Over the past few years, the Nigerian property market has grown exponentially and continues to expand.
The growth, according to Eze Munachino, Chairman of Millennium Group, Nigeria’s leading real estate company, is the result of the secure investment opportunities that real estate creates for many Nigerians, whose incomes are now diversified due to the performance of their real estate.
However, Munachino noted that while investing in real estate, especially in Nigeria, offers countless opportunities including financial prosperity and wealth creation, there are many challenges that can limit what an investor can do and even ability. to invest.
Speaking further, the Chairman of Millennium Group revealed that one of the challenges, which is pretty much the biggest of all, that the real estate industry has been facing lately is affordability.
He argued that with a growing middle class population, rapid urbanization and youthful demographics compared to stronger economies, Nigeria has all the key factors for real estate investment, but despite all this, financing and affordability, he said, remained issues. for real estate developers and future owners.
“Millions of Nigerians are struggling for affordable housing amid the housing boom,” he said.
Explaining the dynamics of the industry, Munachino, said a real estate investment is a financial strategy that involves managing, owning, buying, renting and/or selling property for profit. “Although there are many ways to invest in real estate, they all rely on similar economic factors to make a profit. The first factor is that the property must appreciate in value. owning and maintaining the property should not exceed its appreciation,” he said.
Using the Enugu state property market as a case study, he noted that the Enugu area is characterized by overinflated prices of properties for sale and for rent, while the actual value of property is well lower than the price at which it is rented or sold for. For him, affordable housing is affordable housing for the part of society whose income is below the median household income. Therefore, affordable housing should meet the housing needs of low- and middle-income households, he insisted.
“Affordable housing is becoming a key issue where a majority of the population is unable to purchase houses at market price, which can be compared to what is happening in Enugu where less than 30% of its population can afford a standard house and at least 5% do not have access to housing and in other words more than 5% of the population of Enugu residents do not have housing/housing,” said Munachino.
The implication of development, he says, is oversupply with little or no demand due to exorbitant prices. For most working residents of Enugu, the earning capacity is generally low and makes it virtually impossible for the average person to save to own a home, as well as the dwindling economic fortunes in Nigeria, which reduces the ability of individuals to own a home.
He noted that people’s disposable income remains the main determinant of affordability and therefore the onus is increasingly on the public and private sectors to meet the growing demand for affordable housing.
“Enugu’s housing disparity reflects the huge economic divide in the state. Most of the residents who cannot afford these rents and accommodations live in large numbers in a very large living space, which leads to congestion. Access to decent and affordable housing would provide essential stability to these families and reduce the risk of vulnerable families becoming homeless.”
In his view, affordable housing is important to the economic vitality of communities and therefore affordable homes can attract and retain employees in a community – a selling point and competitive advantage for area employers. Additionally, affordable homes for him also support the local workforce so they can live close to their jobs, as a shorter commuting distance allows workers to spend more time with their families. while the community benefits from a reduction in traffic congestion, air pollution, and expenses on the roads.
By revitalizing communities, building affordable homes, he says, can also help spur economic growth with a healthy mix of housing options, ranging from market-priced and affordable rental units, single-family homes, duplexes, as well as senior (elderly) developments, provides opportunities for everyone to improve their economic situation and contribute to their communities.
The need to shed more light on real estate investments, he said, is due to the fact that the notion of affordable housing is widely misunderstood by the public, as myths and misconceptions about affordable housing developments are based on the fear of negative stereotypes, real estate values and change. brings to neighborhoods – all of which are common arguments in opposition to a new affordable housing community.
In reality, the lack of safe and affordable housing is costing Nigerian cities in several dramatic ways. “Cities that fail to provide affordable housing solutions drive away residents, lose potential workers and discourage the growth of their local economies. While those who already have secure and stable housing may not feel the true cost of poverty, the effects are real and can seriously harm our communities,” he enthused.
For him, high housing prices can slow down a local economy, leaving jobs unfilled and reducing a community’s purchasing power. But, when affordable housing is readily available, more opportunities become available to people at all income levels. More money is available for spending in a community, and long-term change can begin to take hold. Listing some factors that determine real estate and rental prices, he attributed them to the price of land and the high cost of construction.
“There is a constant increase in the prices of construction materials and labor on the market.
“When you build, and the cost of construction is high, the sale price or the rental price will have to be high to break even on the investment. Along the same lines, when the price of land is exorbitant, anything built on it will have to recoup the cost of the land and the cost of construction for the investor.
“So when it comes to price control, it comes down to valuation control, valuation fraud control, and inflation control,” he concluded.
But the above factors are where the government and the private sector, he said, should shine their spotlight, if the government is to improve the real estate sector for Nigerians.