Estate developers, agents shun major cities as insecurity worsens nationwide
The growing spate of insecurity in Nigeria, especially in the northeast, northwest, north-central and some parts of the southern states in Nigeria had started taking its toll on the nation’s real estate sector.
With over 3.3 million people displaced by insecurity, including over 2.5 million internally displaced persons (IDPs) in northeastern Nigeria, the housing crisis is really worsening.
Experts had hinged the success of housing programme in Nigeria on the supporting investment from the private sector because of the low budgetary allocation of N60.87 billion to housing in 2020.
But the combined effects of kidnapping, banditry terrorism and herdsmen’s attacks in major cities have made nonsense of the gains of private sector participation.
Places worst hit by the incidence are Borno, Kaduna, Katsina, Yobe, Maiduguri, and even Kogi states, which are notorious for banditry, kidnapping, and other violent crimes
Many people, who are already housed, had their house razed down, while those displaced from their communities are left without homes thereby worsening the overall deficit.
The Guardian investigations showed that estate surveyors, agents, developers, and even investors are scared of travelling to some parts of Nigeria because of the rising waves of kidnapping and banditry in the country.
Tales of woes are replete of the rising cases of kidnapping and terror attacks on travellers on the high ways. Some estate surveyors have fallen victims of these heinous crimes.
The incidents worsened of late and the presence of security agents in most highways and cities have not hindered the crimes, which led to the recent calls for regional security outfits.
In the midst of this situation, many developers and real estate professionals are no longer willing to go on-site or do any real estate transactions, resulting in the abandonment of several on-going projects for fear of being kidnapped.
This had led to an increment in vacancy rates in many areas as people are fleeing their locations as a result of insecurity.
Stakeholders, who had earlier predicted the recovery of the real estate sector because of the crucial roles the Family Home Fund (FHF) and the Nigeria Mortgage Refinance Company (NMRC), will play in ramping up the 20 per cent reduction in the Federal Government’s spending on housing, said the recurring insecurity in the nation’s life is becoming a disincentive.
For instance, many projects that could have helped in mitigating the housing deficits have been abandoned, while the terrorists are destroying many houses coupled with herdsmen attacks, thereby worsening the already precarious situation.
According to them, not even the expected gains from the recapitalisation of mortgage banks and the finance bill touted to favour Real Estate Investment Trusts (REITs) are making any difference as many investors have stood down their projects, preferring to observe developments in the country.
The security threat, they said, could affect the $2.5billion Family Homes Fund with the objective of achieving 500,000 homes by 2023 in different states.
Already, the fund is yielding results through the commencement of residential development projects in Yobe in partnerships with Mixta Nigeria and Shelter Afrique.
President, Nigerian Institution of Estate Surveyors and Valuers (NIESV), Mr. Roland Abonta said everybody including foreign and local investors is scared of the high level of insecurity in parts of the north.
According to him, estate surveyors are not in isolation with the happenings in the country.
Insecurity, he said, is a bad one for everybody because real estate is a high profile investment that is cost-intensive and requires a lot of financial commitment. So, every investor is looking for a secure environment for his investment.
The other day, we heard of some houses being burnt in Kwara and other places.
“The terrorists go to places and destroy every building that is in that place, and so no investor will go near where there has been doing such in the past for fear of the same thing befalling his investment.
“The foreign direct investment in real estate is the worst hit with warnings coming from the United States and other nations saying their indigenes should not be around some places in Nigeria.
“Definitely, those are the price the economy is paying for the unending insecurity in our nation. There are situations, you described as a win-win situation with insecurity, it is a lose-lose situation, there are losses, such as loss of lives, investments, and assets.
“Property market in some of these areas is down and goes down every day each time there is an attack between Abuja- Kaduna road or attack within Kaduna metropolis. it goes down.”
There is a lot of fears in the land, fear for even for Nigerian investors.
Illustrating the effect of insecurity to estate surveying practice, he said some body, said even if he is paid a billion naira to do the evaluation in Maiduguri outskirt, he will rather die of hunger than going to the place that will expose him to attack.
“Since the method of attack is no longer predictable, it is beyond the military, it is beyond everybody such that with escort people run from them when they start operations. What do you make out it? Simply, we are in a situation that is very precarious, a situation of crisis in our security system and until some thing is done about it, no sector will survive much more so the real estate sector.
“It is worsening because investors are scared and even the existing houses are being burnt down, definitely, it has a worsening effect on the housing industry and other sectors including the real estate. In fact, very soon the entire economy will come down that is when you will know the import of what we are dealing with,” he added.
For the Executive Director, Shelter Origins, Ezekiel Ojo, although the figures being bandied for the housing deficit is not realistic, insecurity is putting pressure on it in one way or the other.
According to Ojo, those who are already housed but displaced from their communities due to insecurity are contributing to the deficit.
He also said insecurity is also leading to a massive exodus of people from their villages to the centre of cities, thereby putting pressure on available houses.
Also, Chief Operating Officer, NorthCourt, a real estate advisor, Ayo Ibaru said insecurity is also leading to the abandonment of projects in north east Nigeria.
According to him, available data showed that where there is insecurity, there is an unwillingness on the part of developers to go there.
Areas with insecurity, he said had more uncompleted developments, while ongoing developments take a longer time than necessary for completion because insecurity influences the natural selection of where to stay either by individuals or by corporate organisations.
Ibaru also stressed that foreign investors are more likely to go to safe locations to ensure the safety of lives and returns of investments.
The Managing Director, Propertygate Development and Investment Plc, Adetokunbo Ajayi said one of the important considerations for any investor is the safety of his investment or capital According to him, if there is a perception of insecurity in a location, it is not likely that an investor is willing to go there.
“Right now, the insecurity challenge in Nigeria is an open secret because it is in the international media that we have security challenges, this is now affecting investment in housing”, he said.
Ajayi, said it is not limited to foreign investors as it also affects local investors.
He stressed that it will take the heart of a lion for a local investor to venture into real estate developments in the troubled areas no matter how the need may be.
“ You are surely not going to go there. Even to get staff, investors and suppliers to go there would be a challenge. Many people will not go there and this surely affects meeting the needs of housing in those locations”, he added.
Sharing his experiences, he said he was at a time, discussing development opportunities in parts of Adamawa and some other northern Nigeria in 2018.
“ I was at Adamawa State to look at possible investment opportunities that affect low and medium home owners, if I am asked today, I will say let’s put it on the hold and observe the security situation and when there is an improvement, then we can launch out.
“So, for us as a corporation, that will be our own position and I believe as it is with us, that is how it would be applicable to other people.
“Most importantly, when you are even talking about the demand, the question would be, would there be even demands in those areas? You should remember when there is insecurity in the Niger Delta; people were running away from there. So every time, people are running away, you cannot have strong demand there, the opportunities will not be there.
“I remember in those days, when we have so much insecurity in the Niger Delta area, other parts of the country like Lagos and Abuja benefited immensely from that as many people were relocating to Lagos and they were not willing to invest there. So if you are a developer, you are going there because aside insecurity, you don’t really have business opportunities there,” he added.
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