We are obviously not going to recover from the frenzy of Nigeria’s Mortgage Refinance Company, NMCR; at least not anytime soon. Since it was launched, no week has passed without an item of news, opinion, report, broadcast or sundry details about it– such is the faith our industry has in the scheme.

Experts such as Mr. Hakeem Ogunniran, Managing Director, UACN Property Development Company; Mr. Niyi Adeleye, Head of Real Estate Finance, Stanbic IBTC West Africa and others have however hinted that the NMRC, though a welcome development, is not a magic wand.

While their arguments are telescoped by the myriad of other challenges slowing down the industry, my concern has always been; giving the “mathematical wonder” expected of the scheme, where is the land? That is, even if all mortgage seekers receive mortgages at reasonable rates, where are the houses for them to buy? We all know the housing units in large supplies are not those targeted at the average Nigerian. Those targeted at them are not in the city centres, besides the fact that they are also in short supply.

Furthermore, everyone agrees that even the highbrow areas of states such as Lagos are overpriced for corporate and high income clients because of the scarcity of land. The implication is that except something is done about access to land, mortgages may truly be available, but the supply end of affordable homes for mid, mid-low market may remain unmatched. Thankfully, the NMRC is forward-looking enough in this regards, but the impact might not be felt sooner than expected.

Since land is a fixed asset, it therefore follows that the only way to breathe life into of the NMRC as well as Nigeria’s growing retail and hospitality sectors is to develop infrastructure. Developing infrastructure such as roads will open up new axes, especially in the suburb of the cities. If this happens, the market which will absorb the average-Nigerian mortgagees will be adequately created; with developers matching demand with their supply and homebuyers savouring the pleasuring of owning a home – in the true sense of the word!  A clear example is the opening up of the Ibeju-Lekki axis of Lagos owning to the Lekki-epe express way concession. Currently, there are number of developments on the axis that could be considered “affordable” if placed side-by-side the average price of property on the corridor.

With the final budget of the Babatunde Raji Fashola’s administration of Lagos State allocating a substantial 20% of its 489.7bn to infrastructure; it is safe to conclude that the tides will favour Real Estate in the city in the coming years. Speaking through its commissioner for Works and Infrastructure, Olufemi Hamzat, the state government said it is optimistic about the completion of 10-lane Lagos-Badagry express way by 2015; and it is not relenting in its efforts to attend to the inner-city roads numbering about 1,000.

If significant steps are taken to match the words with action, it is public knowledge that real estate activities already saturating the corridor will pick up. Besides the fact that the axis is mostly marked as industrial: residential for mid and mid-low will also do well on the axis as manufacturing companies finding their ways into the country will have a pool of close-to-home employees to draw from.

Second, at the Real Estate unite 2013; Mr. Chu’di Ejekam of Actis reaffirmed that there is a huge retail market in Lagos. For example, in the retail space, he informed that Johannesburg which is just the size of Ikeja has about 70 shopping malls which are size of The Palms; while Lagos, with an estimated 21 million population can account for only 3 standard retail malls.

One of the reasons he mentioned besides landing titling, cost of land and poor skill set, is the availability of land around axes where people’s spending power, within an 8Km radius, averages about $1, 500 monthly. With the NMRC leading and a budget bent on strengthening infrastructure; a new set of middle class with relevant purchasing power and shopping culture will emerge around the suburbs of Lagos, giving opportunities for employment and supplementary growth in the retail sector.

Finally, the federal government has also allocated an impressive amount of its 2014 budget to infrastructure and with 14 states already on the pilot scheme of the NMRC, a bustling infrastructure sector and attendant real estate market expansion will mean more employment and an increase in real estate contribution to the Gross Domestic Product.

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2014-02-02