Banks should give loans to building material producers, says Aghaji
Ikenna Aghaji is the chairman, Nigerian Institution of Estate Surveyors and Valuers, FCT Chapter. He spoke with CORNELIUS ESSEN on sundry issues affecting the practice and how to re-position the profession to make it more relevant in the capital city.
The Nigerian economy has been sluggish in the past years and worsened by COVID-19 pandemic. Do you foresee a rebound this year in the sector? What’s your expectation?
Well, after the COVID-19 pandemic in the country, businesses generally started picking up again. The economy was opening up slowly, and more people were getting interested in estates and property developments.
And once a person makes money, the first thing that comes to mind is how to get an apartment in the city centre, or be buying and investing in the built industry. Currently, money has started to flow into the sector, gradually, and things, equally, are becoming more viable, stable and people are buying houses.
Despite the fact that it is growing gradually, I believe it will soon get back to normal but not the way it was before. My expectation, therefore, is that it will steadily continue to grow until it reaches the pre COVID-19 pandemic period.
Nigeria’s real estate sector posted 3.85 percent growth in the second quarter of 2021, representing its highest growth in six years.
What can be done to grow the real estate sector?
For the real estate business to thrive, property developers need to have enough land or landed property for the people to invest massively on housing and other sectors. So, governments at all levels should provide buildable land for private developers at a reduced rate or give allocation for people to build their homes. When all these factors are taken into consideration, more estates will begin to spring up in different places and locations. This means, the banks will give more loans at low interest rate to the people and developers to execute their construction work and projects. This is the part government has to play to boost the sector. Actually, banking institutions and individuals have a role to play in the built industry.
There will be an election in a few months time and politicians are already jostling for positions. How would this impact the sector?
Yes, election year is drawing near, the Nigerian nation and the politicians are known for engaging in money politics. We believe that when political campaign begins, funds will be injected into the system, and a lot of money will be circulating to be spent during the period. Media houses will receive a boost in terms of revenue generation from the advertisement, billboard, campaigns and other publicity. During this period, there will be high cash flow in the system, and when there is money, people will like to invest in construction, especially real estate industry.
Abuja has grown beyond its initial population, which has affected housing. What are the challenges? How can Federal Capital Territory Authority (FCTA) retain its initial concept?
The high influx of people into Abuja, the nation’s capital, causes the value of the houses to go up because people are searching for accommodation or apartments. Sadly, we don’t have enough homes to go round. This situation often lead to the highest bidders being favoured and increase the value of property, with low-income earners becoming the vulnerable group. As a result, houses are highly expensive, making property very competitive for the people. Due to the movement of people into the city, house rent has gone up generally. FCTA needs to expand the city centre by creating infrastructure in these neighbouring districts that have not received government attention. Once they are put in place, there would be alternative areas people will move into and rents would reduce drastically in Abuja.
What has been the role and contribution of estate surveyors and valuers towards the growth of the FCT?
The fact is that we are professionally equipped to handle real estate management and valuations. We have been providing professional services to the public, and that’s why we tell people to patronise the estate surveyors and valuers as there are a lot of quacks out there that have nothing to offer the people. It is unfortunate and that is why most people are being duped by the quacks. These have made us as registered professionals to carry out enlightenment so that people will not engage quacks in real estate management.
Abuja commands the highest house rent in that region, which is driving the low-income earners to the outskirts. Why is the city facing this challenge? Do you subscribe to rent control in the city?
The FCT is the capital and most people would want to have houses, property in Abuja because it is where the country’s power resides. Besides, it is a place of milk and honey and as a result, many organisations have their headquarters in the city. Therefore, people are coming into the nation’s capital on a daily basis. In addition, people are of the opinion that Abuja is the safest place in the country due to insurgency, which has cause insecurity in the country. Rent control is impossible here. We cannot control rent, and as professionals, we can only advise the government. We are in a democratic dispensation, so, it is the people that can determine what they want in their transactions.
Prices of construction materials are skyrocketing in the building market. What will be the effect on housing? How do we bring down the prices of building Materials?
It is self-explanatory. Building materials are really going up and automatically, they will cause the construction of housing units to be high and on the other hand, the estate developers will want to get quick returns on their investments. So, it is a natural phenomenon. Besides, most of these raw materials are imported, we want to encourage manufacturing industries to produce them in Nigeria to save foreign exchange. Today, the effect of dollars has taken a toll on imported goods and services. Government should direct banks to give loans to the manufacturing industries to boost the industry. During the Obasanjo administration, many phone companies were set up in the country and there was competition among them, thereby leading to a crash in the price of phone lines.
If the government toes this path, there will be price reduction in building materials in the future. Currently, the prices can’t be controlled. But they can be cheap, if the Federal Government would create an enabling environment for competition among builders and manufacturers in the sense of producing the construction materials locally to boost the sector.