… floats special purpose vehicle

By Yinka Kolawole

Real estate developers, under the aegis of Real Estate Developers Association of Nigeria (REDAN), are calling for concerted efforts by government and all stakeholders in the housing sector to drastically crash construction cost of building in the country, even as it is set to float a special purpose vehicle (SPV) in this regard.

After a recent South-West stakeholders meeting in Lagos, the group called on the federal government to remove all bottlenecks in the Federal Mortgage Bank of Nigeria (FMBN) and National Housing Fund (NHF) Acts to ensure acceleration of housing provision in Nigeria.

Speaking through the association’s General Secretary, Mr. Goke Odunlami, at the occasion, President of REDAN, Mr. Olabode Afolayan, urged members to embrace research and development to discover cheaper construction methods with out compromising quality, while also tasking them to form a consortium of suppliers for their developments to enable them have access to cheaper building materials and higher gains.

Meanwhile, REDAN President disclosed that the association is set to float a Special Purpose Vehicle (SPV)known as REDAN Capital to help developers in the area of bulk purchase of building materials such as cement, iron rods and roofing materials and as well grant subsidy.

He alleged that most PMIs, especially those floated by the commercial banks were only interested in collecting money from the FMBN on behalf of developers, hold on to the money and later diverted it to do their own business or build their own housing estates.

This, according to him, has prompted developers to explore the modality of setting up their own Primary Mortgage Institution (PMI) through REDAN Capital vehicle for the purpose of financing their operation and to avoid unnecessary delay and competition from banks who are supposed to provide funds for housing development.

Afolayan pledged that the association will soon purchase Hydra form machines from South Africa for members to be paid over a period of 24 months, following a recent visit by REDAN to South Africa.

He posited that the N5 million mortgage facility limit recommended by the Act in 1982 as the maximum loan contributors can access was no longer realistic for home ownership in the country.

On his part, National Vice President (South West), REDAN, Dr. Timothy Nubi, said that a theoretical approach to mass housing development was no_longer tenable, saying pragmatic approach that would crash the price of housing delivery should be encouraged.

Nubi lamented the inability of many Nigerians to access the N5 million mortgage loans because of their low income earning bracket, noting that with concerted efforts, REDAN can crash the price of housing by realizing a two_bedroom apartment at N2.5 million to make it affordable to the people.

He condemned calls for the mortgage facility to be raised to N10 million, saying such proposition would completely remove its access from the reach of low and medium income earners.

According to him, the essence of REDAN is to have a virile mortgage sector. On the campaign in some quarters for an increase in the loanable fund from FMBN, he said it may not be feasible as only very few Nigerians contribute to the NHF scheme.

Nubi called on the government to do something urgent in reducing the cost of construction as it ranks highest in the world according UN Habitat sources. He regretted that while a two bedroom house in Nigeria costs about $9,000 to build in Israel the same goes for $2,000.