The Lagos State Chapter, Chairman, Nigerian Institute of Building (NIOB), Mr Adekaja Adekanmbi, on Tuesday said that dearth of funds was a major challenge facing growth of the property industry in the country.
Adekanmbi told the Nigeria News Agency in Lagos on Tuesday that building and construction projects were capital intensive and required large sums of money to accomplish.
He said the amount of capital needed for growth and sustenance of the industry was not available locally, stressing that there was no viable source through which operators could get funds.
Adekanmbi called on government across board to boost financial capacity of the operators to enable the industry grow and enhance its contribution to Gross Domestic Product (GDP).
“The challenges of property industry in Nigeria are huge, and one of them is funding.
“Funding should be a major priority if the government really wants to grow the property industry.
“Government can earmark the amount it wants to put into housing development and make the fund accessible by the developers through the Federal Mortgage Bank of Nigeria.
“Unless this is done, there is no way the private developers can build cheap and affordable houses, because private developers cannot collect loans from banks at 25 per cent interest rate; it is too high.”
Adekanmbi said there were many unoccupied estates and houses built by private developers due to high costs.
According to him, some of the developers sourced funds abroad to build the houses, while others got from commercial banks at high interest rate and conditions.
He said that the interest rate on loans for housing was not supposed to be the same with what was charged for commercial businesses because of the long-term nature of housing projects.
Adekanmbi called for the establishment of a Construction Development Bank to serve as a source of finance for operators in the property industry.
He said it would serve as a bank of last resort and help developers to finance long-term housing projects.
“Since it has become obvious that the government alone cannot provide the needed houses for the country, it therefore becomes paramount for private operators to fashion out strategies to grow the industry,” he said.
Adekanmbi called on the operators in the industry to plan toward setting up the Construction Development Bank.
He said it was not reasonable to use short-term loans to finance long-term projects, as the developer would be short-changed in the process and would not be able to recoup his funds on time.
“This is why we are clamouring for the establishment of the bank, because it will provide much relief in terms of funding to the sector,” he said.
Edited by Celine-Damilola Oyewole/Oluwole Sogunle