Property developers, under the aegis of Real Estate Developers Association of Nigeria (REDAN) have identified lack of reliable market data in the country as a major hurdle in attracting offshore financing for real estate development in the country, which now requires local bank guarantee.
The developers therefore called on government to help create an enabling environment for their members to access offshore funding, while also canvassing for the recapitalisation of Primary Mortgage Institutions (PMIs) to make them veritable channels of mortgages for more beneficiaries.
Vice Chairman of the Real Estate Developers Association of Nigeria (REDAN), South West Zone, Mr. Akintoye Adeoye, speaking recently, in Lagos, lamented the non_existence of virile mortgage system in the country, saying it had made access to affordable houses difficult for the low_income group in the society. He said REDAN members have been developing houses with loans without ready occupants because of the dearth of a virile mortgage system in the country, arguing that if such money is recouped on time, with returns, such can be ploughed back into the real sector, thereby bridging the demand gap.
Adeoye asserted that the dearth of relevant data has made access to housing finance very difficult, noting that where the fund is available in the short_term, the high interest rates being charged by banks coupled with bureaucratic bottlenecks and demand for unimaginable collaterals have made access to loan burdensome.
â€œFor offshore finance, we need bank guarantee, and getting bank guarantee in Nigeria is very difficult now. For $100,000 worth of loan, the bank will ask you to bring investmentÂ Â worth $150,000 as collateral. If you have investment worth that, what do you need the loan for in the first place?,â€ he queried.
He said that the formation of the Real Estate Investment Trust (REIT) scheme through the Capital Market would go a long way in developing a sustainable source of cheap funds for mass housing development in Nigeria, adding that the scheme will enable developers to come into small capital formations for the purpose of sourcing long_term funds for real estate development.
He indicated that the association will soon approach the capital market in this regard, urging that the government should make available demographic and income data of people so that, as luxury houses are being provided, housing units are also being provided for other classes in the society.
Adeoye canvassed the need to radicalise the housing sector like other sectors of the economy, charging the that federal government to direct the federal Ministry of Land, Housing and Urban Development and the Federal Mortgage Bank of Nigeria (FMBN) through the Central Bank of Nigeria (CBN) to make money available for housing development in order to bridge the housing deficit in the country.
He said they are exploring the possibility of convening a meeting of stakeholders that would include the Ministry of Housing, Federal Housing Authority (FHA), FMBN and other relevant institutions on how to facilitate the provision of quality housing in the country