The Chairman, Millenium Group, Eze Munachino, says the Nigerian real estate market presents bigger prospects.
Munachino, who runs Nigeria’s leading real estate and general merchandise conglomerate, said the market had recorded exponential growth in recent times and was still expanding.
The growth, according to him, was as a result of the secured investment opportunities created by the industry for many Nigerians, whose earnings were now diversified because of the yields from their real estate assets.
He, however, noted that while investing in real estate offered countless opportunities, including gaining financial prosperity and building wealth, there were many challenges that could limit an investor’s earning and capacity to invest.
Speaking further, Munachino disclosed that one of the biggest challenges facing the real estate sector in recent times was affordability.
He noted that with a growing middle-class population, rapid urbanisation, and young demographics, Nigeria possessed all the key factors for real estate investment, regretting that financing and affordability had remained problems for developers and prospective homeowners.
“Millions of Nigerians struggle for affordable housing amidst the real estate boom,” he said.
Explaining the dynamics of the sector, Munachino said though there were several ways to invest in real estate, they all depended on similar economic factors to earn profit. “The first factor is that the property must increase in value. Furthermore, the costs involved in owning and maintaining the property must not exceed its increased value,” he said.
Using the real estate market in Enugu State as a case study, he noted that the sector was characterised by over-inflated prices of properties for sale and rent, but the actual value of property was far less than the prices being leased or sold for.
For him, affordable housing should address the housing needs of the lower- or middle-income households.
“Affordable housing becomes an issue when a majority of the population is not able to buy houses at the market price. This can be likened to what is happening in Enugu where below 30 per cent of its population can afford a standard home and at least 5 per cent have no access to housing,” Munachino said.
He said that the implication of the development was excess supply with little or no demand as a result of exorbitant prices.
For most working Enugu residents, the earning capacity is generally low, making it practically impossible for the average person to save towards owning a house.
He noted that disposable income of the people remained the primary factor in determining the affordability, and as a result, it was the responsibility of the public and private sector to cater to the rising demand for affordable housing.
“Enugu’s housing disparity reflects the state’s huge economic divide. Most residents that cannot afford these rents live in large numbers, resulting in congestion. Access to decent, affordable housing would provide critical stability for these families, and lower the risk of being homeless.”
In revitalising communities, the construction of affordable homes, according to him, could also help to stimulate economic growth with healthy mix of housing options, from market- rate and affordable rental housing, single- family homes, duplexes and developments for seniors (old people).
It would also ensure opportunities for all individuals to improve their economic situation and contribute to their communities.
He noted that in reality, the lack of safe, affordable housing was costing Nigerian cities in several dramatic ways.
“Cities that fail to step up with affordable housing solutions drive out residents, lose potential workers, and discourage growth in their local economies. While those who already have safe and stable housing may not feel the true cost of poverty. The effects are real and can have a serious detriment on our communities,” he further said.
For him, high housing prices can slow down a local economy, leaving jobs unfilled and less spending power in a community. But, when affordable housing is readily available, more opportunities become available for people at all income levels.
Apart from the price of land, he said constant increase in prices of construction materials and labour would drive the price of properties.
But the above factors are where both the government and the private sector, according to him, should beam their lights on, if the government’s desire was to make the real estate industry much better for Nigerians.
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