Why houses are selling faster – Mayor of Housing

My-ACE China, known as the Mayor of Housing, reacts to BusinessDay story on surge in sale of houses

…Totally rejects demolition of houses instead of seeking alternative solutions

A real estate strategist has explained why more houses are selling in the past one year in Nigeria despite prices soaring three times higher.

BusinessDay had reported the surge in house sales seeing it as sign of boost in earning capacities of Nigerians.

Agreeing with the BusinessDay report, My-ACE China, popularly called the Mayor of Housing, reacted in Port Harcourt explaining the dynamics of house sales. He said: “I agree that houses are selling faster these days, but not all houses. We’ve seen a resurgence in, especially, commercial houses because a lot of the economy has created a chasm by the rise in dollar rates to the devaluation of the Naira.

“The Naira devaluation has suddenly found those top 1% of the society, especially those that work by proxy, that are paid in dollars with international companies—both locally and internationally. They’ve seen a tripling of their purchasing power because suddenly their exchange doles out more money.

“While the locally earning ones are struggling with the low earning power of the Naira, forex exchange has seen a surge. So the commercial building rise is because a lot of people are also moving from earned and salaries or earned income to try and go into business. So commercial… there’s been a surge in the purchase of commercial buildings because of that.”

Also, he went on, “Don’t neglect the diaspora remittances. Many of these purchases are done by Nigerians in the diaspora. So it’s really more like the economic shift of purchasing power after the devaluation of the Naira.”

He explained further: “Buyers are showing interest in commercial buildings and high-end luxury buildings because. A lot of people are beginning to see that real estate is a perfect hedge of funds, where buildings and their funds will be hedged from inflation if they invest into housing.

“There’s a housing crisis in Nigeria and the elite that have the money are also benefiting from rental income. This has led to a new surge in rental income. For instance, where I stay in Port Harcourt, the rent doubled by 100% within a year. That has never happened. And when there’s such increment, many people begin to invest, especially those that have the purchasing power.

“So the real mid-level and low level that have the 95% of the housing crisis in Nigeria are not able to afford more houses. More people are having to rent and so the elite are having to buy more either to rent out or for commercial purposes. So that’s what you’re noticing.”

Read also: Foreign Direct Investment vs Local Direct Investment: Mayor of Housing urges govts to address needs of local investors

Solution:

“I speak as the Mayor of Housing; and I’ve seen that government needs to first of all declare a state of emergency in housing. Can you imagine with all the rising deficits, our commercial banks are still not lending to real estate, they are not prioritizing real estate. The government is not organizing leverage-lending system for real estate developers.

“And they are not going into more subsidized public private partnership (PPP). Subsidized PPP is where a government goes into a public-private partnership with a developer and is able to try and subsidize some of the construction costs for its people and get the people offtake it. Something close to that model is what Gov Siminalayi Fubara of Rivers State has done with the Greater TAF City housing estate.

“There, the government provided affordable land to the developer, asked him to develop affordable buildings and also subsidized by offtaking some units from the developer so that he can sell. But why that is not perfect yet is that there’s still a missing ingredient, which is indigenous production. Government also needs to quickly as a matter of urgency begin to develop industrial parks and free trading zone for housing materials.

Building materials here would be duty free, a power-subsidized industrial park where power is cheaper and these people can produce these building materials locally with our local materials. Because we have most of the materials here, but because there’s no power, 85% of what we use to build is imported. And with the devaluation of the Naira, it makes houses out of the reach of the common man.”

China advised government to start by declaring a state of emergency in housing. “And then fish out those that are already doing well, such as the people that built the popular Golf Estate in Rivers State so that they don’t go for political cronies. They went for a proven industry standard person that was delivering and went into a non-political PPP with him.

“And that is why when there was suspension of government in Rivers State, work on the Greater TAF did not stop because it was a private development.”

He said that is the model that other states can copy and make better through subsidized PPP system. They should stimulate an indigenous industrialization in the housing materials sector, then houses can come down.

“After all, if you think far, when we were building with clay, straw and local materials, nobody was homeless in our villages. Now that modern materials came in and importation came in, forex becomes a determinant of who owns a house and who does not.”

On what he is doing on the matter, he said he has taken it upon himself to drive the industry and be the industry north star. “We are starting with luxury housing. First of all, we are bringing more sustainable green walls housing system that is more affordable than the regular housing system and faster than the regular housing system in our Alesa Highland Sustainable Green Smart City. Not only are we delivering green walls, but they are more durable, stronger, more eco-friendly. The whole of our estate is going to be a zero-emissions estate.

“They are also more cost-effective so we are delivering it at a better cost, but most interestingly, and very fascinating, is that they are also faster so we are delivering your regular, duplex through our contemporary building style that would take about four to eight months, our green wall building technology builds that in three weeks. So it’s faster, it’s stronger, it’s safer, it’s greener and it’s more affordable.”

He said they are one of the very few companies that have a very robust R&D department. “We are researching into indigenous materials. With the income we are making through the luxury estate, we are already experimenting and perfecting experimentation into indigenous housing materials and indigeneous but alternative power sources that would allow us to use clay, straw, bamboos, and other local materials to build very green, very strong, very economically viable and yet beautiful houses in the low-cost.”

But for now, we want to showcase what we can do in the luxury space, want to make living environments sustainable, want to make them green, and want to make them healthy, so that whatever you see out there, when you get back home, you have a green, sustainable, rejuvenating environment that is cost-friendly and also beautiful. And that’s what Alesa Highland Sustainable Green City is all about.

“I just want to add that the government needs to begin to stimulate the grassroots for economic productivity. And one of them is housing. Food and shelter are more important than clothing in the basic needs of man.”

He said security directly affects food. “Our farmers are leaving their farms and rushing into the city centres. The city centers are getting overcrowded and not having enough houses. So the state of emergency declared in security should be extended to both food and housing. Because the insecurity in Nigeria is chasing farmers out of their houses and forcing people into the city centres and creating a housing density problem that is causing the artificial hike we are seeing in rents.

“The artificial hike we are seeing in rents is forcing the rich to become richer because it is the rich that can afford houses and they are building more houses to rent out to people at exorbitant rates. So there are two things the government must do; quickly declare a state of emergency in, alongside security, and that is agriculture and housing.

“If you don’t resettle our farmers after the insecurity, if we don’t ensure that our few developers are incentivized to develop more, we are going to have a future crime crisis being brewed now. This is because when people begin to live in shanties and under the bridge and in unworthy living environment, crime increases.”

He also advised the government to try by all means to employ a model that works. And the best model is a PPP (Public Private Partnership), not a PPP—Public Political Partnership. For any of the contract, for any of the initiative, for any of the work to work, politically exposed persons must never be part of the PPP equation, he insisted.

“If the government makes it harder for business people, the populace suffers. If the government makes it easier for private people, the natural economic drive for profit will make the private people surge and create the solutions for the people. “And when the market is flooded with products, prices go down and the populace and the consumers win. So declare that state of emergency and use the only model that works: proper PPP and non-political PPP.”

No to demolition: It’s a systemic failure

The Mayor of Housing rejected everything that has to do with demolition of houses. “The failure of government in housing is deeper than just what you’re seeing in demolition, and the ripple effects of demolition are deeper than what most people see.

“The fact that people erect buildings without proper permit is a government systemic failure. The fact that many buildings were approved by the same government—that later claim they were not legal approval—is a systemic failure of the government.”

He went on: “The fact that our cities are not properly planned ab initio before development, is failure of government. The government has the authority to prevent erection of any kind of structure they don’t want, and protection of the ones they want. Failing to do this is the fault of the government.

“So, we have a deeper rot in our government and our enabling laws that discourage development. And this is why the few developers that have the courage to go into development should be protected; the few citizens that have the courage to develop and erect buildings should be protected.

“And the simplicity of the whole thing is that for every building demolished, the ripple effects are more than seven phases deeper than what we see immediately as the collateral ripple effect. So in essence, until we have a government and a system that does two simple things, we will still keep having challenges in housing. The two simple things the government needs to do are: Prevent by all means the erection of an unapproved building. Make it impossible to ever build without permission; Next, protect by all means, any building that has been permitted and erected.”

In other climes of the world, he said, even if you got government approval in the pre-colonial times, your building still stands till date. “It is only here that change of government can change the validity of your approval.

“That is a serious breach and serious, heart-rending, deep issue of seven-fold depth of ramification of damage that I wouldn’t even want to start discussing. That alone is a topic that we can discuss for a full book: on the depth of the ramifications of the collateral damage of each house brought down.”

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