*Accounts for 20% of project cost

BY YINKA KOLAWOLE

A property developer and stakeholder in the real estate sector has blamed the prohibitive cost of borrowing in Nigeria as a major impediment to housing development in the country.

Managing Director of UACN Property Development Company Plc (UPDC), Mr Hakeem Oguniran, made this assertion at a recent forum where he delivered a paper on “Delivering affordable housing to the mass market: issues and challenges”, hosted by the Association of Professional Bodies of Nigeria (APBN).

Oguniran who observed that there was no suitable funding for housing projects in the country, lamented that cost of borrowing amounts to about 20 percent of overall project cost. “Suitable long term funding is hardly available, but short term funding is not suitable or compatible with real estate market. High cost of borrowing, which accounts for 20 per cent of the overall capital cost, is inimical to the growth of the real estate sector.”

The UPDC boss also noted that non-availability of adequate land for building houses is another major obstacle to the delivery of affordable housing in the country. This, according to him, is mainly attributable to the Land Use Act (LUA) of 1978, which he noted has done more harm than good, and therefore advocated a total review and overhaul of the law. “The Land Use Act has become a major means for the government to rip people off,” he said, adding that it usually takes between 80 to 284 days to register a piece of land in Nigeria.

He listed other challenges confronting the nation’s housing sector to include uncertainty of titles as well as inadequate basic infrastructure, which he noted, has added to cost of building in Nigeria. “There is a strong nexus between real estate and infrastructure development, but each developer has become a mini government; at their own cost, developers in most cases are the ones responsible for providing access roads and other internal road networks.”

Ogunniran has berated the lack of continuity and stability in policy formulation and execution in the country, whereby newly appointed government officials would discard the policies of their predecessors and come up with new ones no matter how laudable the previous polices were.