BusinessDay 06 Feb 2018

26 BUSINESS DAY
C002D5556 Tuesday 06 February 2018
HOMES&PROPERTY
Operators chart course for mortgage sector
growth, seek manufacturers collaboration
Stories by CHUKA UROKO
Worried about its
slow growth in an
otherwise buoyant
and fast-paced
economy where
its contribution is very critical,
operators in the Nigerian mortgage
sector have come out with farreaching
and strategic initiatives
which, they believe, will grow the
sector and unlock its potential.
Some of the initiatives which
the operators under the aegis of
Mortgage Banking Association of
Nigeria (MBAN) are pushing for
include unbundling of mortgage
origination process, further reduction
in loan origination period,
introduction of computerised land
titling registration, land title insurance,
introduction of uniform
mortgage underwriting standards
(UMUS) for informal sector, enactment
of foreclosure law, and wider
public awareness for the sector.
The sector’s slow growth is amply
reflected in its low contribution
to GDP which stands at 1 percent,
hence the resolve and drive by the
operators to push this contribution
to, at least, 5 percent in the short
run, 30 percent in the medium
term, and about 65 percent in the
long run.
The sector is challenged in
several ways and Femi Johnson,
CEO, Homebase Mortgage Bank
Limited, who gave these hints,
blamed it on low mortgage penetration
which is why less than 5
percent of about 13.7 million housing
units in the country has formal
title registration.
Rose Okwechime, CEO, Abbey
Mortgage Bank Plc , had in an
interview blamed the slow growth
of the sector on its relative newness
and lack of public awareness on its
operations and benefits. “A lot of
people don’t even understand why
they should put their money in a
Experts see ‘green-shoots’ of growth returning
to rental market as economy improves
After over four years of enduring
a consistent decline due
to increase in building stock
and contraction in economic activities,
the rental market for commercial
real estate will be seeing ‘green
shoots’ of growth as the economy
continues to improve towards 2019,
experts have said.
The recession which the economy
has just exited coupled with
supply glut created a market that
mortgage bank”, she noted.
But the operators are not resting
on their oars. Apart from exploring
the possibility of adopting the
non-interest mortgages to unlock
the potentials of the Sukuk model,
they are also considering unbundling
of the sector in the main
areas of mortgage guarantee and
insurance.
Adenike Awosika-Fasanya, a
US-based mortgage consultant, explained
in an interview in Lagos that
the insurance industry, which is not
as active participant as it should be,
is one of the problems slowing the
mortgage sector growth in Nigeria,
leading to low homeownership level
in the country.
The MBAN members, who met
in Abuja recently for their chief executive
officers retreat, also considered
collaboration with the mortgage
brokerage companies and the
struggled through low demand and
falling prices all through the period.
But with bullish expectations for the
economy in 2018, it is hoped that
commercial real estate will mirror
this development although not immediately.
The outlook for the real estate
sector in 2018 is said to be bright.
Nnenna Alintah, Head of Corporate
Real Services and Research at Broll
Nigeria, noted in their Occupier
aim of this, according to them, is to
deepen mortgage financing such
that they will devolve some of their
functions to the mortgage brokerage
firms to ensure more vibrancy.
The high housing deficit and low
homeownership level in the country
has been blamed chiefly on
lack of mortgage that is accessible
and affordable. But the operators
looked beyond this, saying that
high cost of building materials
which translates to high house
prices are also critical factors that
need to be addressed.
They are therefore, seeking collaboration
with building material
manufacturers to reduce the cost
of houses and make housing affordable.
Other viable options for
cheaper sources of funds are also to
be explored with a view to reducing
the interest rate on mortgages to
single digit.
Service Snapshot Report for 2017,
that this sector is expected to attract
more investors during the year due
to its long term investment benefits.
Bolaji Edu, Broll’s CEO, says the
real estate sector will be one of the
potential revenue drivers for the
economy in 2018, basing his prediction
on the sector’s performance so
far in the year as well as outlook for
the rest of the year.
“Although the economy was in
recession at the beginning of the
previous year, the exit from recession
in the second quarter of 2017
creates an opportunity for rekindled
activity and subsequent recovery in
real estate”, Edu said.
At the third edition of the West
Africa Property Investment (WAPI)
Summit held in Nigeria late last year,
he highlighted the huge investment
potential in this sector, noting that
Nigeria, as a power house in West
Africa, has the capability to attract
investors.
He urged that the diversification
of the economy should be extended
to the sector, noting, “the fund and
asset managers with the property
skill sets are able to drive excess
returns. The market is creating good
Besides high cost of building
materials, housing delivery is also
constrained by infrastructure deficit
such that it accounts for as much
as 30 percent of construction cost.
The mortgage operators, therefore,
urged the federal, state and local
governments to strive to provide
support for housing developers by
doing more in terms of infrastructure
provision to enhance affordable
housing delivery.
The operators did not lose sight
of the fledgling National Housing
Fund (NHF) scheme which seems
to have lost its original intention.
They stressed the need for the
Federal Mortgage Bank of Nigeria
(FMBN), which supervises NHF
operations, and MBAN to come up
with processes that would ease access
to the NHF scheme to mitigate
the challenges of FMBN’s response
time to get loan applications.
quality grade A stock developed by
local investors and international
private equity firms as well as completed
asset generating but we will
have stabilized returns, which investors
in West Africa are targeting”.
Edu hopes that the capital base of
real estate is to keep growing due to
investments in Grade A commercial
office and retail sectors, advising that
to cater for the needs of the domestic
occupier market however, there has
to be development of good quality
Grade B or Grade B+ investment.
“There has also been a rise in
demand for space from sectors such
as finance, oil and gas, professional
services and tech, propelling a larger
market for real estate investment in
the country. Unlike in the past, when
most of the available rental spaces
were taken up by businesses predominantly
in oil and gas, demand
enquiries are now more diversified”,
he noted.
But, according to him, at the
moment, the market remains a tenants’
market as demand and supply
remain in disequilibrium due to the
existing and anticipated supply in
the market, saying that this limits the
scope of rental growth in the market.
Event Diary
Lafarge Africa
rewards, assures
loyal customers
Lafarge Africa, Nigeria’s leading
building solutions and infrastructure
company, has recognized
and rewarded its loyal customers,
assuring that it will continue to
appreciate its customers across the
country because their loyalty over the
years account for the success of the
company in the country and beyond.
In furtherance of this resolve, the
country recently held a ‘customer
appreciation dinner’ for its customers
from the South-South and South-
Eastern part of Nigeria. The event was
at the Ibom Hotel and Golf Resort, Uyo,
the Akwa Ibom state capital.
The company’s marketing director,
Vipul Agrawal, said they are committed
to providing world class service to
its customers nationwide. “We have
put processes in place and made
adequate investment to allow us attend
to customers better. Outside our
numerous customer touch points, we
value moments such as this when we
have the opportunity to say ‘thank
you’ in a special way and celebrate the
customer”, Agrawal said.
The forum provided an opportunity
for Lafarge customers to engage
in frank and open discussions with
the company and it also enabled the
company’s senior management to feel
the pulse of its customers, as well as
resolve critical issues and complaints.
Some of the customers were also rewarded
with incentives for their loyalty
to the Lafarge brand and performance
in 2017. Similar customer appreciation
events are scheduled to hold across
the country.
Real estate 2018
outlook summit
underway in Lagos
Today at the Lagos Business
School, experts, professionals
and sundry stakeholders in the
real estate sector are gathering at the
instance of Fine and Country West
Africa, a leading real estate marketing
agent, to provide insights into the
sector’s outlook for 2018.
Themed ‘Economic and Real
Estate Outlook’, the event which is
being packaged in collaboration
with the Lagos Business School,
promises to provide real estate
investment information which,
the company believes, can give
potential investors the power to
make life-changing investment
decisions.
“Staying informed of real estate
trends and opportunities will
help you achieve your real estate
investment goals; keeping up with
real estate news can guide your investment
decisions, making you a
smarter investor. Right now, there’s
no better place to get this information
than the 2018 Economic and
Real Estate Outlook”, Udo Okonjo,
Fine and Country CEO, assures.
The outlook series which is
already in its 5th edition, also
presents a platform to set the tone
for the the real estate industry in
2018 as experts will deliberate on
the impact of the current economic
and political climate on the real
estate industry in 2018, the winning
strategies in the current economic
climate and also identify the trends
and opportunities in the industry.