Wednesday, 30 September 2015

PRIVATE ESTATES AND THE FUTURE OF HOUSING

The Nigerian housing market has definitely come a long way despite the enormous challenges we still have to contend with in this regard. With rapid population growth and increasing urban migration, we have witnessed a lopsided demand for residential housing in many of our capital cities. The appetite for good residential accommodation has kept the price rising every year. Almost every stakeholder is concerned about where this trend is headed and what should be done about it.

This trend did not come unanticipated and in fact there have been some excellent responses to this trend in the past especially by both the states and Federal Government. There are several examples of well-planned and well-laid out estates that are owned by the government.

Many of these estates are still a point of reference today. They were planned with enough space for recreation and other basic amenities that serve all the residents. Many of these estates were built in the 70’s and 80’s.They often leave you wondering what would have happened if we had continued consistently in that direction.

One of the concepts that were introduced then was that of acquiring land for public purposes, designating some areas as Government Reserved Areas and then putting infrastructures in place for the future residents .The process for acquiring a plot of land in these estates is by applying to the relevant government department and paying the required fees. In order to develop or sustain the development, the government charges nominal annual rates that is determined and collected by one of the state government agencies.

Today, many of these estates have appreciated in value significantly. One of the state governments at that time embarked on a mass affordable housing programme that successfully made several individuals property owners. The designs were simple and the price was reasonable. Many of those estates are now unofficially named after those governors that instituted and completed them. They have also become thriving communities with several businesses riding on the confluence of people living in those estates.

However, for several years after the above developments, the momentum had not been sustained. Some of the projects are located in areas that have challenging terrains and without provision of basic infrastructures such as roads and drainages. The challenging terrain had made development very slow. There are housing estates that have negligible developments in the past 10 to 15 years .For some, it is not certain when the government will put the promised infrastructure in place.

This scenario has become a window of opportunity to some private developers who have the foresight to recognise it. There are private estates that are now offering their residents what the government has neglected or failed to provide to residents in its own estates. These estates come up with various packages and benefits in order to set themselves apart from the pack. They make provision for road, water treatment plants, power generation, security and some other services. Some of these estates promise their residents uninterrupted power and water supply. These services are managed by a property or facility management company and they charge annual services charge which are subject to upward reviews.

The demand for these private estates is growing even though the price of a property is quite steep in some of them. However, for those who can afford it, the comfort, convenience and climate are irresistible. In some cases, the property developers offer a site and services scheme to stakeholders. In this instance, instead of offering the intending residents a completed house they propose to sell undeveloped land with the promise to do the entire infrastructure. Most of these projects are sold off plan and perhaps because of insufficient funds many of these projects have taken years to reach any major milestone.

It is clear that the government cannot meet the housing challenge alone due to the enormity of the situation as well as limited funds. However, there is a lot that the government and property developers can do together. The government should provide easier access to land for developers, faster documentation process and single digit real estate finance. It is important for the government to also address the challenges of traditional land owners that has now become a menace to property development.

The desire to live in a safe and secure environment with basic amenities in place will continue to increase. Presently, private estates that offer these facilities are charging a premium and several millions are not opportune to access them. Already the high end of the market is becoming very volatile and the slowdown in the economy is affecting that sector. Property developers, in conjunction with government or using their own resources, who can provide these services at an affordable price, will definitely make significant profits. (punch)