Driving round Victoria Island, an affluent area in Lagos, Nigeria’s commercial nerve, one cannot but notice the number of empty apartments and office spaces as sprawling housing developments continue in the city estimated to have a housing deficit of one million units.
But Jim Ovia, founder of one of Nigeria’s largest lenders Zenith Bank and owner of prime real estate across Nigeria, says deficit only exists in the low-end market. According to him, the empty properties seen across Victoria Island are there because “there is no deficit in the high-end market.”
Speaking at the Refined Investor Series, an event organised by award-winning real estate firm Fine & Country, Mr Ovia noted that land in areas like Victoria Island is too expensive for development targeted at low income earners. However, he admitted that even in high-end areas, there should be development for low income earners, say a owner-occupier model or affordable rent.
Ovia’s Quantum Luxury Properties recently completed The Civic Towers which he describes as the first of its kind Intelligent Building in Nigeria. “It was designed with aesthetics and functionality and the digital age in mind,” he said. The Civic Towers is 100 percent leased.
Several luxury developments that will shape Lagos skyline are springing up across the city but little focus is on low income housing. Real estate firms have focused on premium development which offers the adequate return on investment in line with today’s costs, leaving development of affordable housing to the government.
One challenge has been finance. The UN-Habitat in a report noted that “one of the larger problems facing low-income households is the difficulty in purchasing shelter due to the dramatic escalation of housing prices.”
However, in many countries across Africa, housing is not necessarily too expensive, but incomes are too low. In such countries, making shelter affordable to the poor depends largely on increasing their income.
In Lagos, the state government last year launched the Lagos State Home Ownership Mortgage Scheme (HOMS) and inaugurated the State Mortgage Board which were set up to address the housing deficit in Lagos. The initiative started off with 4,260 homes which were allocated using open draws. Then governor, Babatunde Fashola who is now Nigeria’s Minister for Power, Works and Housing said 200 houses would be allotted per month and would be increased to 300 per month as the number of completed homes increases. The homes are given out upon a down payment of 30 percent of the total cost at an interest of 9.5 percent, arguably the lowest anywhere in Nigeria. The cheapest costs N4.10 million payable over at least 10 years.
While the initiative and the progress made are commendable, the rate at which population is increasing in Lagos may makes the development largely inadequate.
Like UN-Habitat notes, the two extreme outcomes that are being witnessed today are affordable shelter that is inadequate and adequate shelter that is unaffordable.
Hopefully, as Nigeria’s economy improves and more people are lifted out of poverty, the government will enact policies that will spike investor interest in low-end real estate development, hence increasing the number of affordable homes.