Ex­perts ad­vo­cate bet­ter REIT regime to un­lock hous­ing fi­nance

Daily Trust - - PROPERTY - By Sun­day Michael Ogwu, Lagos

The Man­ag­ing Di­rec­tor of the Fed­eral Mort­gage Bank of Nige­ria (FMBN), Mr. Gimba Ya’u Kumo has been quoted sev­er­ally to have put the cost of bridg­ing the coun­try’s hous­ing deficit at an es­ti­mated N56 tril­lion based on a con­ser­va­tive cost of con­struc­tion at N3.5mil­lion per unit, a fig­ure that is not far from the World Bank’s es­ti­mated N59.5 tril­lion.

The fig­ures no doubt un­der­score the vast and un­tapped in­vest­ment po­ten­tial of the coun­try’s real es­tate sec­tor with a 17 mil­lion hous­ing deficit as at 2013.

Given the huge cap­i­tal that is re­quired for di­rect real es­tate in­vest­ment, most in­vestors are un­able to achieve a real es­tate port­fo­lio that is di­ver­si­fied across real es­tate types, such as com­mer­cial real es­tate, res­i­den­tial real es­tate among oth­ers and it has also be­come over­whelm­ing for the Na­tional Hous­ing Fund (NHF) with such colos­sal amount.

Ex­perts in re­cent time have unan­i­mously stressed that it has be­come very per­ti­nent to ex­plore off­shore fund­ing pos­si­bil­i­ties to boost fi­nanc­ing for mass hous­ing which the na­tion ur­gently needs.

This re­flec­tion came un­der se­ri­ous con­sid­er­a­tion at the re­cently con­cluded Real Es­tate Unite 2015, an an­nual flag­ship sum­mit where global real es­tate lead­ers dis­cuss per­ti­nent op­por­tu­ni­ties and is­sues in Africa’s real es­tate mar­ket.

Speak­ing on cap­i­tal and de­mog­ra­phy, Nnema Byrd, CFA, a Prin­ci­pal, West Africa Spe­cial­ist STAN­LIB, in struc­tur­ing in­vest­ments in real es­tate prop­erty, con­duct­ing due dili­gence and cap­i­tal rais­ing em­pha­sized that in spite of the shocks that the Nige­rian mar­ket is fac­ing, long term trend re­mains strong, Africa col­lec­tive GDP is sup­posed to con­tinue

at grow­ing.

She said avail­able fig­ures show that pop­u­la­tion growth by the end of the cen­tury will wit­ness growth es­pe­cially be­tween 18 to 64 years of age, an im­por­tant group that drives em­ploy­ment and pro­duc­tiv­ity.

The Nige­rian pop­u­la­tion is ex­pected to grow at com­pound an­nual rate of 2.4 per­cent per year which com­pares to the an­nual growth rate of the world at about 0.9 per­cent. Nige­rian prime age pop­u­la­tion is ex­pected to ex­ceed the to­tal de­pended pop­u­la­tion through the end of the cen­tury.

“We an­tic­i­pate by 2050, Nige­ria will have a to­tal pop­u­la­tion of 413 mil­lion peo­ple. The work­ing age de­mo­graphic is sup­posed to be the fastest in the world at 3 per­cent through 2050,” she said.

Nnema said, “Th­ese peo­ple will need a place to live, shop, work and be en­ter­tained, are we pre­pared for that?” she asked rhetor­i­cally.

The ex­pert ad­vo­cated the need to take a crit­i­cal look at Real Es­tate In­vest­ment Trusts (REIT) as vi­able and de­pend­able source of un­lock­ing fi­nance to the hous­ing sec­tor if we must close the gap that is ex­pected to quadru­ple with the pro­jected pop­u­la­tion fig­ures.

The need to give all in­vestors in Nige­ria the op­por­tu­nity to in­vest in largescale, di­ver­si­fied port­fo­lios of in­come-pro­duc­ing real es­tate in the same way they typ­i­cally in­vest in other as­set classes through the pur­chase and sale of liq­uid se­cu­ri­ties gave birth to REIT in Nige­ria with Skye

Newspapers in English

Newspapers from Nigeria

© PressReader. All rights reserved.