By Nkiruka Nnorom
CHAIRMAN of UACN Property Development Company Plc, UPDC, Mr. Larry Ettah, has said that Nigeria’s real estate sector still remained an attractive investment option for investors who are seeking to hedge inflation and devaluation risk. Ettah made the statement at the company’s Annual General Meeting, AGM, in Lagos saying that some positive trends in recent time signposts impending growth in the industry.
He listed some of the positive developments to include housing sector reform, refinancing of mortgage loans and establishment of Nigerian Mortgage Refinance Company, NMRC, rise in property and real estate transparency rating, among others. He, however, said that cumbersome and time-consuming processes for land acquisition, insecure land title, infrastructure deficiency and under-developed mortgage market, all contributed to dull progress in the sector in 2016.
He noted that the sector recorded a negative GDP growth in 2016, contracting by 4.69 per cent in Q1, 2016; 5.27 per cent in Q2, 7.37 per cent in Q3 and by 9.27 per cent in Q4. Reviewing the company’s operation for the year ended December 2016, Ettah said that UPDC would de-leverage its business in 2017 as part of key strategies to reposition for improved performance. He stated that the efforts to deleverage the company would be achieved through aggressive sales strategy, the on-going one-for-one Rights Issue that aimed to raise N1.719 billion and divestment from low yielding investment properties.
He explained that the increase in Monetary Policy Rate, recession, government policies and other un-abating economic vagaries in 2016 had negative impact on the company’s performance during the year. He said that while the company posted N6.34 billion revenue in 2016 as against N5.12 billion in 2015, loss before taxation, LBT, stood at N1.78 billion compared to N0.56 billion profit after tax in 2015. in 2015.
He further explained that UPDC recorded losses upon completion of certain UPDC & Joint Venture projects.
“The losses are mainly due to high interest costs, effect of the 41 banned items on the CBN list, as well as extended completion date,” he said.