Nigerian Institute of Building (NIOB) in honour of late Otunba Fatai lsola Osikoya, a past president of the lnstitute in Lagos.

Late Osikoya was reputed for commitment to professionalism in building and housing development in Nigeria as the first President of NIOB and first Chairman, Council of Registered Builders of Nigeria.

Speaking on the theme: “Agenda for Housing Development in Nigeria: 2023 in Perspective”, Adewole lamented the incessant building collapses in the country in recent times. He tasked operators in the building industry to engage the services of certified professionals to reverse the ugly trend.

He emphasised that Nigeria’s building policy for the coming administration and years ahead should be such that it will increase social housing stock and manage some of the crises that have kept the people’s social standard low.

The President of NIOB, Prof. Yohana Izam, said the topic was chosen to brainstorm with stakeholders on delivering sustainable shelter that addresses the housing needs of the nation through global best practice in the New Year.

Izam who is also the Vice Chancellor of Plateau State University, Jos, said it is imperative to maintain a high standard of competence in housing delivery in Nigeria.

He said: “The Institute notes with concerns the paucity of debates on the very important issue of housing, which impacts greatly on the prosperity of all other sectors of the economy.

On her part, the Special Adviser to the Lagos State Governor, on Works and Infrastructure, Mrs. Aramide Adeyoye, said that the state actors were looking at the professional builders to reform the system, as well as give Nigerians better housing.

The Vice Chairman, Nigerian Instituton of Estate Surveyors and Valuers, Mr. Olugbenga Ismail, emphasized the need to deploy use of local building materials instead of reliance on importation of inputs to drive down cost of construction.

A faith-based coalition’s yearly report on the economic impact of climate-driven natural disasters has revealed that each of the costliest extreme weather events of 2022 caused over $3 billion in damages.

Entitled Counting the Cost 2022: A Year of Climate Breakdown—was published by Christian Aid, a London-based relief agency of over 40 U.K. and Irish churches. It stated that most of the estimates are based only on insured losses, adding that the true financial costs are likely to be higher, while the human costs are often uncounted.

One of such events highlighted was the extreme weather, which caused severe human suffering from food insecurity, drought, mass displacements and loss of life. A devastating drought affected over 36 million people in East Africa; pushing many to the brink of famine. While people in East Africa have been suffering from drought, in West Africa 1.3 million people were displaced by floods, which killed over 600 people in Nigeria, Cameroon, Mali and Niger.

The report indicated that the Hurricane Ian, which struck the United States and Cuba in September, cost about $100 billion and displacing 40,000 people. The drought in Europe cost $20 billion while floods in Pakistan killed more than 1,700 people, displaced a further seven million.

According to the report, which focused on financial costs, the losses were higher in richer countries because they have higher property values and can afford insurance, some of the most devastating extreme weather events in 2022 hit poorer nations, which have contributed little to causing the climate crisis and have the fewest buffers with which to withstand shocks.

In the report, a second list of 10 climate disasters highlights some of these other climate events of 2022, which don’t make the list of insured losses but were just as damaging to communities or posed worrying future threats such as the Arctic and Antarctic heatwaves.

Christian Aid said these extreme events highlight the need for more urgent climate action, stressing that they also underline the importance of the Loss and Damage Fund recently agreed at COP27 to provide financial support to people in developing countries who have suffered huge losses due to a climate crisis they have not caused.

The report said: “Some of the disasters in 2022 hit rapidly, like February’s Storm Eunice, which set a new UK wind speed record of 122mph and Hurricane Fiona, which struck the Caribbean and Canada in September and caused losses valued at more than $3 billion in just a few days. Other events took months to unfold, like the droughts in Brazil and China, which lasted all year and cost $4 billion and $8.4 billion respectively. No corner of the globe was spared from the costliest climate impacts in 2022 with all six populated continents represented in the top 10.

These impacts were also felt by some of the biggest fossil fuel polluters. Hurricane Ian in the USA, Hurricane Fiona in Canada, and floods in Eastern Australia in February costing $7.5 billion all struck countries with some of the biggest per person carbon emissions. Elsewhere, floods in South Africa, and droughts and floods in China hit two of the world’s biggest coal producers.”

Speaking on the study, the Chief Executive Officer, Christian Aid, Patrick Watt, said: “Having 10 separate climate disasters in the last year that each cost more than $3 billion points to the financial cost of inaction on the climate crisis. But behind the dollar figures lie millions of stories of human loss and suffering. Without major cuts in greenhouse gas emissions, this human and financial toll will only increase.

“The human cost of climate change is seen in the homes washed away by floods, loved ones killed by storms and livelihoods destroyed by drought. This year was a devastating one if you happened to live on the front line of the climate crisis. Some of these catastrophes hit with blinding speed, others unfolded such as the terrible drought in East Africa over many months.”