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Bank Loans To Real Estate Industry Drop By N162bn

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Credit allocation by banks to the real estate industry has maintained a downward trend in the last one year.
Data obtained from the National Bureau of Statistics showed that the industry got about N622bn out of the N15.13tn credit to the private sector in the last quarter of 2018.
The amount, which accounted for 4.12 per cent of the total credit to the private sector, was about 12.39 per cent lower than the N710bn recorded in the third quarter of 2018.
In the first and second quarters of 2018, N784bn and N744bn, respectively, were given out by banks to the industry.
The first quarter of 2018 saw growth in credit allocation to the industry when the amount rose to N784bn, up from the N753bn recorded in the last quarter of 2017.
However, the comparison between the first and last quarters of 2018 showed a drop of about N162bn.
Stakeholders in the industry said it had become increasingly difficult to access commercial banks’ loans for investment in real estate.
Investigations revealed that in the last two years, it had been difficult for many developers to break even due to the glut in the property market, which had led to the high rate of default on loans.
It was gathered that commercial banks were no longer interested in financing real estate projects, and had not been putting their money in the industry for a while.
The Deputy President, Real Estate Developers Association of Nigeria, Mr Akintoye Adeoye, said,  “If you go to any bank today and tell them you want to finance real estate development, they will not talk to you because they have had their fingers burnt.”
Adeoye stated that from the glut in the property market due to low purchasing power, interest rate, which he said was around 25 to 35 per cent, had also been a major clog in the wheel of real estate funding.
“Housing is long-term, so it is a mismatch to use a short-term fund to finance a long-term project. Now, banks are not places to go to except on some special projects where the off-takers are members of a cooperative society and they already know how to wrap up the transaction but it will also be expensive for the buyers because the cost of funds will be transferred to them,” he said.
The Chairman, Nigerian Institution of Estate Surveyors and Valuers, Lagos Branch, Mr Rogba Orimalade, stated that from the period the economy went into recession till now, commercial banks had been saddled with the burden of disposing of huge real estate assets acquired through bad loans.
Orimalade said this had made many of the banks wary of investing their money in real estate projects.
He added, “From the period of the recession and even before, we came from an era where the banks had lots of assets, at a particular time the Asset Management Corporation of Nigeria was said to be the biggest custodian of real estate assets in the country and it was mainly because of the bad loans that emanated from the banks they took over. Most of the assets were taken away from the people who gave them out as collateral.
“So, naturally, only very few of them are out giving loans. It is only common sense for a lot of those banks and other financial institutions to look at the amount that they give out. To a lot of them, the industry is not attractive anymore.
He, however, stated that the question should not be about the reduced credit allocation to the industry but rather it should be about what should be done to grow the country’s economy through housing .
“Government says all the time that it wants to grow the economy but the economy cannot really grow without a thriving housing sector; that is the reality. Just as the government is giving priority to agriculture and the Central Bank of Nigeria and other banks are being compelled to give certain loans to agric and SMEs, it is important that the government recognises that housing is key to growing the economy,” he said.
According to him, once housing is taken care of, about 70 per cent of the issues in the economy will be addressed with the potential of the industry to have a multiplier effect on other industries.
Orimalade said, “Until the government recognises and puts a premium on houses, the economy may not really grow as much as it should. There are all kinds of commercial institutions with initiatives for agric.  As far as I am concerned, the same should be done to real estate with housing as a critical part of the economy; in other climes, the economy is determined by how buoyant the real estate industry is.
“I agree that people have got their hands burnt and now prefer to go into other ventures rather than real estate but are the banks giving these credits in a way to help the real estate industry give the economy the bounce that is required? They are not doing that and if not, the question should be put to the government what it intends to do for the industry.”
He said the government should encourage banks to invest more in real estate.
The Central Bank of Nigeria’s Head, Project Administration Team of the National Housing Finance Programme, Mr Adedeji Adesemoye, noted that for the housing issues in the country to be addressed, access to mortgage must be put into consideration.
According to him, one way for the government, especially at the state level to address the challenge, is to sign the Mortgage Model and Foreclosure Act into law.
“The law would help to correct some of the shortcomings of the Land Use Act, which limits access to land and housing,” he said.
He stated that for people to be able to have better access to funding for investment in housing, mortgage culture must be encouraged to grow in the country.

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N69.4bn Debt: AMCON Seizes Properties, Freezes Accounts Of Jimoh Ibrahim

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The Asset Management Corporation of Nigeria (AMCON) has taken over 12 assets belonging to Chairman of Global Fleet Group, Jimoh Ibrahim, and frozen all his accounts over his debt which amounts to N69.4billion.
The seizure of the assets is pursuant to an order by Justice R.M. Aikawa of a Federal High Court, in Lagos.
AMCON on Wednesday took effective possession of all 12 properties through its Debt Recovery Agent – Pinheiro Legal Partners, which include the following: the building of NICON Investment Limited at Plot 242, Muhammadu Buhari Way, Central Business District, Abuja; NICON Hotels Limited building at Plot 557, Port Harcourt Crescent, off Gimbiya Street, Abuja and the building of NICON Lekki Limited also at No. 5, Customs Street, Lagos.
Other properties include: The building of Abuja International Hotels Limited located at No. 3, Hospital Road, Lagos; another Property at Plot 242, Muhammadu Buhari Way, Abuja; the former Allied Bank Building on Mile 2, Oshodi Express Way, Apapa Road, Lagos; Energy House located on No. 94, Awolowo Road, Ikoyi, Lagos; NICON Building at No. 40, Madeira Street, Maitama, Abuja; a Residential Apartment at Road 2, House A14, Victoria Garden City, Lagos; NICON Hotels Building at Plot 3, Road 3, Victoria Garden City, Lagos as well as the NICON Luxury Hotel’s Building, Garki I, FCT, Abuja.
In addition to the takeover of the listed properties, the court also ordered the freezing of all accounts belonging to Ibrahim and his companies, including Global Fleet Oil & Gas Limited and NICON Investment Limited all of who are defendants in the suit No. FHL/L/CL/776/2016 presided over by Justice Aikawa on Wednesday, November 4, 2020.
The court also granted AMCON possession over all shares belonging to the embattled Ibrahim and his two companies that are domiciled in Nigerian Re-Insurance Company Plc (NICON) Insurance Company Plc, Nigeria Stockbrokers Limited and NICON Trustees Limited.
AMCON’s Spokesman, Jude Nwauzor, said all the assets that are listed by the court and scattered around Abuja and Lagos had been successfully taken over by AMCON with the help of court bailiffs and officers and men of the Nigerian police as mandated by the court.

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Land Use Charge: Stakeholders Call For More Property Valuation

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Stakeholders in the real estate industry have said the Lagos State Government should increase the number of properties that have been valued under the amended Land Use Charge (LUC) Law, 2018.
They noted that this would take away the burden of paying high levies on properties by a few in the state.
The Deputy President, Real Estate Developers Association of Nigeria, Mr Akintoye Adeoye, who applauded the recent amendment of the LUC law by the Lagos State House of Assembly, said the number of properties that were captured before the suspension of the process in 2018 was too small compared to the population of the state.
He said, “The percentage of properties that have been assessed is still less than 30 per cent. Rather than tax this number of people, it is better for the government to widen the net and bring more property owners onboard.
“It doesn’t make sense to tax just a few people, especially in a challenged economy like ours. We should bring in more people rather than increase the rate for a few.”
Adeoye said the state government’s decision to amend the LUC law would encourage more people to invest in property in Lagos State.
A six-man ad hoc committee, chaired by Rotimi Olowo, recently presented the report of its findings from a public hearing to the House of Assembly revealing that the review of the LUC lawwas generally perceived to be arbitrary and unrealistic.
During the presentation, Olowo was quoted to have said the Section 1(2), “Pensioner” should be redefined to include all retirees resident in the state from federal and state institutions and from both private and corporate organisations domiciled in the state.
He said it was agreed by participants and stakeholders during the public hearing that vacant plots of land and unoccupied properties should be exempted from the LUC liabilities and a proper classification of commercial and residential property in the state should be done for the purpose of levying.
Among other amendment is the Section 17(c) (i) stating that there is no need for 50 per cent payment by aggrieved owners over disputed charges before their eligibility to appeal, while aggrieved residents and property owners should pay the preceding year’s charges when the disputed charges are being resolved.
Akintoye noted that the resolve to amend parts of the law especially the aspect covering pensioners was a welcome development.
He said, “Before now, it used to be only Lagos State retirees but it has been extended to others across the federation.
“Lagos market is Nigeria’s market and people from all over the world invest in the state where many of them also retire. It doesn’t make sense to have that dichotomy in the treatment of pensioners.”
The President, Nigerian Institute of Building, Mr Kunle Awobodu, stated that to make the newly amended law achieve its objectives, there should be modalities for implementation to prevent fraud and false claims.
“I am in agreement with the amendment. The only thing I am sceptical about is how those from the private sector will be identified. It is difficult but it can be done. It is difficult to have an accurate record of pensioners from the private sector. But there should be modalities for implementation,” he added.
A former President, Nigerian Institution of Estate Surveyors and Valuers, Mr Bode Adediji, said even though the details of the amendment had not been made public, its assent by the governor and implementation should be looked into for the benefit of Lagos residents and investors.

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Housing Deficit: LASG Completes 360 Homes In Ikorodu

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Lagos State Government said it has completed construction of 360 additional housing units for commissioning soon as part of its efforts to tackle the challenge of housing deficit in the state.
The state Commissioner for Housing, Mr. Moruf Akinderu–Fatai, disclosed this recently, while conducting a validation and inspection visit to Lagos Homes, Lagshom Igbogbo Scheme 2B, in Ikorodu Local Government area of the state.
“Lagos is adding 360 more homes to the existing stock of homes in the state in the next few weeks,” Fatai said.
According to him, the state government has resolved to complete all housing schemes that were set aside by the previous administration in order to speedily bring succour to residents by increasing the availability of decent accommodation for the increasing population of the state.
“Reducing the housing deficit and bringing more people on the home ownership ladder through provision of affordable and quality homes are tasks that are germane to building a 21st century economy.
“Hence, the administration of Mr Babajide Sanwo-Olu is frontally pursuing the goals of completing all the on-going housing schemes to ensure that befitting and decent accommodation is available to the ever increasing population of the state,” he said.
The Permanent Secretary of the Ministry, Mr. Wasiu Akewusola, who also affirmed that over 360 families would soon move to their homes, expressed satisfaction with the on–going works at the site and encouraged the contractors to keep up with the good job in order to deliver at the targeted date.
He disclosed that in year 2020, not less than 3,500 homes in Sangotedo, Idale in Badagry, Odo Onasa/Ayandelu, Ibeshe, Egan-Igando and Ajara would be completed from both government owned schemes and joint ventures.
The LagsHom Igbogbo Housing Estate is made up of 30 blocks of buildings with 120 units each of three-bedrooms, two-bedrooms and one- bedroom, making a total of 360 units of family homes.
In addition, the scheme which commenced in 2012 has a central sewage treatment plant, water treatment plant, high quality road network, and  Street lights.

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