The Association of Housing Corporations of Nigeria (AHCN) is aligning efforts with financial institutions in search of viable options for funding housing development, against the backdrop of shortage of funds and lack of mortgage finance for housing schemes in the country.
Members of the association met recently with corporate investors, developers and mortgage institutions seeking ways to leverage funding through Real Estate Investment Trusts (REIT) scheme.
REITs are entities that invest in different kinds of real estate or real estate related assets and mortgages secured by real estate. There are basically three types of REITs.
Equity REITs, the most common type, invest in or own real estate and make money for investors from the rents they collect; Mortgage REITs lend money to owners and developers or invest in financial instruments secured by mortgages on real estate; and Hybrid REITs are a combination of equity and mortgage REITs.
In his opening statement at the stakeholders meeting, President, AHCN , Dr. Ifejinna Chukwujekwu, noted: â€œThere is gold to be exploited by investing in mass property development in Nigeria. It is time we begin to shift focus away from personal thrifts and banks credits with all the plethora of neck breaking conditionality and red_tapism. I already see us raking in hundreds of trillions of naira in couple of years for housing finance and public revenues in this hitherto untapped goldmine.â€
â€œAccess to finance for housing production and home acquisition is becoming seemingly difficult. Most hit by this inadequate housing finance is the mortgage market, which provides for home ownership.â€
According Chukwujekwu, the major challenges to housing in Nigeria are basically the lack of a holistic approach to housing problems, lack of finance, high cost of building materials and high infrastructure development cost.
There are currently only two REIT schemes that have been issued in Nigeria, with Skye Shelter Equity Fund already listed on the Nigerian Stock Exchange (NSE), while Union Homes Hybrid REIT that was offered for subscription in 2008 is set to be listed anytime soon.
According to the Managing Director, Union Homes Savings and Loans Plc, Mr. Olatubosun Thomas, the Security and Exchanges Commission (SEC) has already approved the allotment of the REIT to investors.
Thomas declared that the scheme would accelerate housing delivery and open up opportunities for new homes offices, estates and condominiums, and also return good profits to build up value for all investors, emphasizing that REIT remain a veritable source of cheap long_term funds to facilitate higher turnover in housing finance and by extension, create higher profitability for discerning investor.
In the same vein, Lagos State Governor, Mr. Babatunde Fashola, conceded that inadequate finance coupled with prohibitive costs of building materials remain the bane of housing provision in the country.
â€œWe need alternative options for investment, especially in mass housing delivery. If REITs could be used to solve housing challenges in the developed nations, ours should not be an exception and it is worth exploring,â€ stated Fashola, who was represented at the occasion by Commissioner for Housing, Mr. Dele Onabokun.