Propertygate urges government engagement on housing delivery

In the wake of Federal Government’s plan to increase the nation’s housing stocks and reduce homelessness, the Lagos-based real estate developer, Propertygate Development and Investment Plc has advocated engagement with the governments and other critical stakeholders to address age-long challenges bedeviling the built environment sector.

And notwithstanding the inclement weather, which signals stiffer challenges against the real estate industry, the senior official of the company wants intervention in the areas of infrastructure, finance, red tape, processes and reviews of planning permits and rules, perfection of title and land administration.

While recognizing that the vast potentials in housing will remain difficult to unlock until functional mortgage finance system is in place, the Managing Director and Chief Executive Officer, Propertygate Development and Investment Plc. Mr. Adetokunbo Ajayi who spoke at its 9th Annual General Meeting held last week in Lagos said attention is sometimes misplaced on affordability, when the key to unlocking the sub-sector is mortgage.

“The solution requires great innovation, as the financial system, as currently configured cannot provide functional mortgage. Furthermore, the need for collaboration among operators in the sector cannot be more urgent than now,” he said.

Looking into this year, Ajayi said, the real estate sector could benefit from the growing population and urbanization.

However, this is not the case as the total GDP of the sector declined to 6.85 per cent in 2017 against 7.22 per cent recorded in 2016.

It underperformed the non-oil sector category, where it resides, which achieved an annual growth of 4.7 per cent by the end of the year.

Following its hostile lending climate as interest rates rose in 2017 hitting 30 per cent per annum as some point, the year witnessed extremely limited mortgage financing for buyers, crippling potential demand, a situation that is yet to record significant improvement.

According to Ajayi, “real estate is a highly capital intensive business, which will thrive under an encouraging credit regime.

The interest rate at about a time got to an average of 30 per cent, the question is if you are doing real estate development and you are collecting money at such penal rate then you are likely to run into trouble.

Then if you also develop and you are looking at people to take it up from you whether it’s residential or commercial and because of the huge capital for that precision they require mortgage which is rarely available and its extremely high interest rate is not encouraging.”

Ajayi who stressed that their wealth of experience and knowledge helped them through the difficult phase noted that even though mortgage played a significant role in the success of the sector, it is important to understand who the buyers are, where they comes from and their positions else one will keep churning out products no one is interested in and can afford.