Real Estate Financing: Why Government should Foster its Seamless Implementation

In this short piece, ESV Eshiett Inokon Samuel, a registered Estate Surveyor and Valuer, and a Partner at James Iniama Consult, a leading Firm of Estate Surveyors and Valuers shares his professional opinion on why Government should not only enact Real Estate Financing Policies, but also ensure that the core purpose of the policies are achieved in a most seamless way.

From time immemorial, real estate financing has been one of the major challenges bedevilling the real estate sector of the developed and developing economies of the World. Over the years, governments at all levels have made efforts in the development of policies aimed at supporting the financing of real estate projects. The capital intensive nature of the real estate sector, especially for professionals whose core business in the real estate space is development, was what led to the governments at all levels to be involved in real estate financing. Some real estate development projects are so cumbersome and capital intensive in nature that a single individual or real estate firm cannot finance it alone.

Finance constitutes an integral part of real estate development, and the ability of the investors or developers to mobilize credit facilities from financial institutions for projects is a direct function of how the project development will end.

Unfortunately, the housing finance system in most developing economies like Nigeria is not all encompassing and viable to adequately cater for all kinds of real estate developmental projects. Even when the financial institutions are there, the bureaucratic processes of accessing the finance is another challenge on its own. The Nigerian factor and endemic corruption in the system does not give room for so many real estate developers and real estate professionals to access the credit facilities allotted to the sector by the government.

Real estate development institutions like the Federal Mortgage Bank of Nigeria (FMB), Federal Housing Authority (FHA), Development Bank of Nigeria (DBN), just to mention a few should be overhauled. The policy documents designed by this institution are fantastic, yet they are far from achieving the core purpose of their establishments.  Today, available data puts the Nigerian housing deficit at 17 million. This statistics is not only worrisome, it also speaks volume of the fact that the authorities saddled with the mandate of providing quality housing in Nigeria have not really lived up to expectation.

In housing development, the core role of the government is to provide the congenial business environment for all players in the real estate value chain to thrive, and one of the best ways of doing this is for the institution saddled with the responsibilities of providing the needed capital are optimally up and doing. The low volume of loans being granted by banks and mortgage institutions has grossly hampered housing development by private sector developments.

In fostering the seamless implementation of the policies being developed by the institutions, both the government and the private sector have pivotal roles to play. First, the institutions should be strengthened and empowered to meet the present day housing challenges.

The housing loans being disbursed by the institutions should be all encompassing to cater for all segments of the real estate financing and development. The institutions should not be concentrated in the cities alone; access to loans should be made available across all states of the federation.

Above all, the federal government should provide the needed macroeconomic and political environment for all the given housing facilities to strive. The escalating security situation in Nigeria at the moment is a big threat to housing finance and development.

ESV Eshiett Inokon Samuel, a registered Estate Surveyor and Valuer, is a Partner at James Iniama Consult, a leading Firm of Estate Surveyors and Valuers. He sends in this piece from Uyo, Akwa-Ibom State.