INCENTIVES TO REAL ESTATE DEVELOPERS, A PANACEA FOR ADDRESSING HOUSING DEFICITS IN NIGERIA
ESV Mohammed Salihu
The Nigerian real estate sector is both complex and dynamic. Real estate development is one of the value chains in the real estate sector that is driving changes, and promoting market dynamism, with many positive changes being experienced. Property development companies in Nigeria have up their games, embraced professionalism, and delivering world-class smart homes, though expensive, but greatly helping to address the Nigerian housing deficits. With a housing deficit of over 15.56 million units, the Nigerian case is peculiar and needs collective cum urgent attention from both the private and public sectors. One of the ways to address the housing deficit challenge is through diverse incentives to property development companies. These incentives could come in diverse ways, ranging from tax reduction in the importation of building materials. It is evident in the prices of houses being sold by developers that the rising cost of building materials is one of the major reasons for the rising cost of housing cum housing accommodation in Nigeria.
Most materials needed for the development of modern houses are imported, and with the Nigerian escalating and unstable exchange rate, real estate developers need to be protected against hyperinflation with tax holidays and incentives.The professional bodies in the real estate sector like the Nigerian Institution of Estate Surveyors and Valuers (NIESV) and, the Real Estate Developers Association of Nigeria (REDAN), among others, ones should come together and present an actionable proposal to the federal government on the need for a specialized bank for the real estate sector.
The Federal Mortgage Bank (FMB), the Bank of Industry (BoI), and the Development Bank of Nigeria (DBN) are not addressing the capital needs of real estate professionals. Real estate development is capital intensive and will require a specialized bank that will provide timely, accessible, and affordable credit facilities for developers at all levels.Another angle to the incentive the government could extend to developers is to ensure that land title documents are speedily processed and given to developers. The bureaucratic processes of obtaining land title documents in Nigeria are stalling property developers to both private and commercial developers. In Nigeria, many and willing to develop properties, but even with available capital, the title documents to embark on the development of legal structures are lacking. This is the reason behind the development of estates without government necessary approvals. This needs to be urgently addressed, and amend the land use policies where applicable.The ease of doing business in Nigeria as it concerns real estate should be reviewed by the government at all levels.
This all-important sector of the Nigerian economy needs to be protected by the government. The regulation in the housing sector should be people-centric, and multiple taxes being levied on developers and developed houses should be reviewed. Incentives to developers will encourage more strategic investment in the real estate sector and massively help in addressing the Nigerian acute housing deficits. ESV Mohammed Salihu, is the Principal Partner of Mohammed Salihu and Associates, a firm of Estate Surveyors and Valuers that is offering diverse real estate services.
