Home News POOR REGULATIONS CRIPPLING REAL ESTATE SECTOR.

POOR REGULATIONS CRIPPLING REAL ESTATE SECTOR.

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Abuja – November 13, 2023 – Viewpoint Housing News.

Stakeholders have blamed poor regulations for the underperformance of the country’s real estate sector. They claimed this was further exacerbated the high inflation in the country. They stated this at a business forum themed “Current Economic Realities and the Impact on the Nigerian Real Estate Market,” organized by Ubosi Eleh & Co., held in Lagos State, recently.

The Principal Partner of Ubosi Eleh & Co., Emeka Eleh, said that high inflation has affected every sector of the economy, including housing.

He said, “An off-plan solution would have been a good approach. However,  even the developers who sell off-plan, the failure rate to deliver is very high. If you pay N50m, for instance, and the next month, prices shoot up, the developers would either increase the price or reduce the money.

“And because of poor regulations, there is still no regulatory mechanism for developers, the government is not regulating developers to ensure adequate delivery.  Meanwhile, in the stock market, if you have to take money from a certain number of people, a license from the government is required.”

According to Eleh, poor regulations are crippling the housing sector, however, the main challenge is to deal with the macroeconomic issues in the country.

He called on the government to curtail the rising costs of goods and services.

“In addition, poor regulations also affect town planning, because for any house that collapses somewhere, people have lost money and loved ones. Hence, the duty of regulation is the government,” he noted.

Also, an Associate Partner at Ubosi Eleh & Co., Olusanjo Fawole, remarked that the real estate sector lacked synchronised policies.

He said, “The sector does not have a synchronised policy. The only policies in use are those in relation to land documentation, and each state has its way it doing it. So, you cannot say there is a strong central policy guiding that the whole state can come under.

“There is a need for more centralised governance guiding the real estate sector, birthing policies that would unlock the potential of real estate development in Nigeria as a whole.”

He noted that many people had their houses but they could not use them to secure loans.

Some people have properties without a title document; they just have a survey plan and they are fine,” Fawole stated.

Meanwhile, the Group Managing Director of Meristem Securities Limited, Oluwole Abegunde, said in 2023, real estate Gross Domestic Product had been underperforming the overall economy.

He said, “The economy registered 10 quarters of growth in a row in Q2 of 2023, but a subdued pace of 2.51 per cent. In 2023, real estate GDP will be underperforming the overall economy. The discretionary nature of real estate makes the associated spending highly postponable in tough times.

“The current economic environment is fraught with a number of challenges, but the medium-term outlook appears bright.”

According to Abegunde, the real estate sector is hard hit by key macro variables, and this is compounded by the recent rising yield environment.

“Notwithstanding, opportunities still exist in land banking, trade-related real estate projects, real estate investment trusts, and house flipping among others. Residential real estate in locations that afford greater flexibility in rent review can also prove attractive.

“The economic cycle needs to be monitored such that as the monetary policy tightening nears its end, and both interest rate and inflation begin to subside. Proactive measures can be taken to exploit opportunities in the sector,” he asserted.

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