The Housing Development Advocacy Network (HDAN) has called for innovative funding models in Nigeria’s real estate sector to weather the current economic storm.
This comes as the industry grapples with skyrocketing costs, slowing sales, and a deepening housing deficit.
Executive director of HDAN, Festus Adebayo in a statement emphasised the urgent need for change in a statement released in Abuja.
“Developers must innovate and create new methods of funding and building new houses if they must remain in business,” Adebayo stated, highlighting the dire situation facing the industry.
The real estate market has been hit hard by a perfect storm of economic challenges. Inflation has driven construction costs to new heights, while the devaluation of the Naira has made importing building materials prohibitively expensive.
High interest rates, implemented by the Central Bank of Nigeria (CBN) to combat inflation, have made traditional financing options unattainable for many developers and potential homebuyers alike.
The impact is evident in property prices across the country. In Abuja’s prime locations, such as Maitama, prices for luxury properties have more than doubled. A 5-bedroom fully detached duplex that previously sold for N800 million now commands between N1.5 billion and N2 billion.
Adebayo pointed out that the steep rise in property prices is partly due to inflation and the high cost of building materials, exacerbated by the devaluation of the Naira and the rising costs associated with importing construction materials.
According to him, this inflationary pressure has also led to increased challenges for estate developers, who now face difficulties in securing buyers, despite resorting to extensive advertising efforts.
Adebayo also called on the government to intervene by subsidising land acquisition for credible developers and providing the necessary infrastructure to reduce overall development costs.
Additionally, he suggested that the government should enhance financing options for homebuyers through institutions like the Nigerian Mortgage Refinance Company (NMRC) and the Family Homes Fund Ltd.
The HDAN Boss also recommended that the government should either subsidise locally sourced building materials or reduce the cost of importing them to make housing more affordable.
As the real estate sector grapples with these challenges, HDAN adds that without significant intervention and innovation, the dream of affordable housing may remain elusive for many Nigerians.
He said it is time for real estate developers to innovate and create new methods of funding and building new houses if they must remain in business.
A recent World Bank report, referenced by Matthew Ashimolowo, Senior Pastor at Kingsway Christian Centre (KCC), Maryland, Lagos, during the opening of the 18th Africa International Housing Show (AIHS) in Abuja, highlights this issue. The report estimates the housing shortfall at 20 million units.
Speaking at the AIHS conference in Abuja, Ashimolowo underscored the severity of the situation, stating that to close the housing gap, Nigeria must build 700,000 units annually for the next 20 years.
He projected the financial requirement to address this deficit at N7 trillion, emphasising the urgent need for substantial investment in the sector.
Minister of Housing and Urban Development, Ahmed Dangiwa,also addressed the issue at the AIHS event, aligning with Ashimolowo’s concern but offering slightly different figures.
Dangiwa indicated that Nigeria needs to construct 550,000 housing units each year over the next decade to address the estimated 20 million unit shortfall.
He suggested that an investment of approximately N5.5 trillion would be necessary and urged for stronger private-sector partnerships to tackle the housing crisis effectively.
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