26 BUSINESS DAY C002D5556 Tuesday <strong>06</strong> <strong>Feb</strong>ruary <strong>2018</strong> 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 <strong>2018</strong>, it is hoped that commercial real estate will mirror this development although not immediately. The outlook for the real estate sector in <strong>2018</strong> 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 <strong>2018</strong>, 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 <strong>2018</strong> 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 <strong>2018</strong>. 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 <strong>2018</strong> 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 <strong>2018</strong> as experts will deliberate on the impact of the current economic and political climate on the real estate industry in <strong>2018</strong>, the winning strategies in the current economic climate and also identify the trends and opportunities in the industry.
Tuesday <strong>06</strong> <strong>Feb</strong>ruary <strong>2018</strong> C002D5556 BUSINESS DAY 27