FIABCI chief seeks conducive environment for real estate investors
WITH ample opportunities for the housing industry in Nigeria yet to be explored through the global network of International Real Estate Federation (FIABCI), a senior official of the organisation has called on the Federal and state authorities to provide conducive environment for property investors, which will stimulate foreigners’ interest in the nation’s real estate sector.
FIABCI Africa President, Mr. Chudi Ubosi told The Guardian that there exist viable opportunities to bring investors to Nigeria, but the challenge still remains the operating environment. “ Our environment is not conducive for the property investors. They are not confident with the political system, economy and globally, there is competition to attract foreign investors.”
FIABCI is a business club of real estate professionals in 60 countries and
Federation of 100 national real estate associations. A non-political entity whose objective is to help its members add an international dimension to their businesses. It also helps members acquire knowledge, develop networks and optimise business opportunities all over the world.
He explained that so many countries offer incentives to investors and willing to do more to attract them. “We have little or nothing here to showcase on Nigerian environment, apart from us having a huge population and housing market. Our major challenge has been the operating environment. Investors are forever willing to come, but when you look at the news that emanate from Nigeria everyday, you’re at a loss on how to convince them.
“For instance, last year, we were in Luxembourg and all the discussions were centered on the Chibok girls. A lot of questions were asked. In that type of environment, can you tell the man to come and invest in real estate? We are doing our best to market the country, and atimes show videos of prominent and impressive developments like the Eko Atlantic project in Victoria Island.”
Ubosi, a partner in Ubosi Eleh and Company, a firm of estate surveyors and valuers and also a fellow of the Nigerian Institution of Estate Surveyors and Valuers (NIESV), noted that the housing sector has challenges for local and international investors.
Firstly, access to land. “I have a lot of enquires from expatriates, who want to develop some facilities, but the cost of obtaining the landed property is scaring for places like Victoria Island or Lekki in Lagos. For instance, an acre can cost as much as $100 million in such places. It is a fact that few locations in the world have this type of huge prices, which is a disincentive. Because of the Land Use Act, the government has inhibited access to land.”
Secondly, infrastructure development. “After many years, our infrastructure development is still centered inside the towns. Most workers spend their time on traffic. Why can’t we have speed rails to Ibadan, so that people can live there and work in Lagos?”
Thirdly, mortgage finance. “We don’t have a viable mortgage industry. Property transactions today are mostly on cash and carry basis. The commercial banks’ interest rate on facility is now about 29 per cent. That means, in four years, if you take a loan of N10 million that loan will worth about N20 million.
“Our environment is very challenging. Only few homeowners can boost of property documents. In Lagos, I doubt if there is up to 100 certificate of occupancy registered, despite all the awareness created by the government and the state is the most dynamic and active in property transactions. Some states may not have up to 100 registered documents. If land does not have title, how can the owners do transactions?
Speaking on property tax, Ubosi noted that easy money from the federal government has made most state governments complacent on issues of property tax, adding that unlike Lagos State, which has put together an efficient tax administrative and collection system, most states are still very comfortable with receiving monthly revenue allocations from the Federal Government.
He recalled that “Lagos collects internally generated revenue of between N12 billion and N14 billion monthly. In 2008, the State made a total of N139.2 billion from internally generated revenue. Of this figure, tax from property accounts for between 1percent – 2 percent annually. In 2010, the state generated a total of N3billion from Land Use Tax alone.”
He lamented that whereas the contribution of property tax to over all annual revenue in states like Johannesburg in South Africa; Rio de Janeiro in Brazil; Toronto in Canada; Georgia in United States are 20 percent, 29 per cent, 32 percent and 21 percent respectively, those of Lagos and Anambra States who lead the pack in Nigeria make paltry contributions of 1.6 per cent and 1.8 per cent respectively.
He, therefore suggested, among other things, that government should understand the significance of property tax; be serious about its administration and collection; embark on an aggressive publicity and enlightenment campaign and be accountable and transparent on issues relating to the subject matter.