…Says Lack of funding, stifling real estate investment’
Experts in the building business have demanded more funding and the elimination of administrative roadblocks in order to encourage private investment and industrial expansion.
They made the announcement during the “Rewriting the Narrative: Positioning and Strategies for the Future” West Africa Property Investment Summit in Lagos.
The summit was called in response to West Africa’s struggle with macroeconomic problems, such as rising inflation, currency devaluations, political unpredictability, and the effects of national debt on individual nations. These issues have affected the real estate sector, driving up the cost of building, importing goods, and hiring professionals.
The Chief Executive Officer, Landmark Group, Paul Onwuanibe, said the government should determine how much real estate contributes to the economy and invests adequately to grow the industry.
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He noted that for real estate to work, it needs to be well financed and advised the government to adopt British Rule Section 106 that allows developers to also develop their immediate surroundings.
Onwuanibe said: “There is so much administration in the production of real estate. The government needs to remove excessive administrative bottlenecks because it’s too expensive. The government would make more money from taxes than the system of paying to register titles and all the other documents.”
The Head, Equity Research, West Africa, Stanbic IBTC Bank, Muyiwa Oni, argued that the next two years would entail a tough environment for the real estate sector due to current economic realities such as inflation.
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“We think that the process of repairing the monetary policy environment would take some time and with the management of the policy from the Central Bank, it might take longer. This process will take more than six months before visible signs of inflation moderation. Next year inflation should still average within the 20’s and hopefully by 2025, we would see inflation in the 10’s,” he said.
On his part, Head, Real Estate Finance, Stanbic IBTC, Tola Akinyomi, said the sector has remained resilient amid the micro economic environment impact, adding that as the asset class is long-term, it provides much needed business infrastructure.
He said the government can improve by creating access to land as it is a key cost element in any real estate projects. Akinyomi also called for infrastructural development including rail to road access for ease of movement.
The Chief Economist, Deloitte, Damilola Akinbami, who spoke on the need for clarity of reforms and policies and the importance of addressing supply of foreign exchange by searching for alternative sources, warned that uncertainty in the industry limits investors.
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She stated that diaspora remittances are a long-term solution in stabilising the naira. However, Akinbami said Nigerians in diaspora should leverage on the opportunity to invest in real estate in their home country due to the strength of their earning in foreign currency.
Head, Capital market, Sub Saharan Africa, JLL, Pepler Sandri, said though the stage of commercial real estate cycle has hit a relatively low point globally, to grow real estate in Nigeria, regulatory changes and embarking on best practices in all markets are needed. This, he said, would create much needed liquidity for further development.
On her part, Co-lead, International Finance Corporation (IFC) Edge Green Building programme, Temilola Shonola, advocated for greener rather than brown buildings, adding that it requires about three to five per cent on developer’s capital expenditure as against 30 per cent.
She said that IFC believes that if building emissions can be reduced, it would positively reflect in the greenhouse gas going into the atmosphere.
