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Ovia laments real estate’s paltry contribution to GDP

Yinka Kolawole
A former bank chief executive, Mr. Jim Ovia, has deplored the meager contribution of the real estate sector to the Nigerian economy in spite of its huge potentials.

Speaking at an inaugural lecture of the Nigerian Institution of Estate Surveyors and Valuers (NIESV) in Lagos recently, the immediate past managing director of Zenith Bank cited the Central Bank of Nigeria (CBN) annual report which stated that the real estate industry contributed an average of 5 percent to the GDP in 2008 despite an estimated industry size of N1.3 trillion.

Ovia asserted that the potentials of the industry are huge, considering Nigeria’s land mass of over 970,000 square kilometres and a population of 150 million people and rapid urbanisation.

He remarked that the potentials of the sector will remain untapped for as long as titling of properties remain problematic, thus making it almost impossible to monetise. He charged policy makers to adopt global best practices where titles are monetised and can be easily traded while also making case for collaterised mortgage, adding that monetisation of  quarantined properties will unlock sector potential thus enabling owners to earn a living therefrom.
“It costs much more to register property in the country unlike other emerging markets of Malaysia, Singapore and South Africa.

There should be a deliberate expansion of the knowledge of  bankers in real estate sector issues, harmonisation of government policies, strengthening of mortgage institutions, over hauling of the Federal Mortgage Bank of Nigeria (FMBN) and the improvement of our ways of conducting business,” he stated.

Ovia noted that another big challenge confronting the real estate industry is the problematic Land Tenure System,Land Use Act of 1978, which vested all land in the hand of government, with change of ownership requiring Governor’s consent – right of occupancy does not confer title and a person’s right of occupancy may be revoked.

He called for enactment and effective implementation of securitisation laws, strengthening of mortgage institutions, establishment of construction banks, patterned after the China Construction Bank, India Construction Bank, Singapore Construction Bank, Malaysia Construction Bank and the overhauling of the Federal Mortgage Bank of Nigeria (FMBN).
Ovia also said that efforts must be made to reform the process of property registration in the country, for which Nigeria was recently ranked 178 out of 183 in the ease of registering properties. “This is where the problem is; we need to focus on why is it difficult to register property within reasonable period in Nigeria. We should monetise real estate and collateralised mortgages,” he added.
In his opening remarks, National President, NIESV, Mr. Bode Adediji, stated:

“The assessment of Nigeria’s progress and failures will continually be viewed through the prism of the performances in specific and tangible sectors such as housing, infrastructure development and public utility most of which fall within the purview of the built_environment to which our profession belong. Nigeria’s performance in this crucial sector is largely lamentable. We must therefore strive towards the attainment of the targets set under the Millennium Development Coals (MDG) if we must lay claim to belong to civilised countries of the world.”

A former bank chief executive, Mr. Jim Ovia, has deplored the meager contribution of the real estate sector to the Nigerian economy in spite of its huge potentials.

Speaking at an inaugural lecture of the Nigerian Institution of Estate Surveyors and Valuers (NIESV) in Lagos recently, the immediate past managing director of Zenith Bank cited the Central Bank of Nigeria (CBN) annual report which stated that the real estate industry contributed an average of 5 percent to the GDP in 2008 despite an estimated industry size of N1.3 trillion.

Ovia asserted that the potentials of the industry are huge, considering Nigeria’s land mass of over 970,000 square kilometres and a population of 150 million people and rapid urbanisation.

He remarked that the potentials of the sector will remain untapped for as long as titling of properties remain problematic, thus making it almost impossible to monetise. He charged policy makers to adopt global best practices where titles are monetised and can be easily traded while also making case for collaterised mortgage, adding that monetisation of  quarantined properties will unlock sector potential thus enabling owners to earn a living therefrom.

“It costs much more to register property in the country unlike other emerging markets of Malaysia, Singapore and South Africa. There should be a deliberate expansion of the knowledge of  bankers in real estate sector issues, harmonisation of government policies, strengthening of mortgage institutions, over hauling of the Federal Mortgage Bank of Nigeria (FMBN) and the improvement of our ways of conducting business,” he stated.

Ovia noted that another big challenge confronting the real estate industry is the problematic Land Tenure System,Land Use Act of 1978, which vested all land in the hand of government, with change of ownership requiring Governor’s consent – right of occupancy does not confer title and a person’s right of occupancy may be revoked.

He called for enactment and effective implementation of securitisation laws, strengthening of mortgage institutions, establishment of construction banks, patterned after the China Construction Bank, India Construction Bank, Singapore Construction Bank, Malaysia Construction Bank and the overhauling of the Federal Mortgage Bank of Nigeria (FMBN).
Ovia also said that efforts must be made to reform the process of property registration in the country, for which Nigeria was recently ranked 178 out of 183 in the ease of registering properties. “This is where the problem is; we need to focus on why is it difficult to register property within reasonable period in Nigeria. We should monetise real estate and collateralised mortgages,” he added.

In his opening remarks, National President, NIESV, Mr. Bode Adediji, stated: “The assessment of Nigeria’s progress and failures will continually be viewed through the prism of the performances in specific and tangible sectors such as housing, infrastructure development and public utility most of which fall within the purview of the built_environment to which our profession belong. Nigeria’s performance in this crucial sector is largely lamentable.

We must therefore strive towards the attainment of the targets set under the Millennium Development Coals (MDG) if we must lay claim to belong to civilised countries of the world.”


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