Changing the face of Nigeria’s real estate market…Dubai style
Despite Nigeria’s giant economic status within Africa, housing remains a major problem. The World Bank says Africa’s largest economy would require a minimum of 700,000 housing units annually to meet its housing deficit.
In recent years, private investors have significant ramped up development, particularly in the countries more developed cities like Abuja, Lagos and Port Harcourt, but this hasn’t served to wipe off significant the high number of Nigerians who don’t own a home. A recent study confirmed that over 70% of Nigerians, particularly residents of Lagos, continue to live in rented properties. Affordability remains the biggest problem as many people, despite having decent jobs and a fair income, cannot afford the high-interest mortgages offered by Banks.
Adeyinka Adesope, an Executive Director of high-end property development firm Grenadines Homes and the Managing Director of Palton Morgan Holdings Company, believes Nigeria can overturn its real estate fortunes for the better. In an interview which he sheds light on the Atlantic Resort, a $100 million iconic property designed to have a similar iconic effect that the Burj Khalifa has on Dubai. Some have even termed the development with the phrase “A touch of Dubai in Lagos”. Mr Adesope digs into the discussion surrounding Nigeria’s housing deficit, solving the affordability problem and developing a luxury property in a growing economy like Nigeria’s.
QUE: Nigeria is said to require 700,000 housing units annually to meet its housing deficit according to the World Bank. How visible is this?
ANS: It is quite visible but would require a lot from the private sector and the public sector. For us to be able to bridge the gap, it’s going to require a lot of synergy, a lot of partnership. Government will have to play a major role, one which does not involve direct construction of houses but by creating enabling environment, providing incentives and good policies, policies that will attract investors, both locally and internationally.
What kind of policies would you like to see the government focus on?
Let’s look at property protection rights for example. Government will have to improve on this because this is going to trigger a lot of activities if addressed in the mortgage sector. When we look at the whole of Africa, amongst about twenty six countries, Nigeria ranks second from the bottom in terms of Protection of rights On property. These are things government can look at; how many days it takes to register a title, giving tax incentives to developers. Like I stated earlier, the government will have to look away from directly providing housing for the people because the population is growing astronomically.
The Grenadines Homes is embarking on an iconic destination in the Atlantic Resort in Lagos. However, this is geared towards the luxurious market than the middle class or lower class, in terms of addressing the deficit immediately in itself. How do you think this project will be of help?
The deficit exists across all the market segments. It will not be fair to think that deficit affects only the bottom of the pyramid. The deficits actually exist among all market segments; the top, the middle and the lower class. But how can Atlantic Resort resolve this? We have 165 residential apartments in the first phrase that we are bringing to the market, with exceptional quality and a memorable experience for those that will inhabit it. But more importantly it is in the economic benefits that this project brings in that gives us greater joy; the thousands of jobs the Atlantic Resort will create, the foreign income it will pull in from tourists, the indirect jobs that will be on offer during and after construction. It is an entire value chain that is positioned not just to provide Nigerians with an iconic monument but with the greater financial muscle to afford homes.
Experts say the greatest problem facing the Nigerian real estate sector is affordability. Do you agree with this?
When we look at the housing deficit we have in Nigeria a larger percentage of these deficits lie at the bottom of the pyramid and it is not because there is no land, it is not because we cannot source for building materials but basically affordability. Everybody wants to leave in close proximity to where they work, and this results in a lot of pressure on the existing serviced plots, serviced apartments and built up areas, which is turn raises prices and makes housing less affordable. More tellingly, people don’t have finance to buy houses. Even if you can afford to get financing based on your job or your status in the society, you’re probably paying 20% interest which will triple the cost of the house at the end of the day. This I believe is where government comes in. Now the government has come up with Nigerian Refinancing Mortgage Company (NMRC), which should support financial institutions in ensuring mortgages are offered to people at single digit interest rate. In addition, the government should commit itself to providing infrastructure, particularly in the transportation sector to ease commuting. This would ensure people begin to move outside the major cities, creating new cities in the process and easing the pressure on prices of properties. What you get then is affordability.
In recent years, there have been offshoots of mega projects like the Eko Atlantic Mega City with similar underpinnings to what we see with the Atlantic Resort. How has the Atlantic Resort been differentiated?
From the beginning, The Atlantic Resort was a well thought out project. The Eko Atlantic is a new city; It’s very different from what we are doing. They are selling land to developers, so that’s a very different project. It’s a huge project which will put Nigeria on the world’s map. But what we are doing with the Atlantic Resort is directly responding to need of people within this vicinity. Atlantic Resort is about the only mixed used development that can give you the opportunity to live, work and play. Why we say live, work and play is because we have residences, we have a mixed use tower where you can have your office, we also made provision for the retail where you can have a few shops and you can go there and shop. In the next phase we’re going to have a hotel as the location is very ideal for that due to its proximity to the Atlantic Ocean an artificial lake and the layout is going to be Beautiful. So within the whole craziness of Lagos, where there’s a lot of traffic and time wasting, you have an opportunity to be in one location and do everything you need to do, in one ideal beautiful serene location. It is very different from everything else I have seen happening within Lagos. That is why Atlantic Resort is not just a real estate development; it is an inspiration to this nation, an icon, a symbol of excellence to Africa.
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