Property
UPDC re-engineers plans to deliver 1,500 housing units
UPDC has re-engineered plans to deliver 1,500 housing units.
Part of this plan is to leverage its over 24 years experience developing first class real estate properties in Nigeria to deliver over 1,500 housing units to the real estate market over the next five years.
The plan leading to the development of the new estates is to be driven by the strategy which Odunayo Ojo, the company’s CEO, revealed at an interactive session with newsmen in Lagos recently.
Ojo disclosed that they took some corporate actions recently one of which was completing the unbundling of the company’s interest in the UPDC Real Estate Investment Trust (UPDC REIT) to its shareholders.
“UPDC, however, holds 5 percent residual stake in the REIT as a sponsor to the REIT,” he said, noting that this action would help UPDC to direct its focus on its core activities while unlocking additional value for its shareholders by granting them direct ownership in a REIT that has paid dividends since its inception.
Ojo added that the company, in 2020, raised about N16 billion through a rights issue, pointing out that the completion of this exercise has strengthened the company’s capital structure, leading to a significant reduction in its debt obligations from about N20.8billion to N5.4billion.
“The impact of this strengthening the capital structure is that it has positioned the company for profitability,” he said.
The most significant of the recent actions UPDC has taken pursuant to its growth strategy is its acquisition by Custodian Investment Plc. This transaction, Ojo said, is complete with Custodian securing 51 percent stake in UPDC and UAC retaining 43 percent stake. What this means is that UPDC is now operating as a subsidiary of Custodian Investment Plc and as an associate company to UAC.
Bond Repayment is yet another recent action taken by UPDC towards its growth plan. It exercised the call option on its bond in April 2021 and this was financed with the aid of an intercompany loan from Custodian and UAC. By this action, “UPDC was able to refinance its debt obligations at a significantly lower cost (16 percent to 9 percent). This will lead to a significant reduction in finance cost going forward,” Ojo predicted.
“We are putting these information out there because we want to tell our own side of the story and set the records right; we want to change the narrative; UPDC now has the capacity to do new developments and we have the right resources to put the company on the path of growth and profitability,” Ojo assured.
A close look at the composition of the company’s board and management staff shows that its human resource is unimpeachable. Ojo, for instance, is a consummate real estate professional that has been involved in property development, asset management, private equity and advisory services for various asset classes including master-planned communities, mixed-use schemes, shopping centres, commercial buildings and hotels.
He has held several roles such as CEO of Alaro City, Director of Development and Projects at Eagle Hills, Abu Dhabi; Development Director at Laurus Development Partners, Vice President at Ocean and Oil Holdings, and Business Manager at UPDC Plc.
A new development which the company says it is using to announce its rebound and return to reckoning is the Pinnock Prime Estate. This, the CEO explained, is a 1 .47-hectare site and service scheme located in Lekki Pennisula II right beside their existing Pinnock Beach Estate.
The new estate, according to him, is envisioned to become a sought-after development and estate of choice within the area, creating a new benchmark for suburban living. It has 18 plots that will be allocated and priced as High Density and Low Density Plots.
Whereas the high density has 5 plots that will accommodate 5 to 7 dwelling units per plot, the low density has 3 plots that will take 2 dwelling units per plot.
Among other facilities, the estate boasts recreational facilities and promises to be an embodiment of lifestyle consisting of pocket parks with a play area; tree-lined street and beautiful landscaping infrastructure such as gatehouse, secured access gate and signage.
In response to market realities, Ojo said they would also be going into mid-income developments that will be targeted at middle-level workers. These will be developed outside their traditional locations including Ikoyi, Victoria Island and Ikeja.
“Going into the future, besides estate development, we will also be focusing on development management in order to render services to other players in the industry, and to guide people who have projects to do but lack the appropriate expertise,” Ojo said.
He added that they would also be doing Asset management, Facilities management and also giving advisory services.
“We are also going to restructure our hotel business and, in the course of 2022, we are going to turnaround the whole company,” he posited.
By Esther Agbo
Lagos State Governor, Babajide Sanwo-Olu has launched a series of upscale housing developments, marking a significant milestone in the city’s real estate landscape. On Tuesday, the governor unveiled 60 luxurious apartments at the Rising Lagos Apartments and inaugurated the Greater Lagos LBIC/WGC Apartments, a 144-unit mixed development located in Amuwo Odofin.
Through his official handle on X, the Governor said these state-of-the-art projects are designed to redefine residential living in Lagos, offering top-notch amenities and setting a new standard for housing in the state. Governor Sanwo-Olu emphasized the importance of these initiatives in meeting the growing housing needs of Lagosians while promoting urban renewal and sustainable development.
He said, “Today, I unveiled 60 Units of two and three bedroom apartments at Rising Lagos Apartments, equipped with state-of-the-art facilities and designed to enhance residents’ quality of life.
“Additionally, I commissioned the 144-unit mixed development project, Greater Lagos LBIC/WGC Apartments, in Amuwo Odofin, showcasing our dedication to urban renewal and sustainable development in Lagos State.
“These building initiatives mark a significant milestone in our ongoing efforts to address the housing needs of our citizens and promote inclusive growth throughout the state.”
The unveiling follows the recent inauguration in June of 270 two-bedroom flats at the Egan-Igando Mixed Housing Estate, highlighting the government’s commitment to providing quality housing solutions across various parts of Lagos State.
By Esther Agbo
Overview
Nigeria’s housing market, a critical component of its economy, reflects the broader economic trends and challenges facing the country. Despite significant obstacles, including economic volatility and a substantial housing deficit, the sector exhibits resilience and potential for growth.
Nigeria’s housing market, as highlighted by recent statements from the Minister of Housing and Urban Development, Ahmed Dangiwa, holds immense potential to drive economic growth, potentially unlocking a $1 trillion economy.
The Minister’s recent statements emphasised on the transformative power of the housing sector.
The Renewed Hope Estate projects, launched across various states, are designed to provide affordable housing while stimulating local economies. For example, the 250-unit project in Akwa Ibom aims to create over 6,500 jobs, highlighting the sector’s capacity to generate employment and spur economic activities.
Current state of the housing market, trends and challenges
The Nigerian housing market is however influenced by rapid urbanisation, population growth, and evolving economic policies. Nigeria is one of the fastest urbanising countries globally, with an urban population expected to reach 300 million by 2050. This rapid urbanisation fuels the demand for residential properties, creating opportunities for investors and developers.
Despite this demand, the housing sector faces a significant deficit, estimated at 28 million units in 2023, up from 14 million in 2010. The lack of affordable housing remains a critical issue, driven by economic challenges and insufficient government intervention.
An exclusive interview with the National Public Relations Secretary of the Nigeria Institute of Town Planners and Chairman of the Association of Town Planning Consultants of Nigeria, Lagos State Branch, Dr. David Olawole, provides a critical perspective on the current trends in Nigeria’s housing market.
He noted a significant decline in housing stock due to skyrocketing building material costs, making it difficult for the average Nigerian to afford new homes. This situation has exacerbated the housing deficit, currently estimated at 28 million units, requiring an investment of over N21 trillion.
He said, “When you talk about the current trends in Nigeria’s housing market and if you want to compare it to the previous years, the current housing market in Nigeria, to my own understanding, is not the way it used to be in the previous years because the cost of building materials at the moment is not something that a common man can conveniently afford.
“So as a result of that, it has drastically reduced the housing stock in the country at the moment. So compare this current housing trend with the previous years, you will see that it has drastically dropped. So there is a sharp drop in the housing provision in the country.”
Government policies and private sector involvement
Government efforts, while commendable, have not been sufficient to address the housing deficit comprehensively. Dr. Olawole emphasises the need for a robust public-private partnership (PPP) framework. Effective PPPs can leverage the strengths of both sectors, with the government providing land and regulatory support and private developers bringing in capital and technical expertise.
Dr. Olawale said, “Developers are trying, but you should have it in mind that what every business owner will have at the back of our mind is to make profit, to maximise profit, and that is the best a private developer can do.
“So, coming together the public-private partnership really contributes a lot to the development of affordable housing projects in the country, because, you know, when it comes to public-private partnership, government will provide maybe land, and private developers will come in and develop the houses, and at the same time, they come up with the sharing formula, the strategy of how the individual wants to equip his or her own funds contributed to the development of the housing.
“But in Nigeria, when we look at it, are we really achieving that? Are we really achieving that? Because the scope and the terms of reference, when it comes to public-private partnership, is not really favourable to some developers, and that’s why some of them are opting out, or at the end of the day, they provide the houses with low quality. So, that is another issue.”
However, current regulatory and tax policies have been deterrents rather than incentives for private sector investment. High taxes and stringent regulations have driven many developers away, further straining the housing market.
“Of course, the government is trying, but there is little that the government can do. The ideal thing should be both government and private sectors coming together in addressing the housing deficit in the country, whereby governments provide a certain percentage and private developers, private sectors also provide a certain percentage. That will help us to meet with the housing demand in the country. But the way it is, based on the current housing market, there is a problem, especially when you talk of the housing provision in the country.
“Even the government is finding it difficult to provide affordable housing this time around. You discover that houses that are not supposed to be more than probably 5 million, getting those kinds of flats from the government, are now running to about 20 million. How many people can afford that? So there is a serious issue in addressing the housing deficit in the country.
“However, both governments and the private sectors are supposed to come together. And if you look at the policies, especially the taxes, it is driving a lot of private sectors away from housing provision in the country,” Dr. Olawale stated.
Moreover, improving mortgage accessibility and financing options is crucial for expanding homeownership. In advanced economies, accessible mortgage facilities allow individuals to own homes without significant upfront capital. Nigeria needs to adopt similar strategies, ensuring that mortgage facilities are available and affordable to a broader population segment.
“Somebody who has not eaten, how do you expect such a person to be thinking of building a house? Where will he get the resources from? And that is why if the government is really doing the right thing by making sure that the mortgage facility is accessible to everybody, you have the finances that you can use to provide shelter for yourself, and you pay back over a longer period of time. There is nobody that doesn’t want something good for himself.
“The housing market currently is affecting the local communities, that’s why when you see where some people are putting their heads, you will be marvelled. The measures that can be taken to ensure positive social impact is by making sure that governments make facilities available. Then in terms of public-private sector collaboration, the government should not be too rigid in their regulatory system.
“Make things friendly, not a situation whereby somebody is struggling to build a house, and the taxes that he’s going to pay to the government is running to even the fund that will afford him to build the house to a certain level. That kind of thing will not help us. For us to ensure positive social impact, the government needs to play a vital role and make sure that all their charges are pocket-friendly to the masses.
“At the same time, the private sectors that are involved in the housing provision should also do the right thing. Enough of cutting corners. It will not take us anywhere.
When we do it right, we get better results. We cannot continue to do things the same way and expect different results.”
The broader Nigerian economy, characterised by inflation, fluctuating exchange rates, and recent policy shifts like the removal of oil subsidies, directly impacts the housing market. These factors contribute to rising construction costs and affect the affordability of housing.
“Because if you look at some of the houses that have been developed, especially in recent time, that aspect of the technology is not really there when you talk of eco-friendly practices. Only few are going into that, especially when you talk of green buildings, green this, that, you know, the smart building practices and all of that. Only few of the real estate developers are practising that.
“A lot of them are what will come in at the end of the day, that is their main priority. So, well, it’s plainly, I mean, it’s a good idea, it’s a good approach, and which is sustainable, and if we can go into it or if we can really practise it, it will take us far. And, you know, when you talk of the housing market evolving in the next five to ten years, well, only God knows where we are going in this country.
“If the economy is better, we can do it, we have knowledge, we have what it takes to do all these things in the country. But in a situation whereby the economy is not favourable to people, people will tend to do, you know, what we fetch them, I mean, maximum profit that they can quickly, you know, recoup their money. You know, a lot of people that are going to real estate development, they take loans from banks, from different financial organisations, and they have to pay it back within the stipulated period.
“If not, the interest rates will kill the business, and that is why a lot of them, you see, what they are after is let me just develop it, sell it out, and move out of that place. They don’t think about the sustainability of those houses. And these are things that we need to work out, both government and private sectors, organisations, so that we can balance the equation and make sure that we get it right.
“However, the economy of the nation has a very critical role to play in this matter. If the economy is okay, people will do what is right, and we all get it right. We will not be experiencing a building collapse here and there, and loss of lives, loss of property, waste of resources, and all of that. So all of us need to come together and make sure that we get it right,” Dr. Olawale posited.
Also, reforms such as the amendment of the Land Use Act are essential for resolving land tenure issues and simplifying the process of acquiring land for housing development. These reforms can reduce land-related disputes and make it easier for both public and private sectors to invest in housing.
Impact of urbanisation
Nigeria’s rapid urbanisation presents both challenges and opportunities for the housing market. The increasing urban population intensifies the demand for housing, particularly in cities like Lagos. This trend underscores the need for high-density housing solutions and efficient use of available land. Failure to address this demand could lead to a significant rise in homelessness and inadequate housing conditions.
Additionally, the adoption of sustainable and eco-friendly practices in real estate development is still limited in Nigeria. While green buildings and smart technologies offer long-term benefits, they require initial investments that many developers are reluctant to make due to the current economic climate. Promoting sustainable practices through incentives and regulations can enhance the quality and sustainability of housing projects.
However, technological advancements are transforming Nigeria’s real estate sector. PropTech companies are introducing innovations such as virtual property tours, online marketing platforms, and digital transaction management systems. These technologies enhance efficiency, broaden market reach, and improve the customer experience.
Investment diversification is another emerging trend. Investors are exploring various real estate assets, including commercial properties, mixed-use
President Bola Ahmed Tinubu on Tuesday appointed Ademola Adebise, a former managing director of Wema Bank, as chairman of the board of Family Homes Funds Limited (FHFL).
Adebise, an alumnus of the University of Lagos, is 57 years old.
As part of the new appointments, Abdul Muttalab will serve as Chief Executive Officer/Managing Director.
The board will also include Abdullahi Musa as Executive Director (Finance) and Emeka Henry Inegbu as Executive Director (Operations).
In addition, representatives from the Ministry of Finance Incorporated and the Nigeria Sovereign Investment Authority (NSIA) will serve as non-executive directors.
The board will be rounded out by four non-executive directors: Sam Okagbue, Musa Ahmed, Eniang Nkang, and Bilkisu Usman.
Family Homes Funds began operation in 2018 to provide affordable housing for low-income Nigerians.
As a social housing initiative, it is promoted by the Federal Government of Nigeria as part of its Social Intervention Programme, with initial shareholding by the Ministry of Finance Incorporated (MOFI) and the Nigeria Sovereign Investment Authority (NSIA).
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