Experts have stressed the need for issues of high interest rates, inflation and inadequate risk management to be tackled so as to provide a conducive environment for real estate financing in the country.
According to them, unless these issues are addressed; it may be difficult to achieve a sustainable financing for the real estate sector and provide the 16 million homes needed to provide housing for people in the country.
Speaking at a seminar titled: “Financing strategies for real estate projects” in Lagos, one of the Project Coordinator, Clabema Investment International Limited, Mr. Winston Ikekaonwu, stated that the event was part of measures to enhance capacity building efforts of investors while making investment decisions in Nigeria’s real estate sector.
Ikekaonwu added: “Some challenges in real estate investment in Nigeria involve high interest rate and unstructured mortgage system.
Ideally, if we have functional mortgage system, real estate financing will be easier.”
According to him, the move was made to address capacity building efforts in the area and also mitigate challenges arising from real estate project financing, especially for commercial purposes.
The Principal Consultant, BS-Net Associates, a real estate consultancy firm, Mr. Benson Ukwere, noted that government’s inconsistent policies also affected investment opportunities and financing in the real estate sector.
According to him, there is a need for a framework for risk management, as it helps to address the issues of governance in the industry.
He said: “Interest rates on mortgages are very high in the country, thus affecting the growth of the sector and ability to provide affordable housing to the people. We need to address this by examining alternative financing options for commercial real estate financing.”
Similarly, another real estate consultant, Mr. Deolu Dara, pointed out that a lot of opportunities exists in the real estate sector, which according to him, are yet to be harnessed.
“Real estate contributes only five per cent of Nigeria’s Gross Domestic Product in 2011 compared with other countries. It is still being dominated by private businesses with limited capitalisation. With more than 16 million homes needed to provide housing for people, there is a lot to be done in the sector,” he added.