Written by Victor Gbonegun
Posted on 21-07-2020
DR. AUSTIN OTEGBULU is an associate professor of Estate Management, University of Lagos. He spoke to VICTOR GBONEGUN on why property market has contributed dismally to Nigeria’s Gross Domestic Product (GDP); the essence of sustainable green building designs and need for property data bank in the country.
In some of your advocacies, you clamoured for green building designs in Nigeria, but such remains at its low ebb. Again, why must Nigerians and builders imbibe green building culture?
THE issue of sustainable designs in the construction sector is not something that the professionals can do alone. The government should see it as a responsibility for a healthy environment. In other countries, they have green standards used to measure green buildings. There are also different types of certifications in several countries.
For instance, in the United Kingdom, they use the Green Building Council and Leadership in Energy and Environmental Designs (LEEDS) in the United States of America, while Nigeria has adopted EDGE certification as recommended by the World Bank. This is because it is more affordable for emerging economies. EDGE green building certification system makes it faster, easier and more affordable to build and brand green.
Nigeria is the 15th most vulnerable country in the world in terms of the effects of global warming, fossil fuel emission and climate change. So, we need green buildings more than any other country. The Federal Government must encourage green designs for a healthy environment. Going green will bring about energy efficiency, lower construction costs, reduction in carbon emission and lower professional costs because real estate consumes about 40 per cent of energy globally. If we introduce efficiency in our buildings, the number of power stations required will reduce in the country.
In Dubai, green buildings generate their own energy rather than paying energy bills to the public sector. It is an irony that in Nigeria, most of the certified green buildings pay very high service charges because most of the developers don’t have certification. We only have four or five green-certified office buildings in Nigeria. The government hasn’t shown sufficient interest in green building development. The government should take initiatives by setting up a green building council for healthy real estate sector.
Currently, people are building without standards. There should be a law guiding property development that will state the type of buildings and standard for their construction.
The Nigerian property market seems not to have achieved its potential, as recent figures from the National Bureau of Statistics have indicated a very little contribution of the sector to the Gross Domestic Product(GDP). How do you see this development?
It is a fact that the Nigerian real estate is contributing about four per cent to GDP and the world average is 15 per cent. Some countries contribute between 30 and 50 per cent. The problem with the construction industry is that most of the property being developed is not an outcome of proper market research. A lot of properties in the market are not occupied, yet, many people can't find a house to live. This means that we have not addressed the problem. If we have a good mortgage system that allows people to take money from banks with the hope of paying back, nobody will tell the developer to produce what the people need. People are looking for one-room apartments, studio and not big houses because it would not contribute to the GDP or create value when there are no demands for it.
Most of those building houses for the upper end of the market do not contribute to the economy. We also need to examine the attributes of buildings that people are looking for before constructing them. There should be a market study that guides what developers are building. There shouldn't be a mismatch because it will be wasted money.
The deficit in the housing sector is still very huge. Some experts say over 20 million homes are needed. Is this housing gap realistic? What is your suggestion on how to improve the supply side of the market?
The figures are not realistic. There is no basis for guesswork, but there must be an empirical study to establish if the gap in housing supply is right. We can’t talk about housing deficit without a housing census. We need to do a housing census to determine the number of houses that are vacant, and why they are vacant? Deficits also come in terms of quality, quantity and affordability. Does the income of the economy support available houses? The Nigerian Institution of Estate Surveyors and Valuers has been saying, "let us be engaged to conduct a housing census."
Affordable housing is a word that I haven’t been able to understand in Nigerian housing industry because how many of the Nigerian workers could afford to buy any house with their income? How can they afford N40 - N50 million houses from their savings? We have to look at our housing policy realistically and encourage the production of local building materials. When all building materials are imported, it is not helpful. We should try and develop our local industries.
There are concerns about poor governance in the management of public buildings, as many of them are in bad shape. What must we do to remedy the situation?
The issue of poor maintenance of public buildings arises as a result of a lack of policy and attitude of people in government. The estate surveyors and valuers are trained to manage assets, but you find out that a lot of professionals who have challenges in their own fields have abandoned their fields, and are coming to do real estate jobs.
At the end of the day, you will find out that their interest is no more rendering services, but money and they end up doing low-quality jobs or no job at all. Most times, people in government are not being sincere to themselves; they don’t give jobs to those who have the competence and are trained in the act of facility or asset management. People who are in power assume larger-than-life attitude in their positions. We need to try and make the government understand that things have to be done properly. The government should be sincere in governance and there must be compliance with ethical standards. We need to work on the morality of our actions, and the country should place emphasis on ethics from the primary to tertiary level. Students must be grounded in civil education and ethics.
The influence of technology is critical to the development of the real estate sector. With the sector being hampered by COVID-19, what recommendations will you proffer to operators in the housing industry?
It is still very low and we need to enhance it. I’m not satisfied because we can still do more. Even without COVID-19, we can’t wish away the importance of technology in housing delivery. Technologically, we are advancing and without it. We can’t reclaim waterlogged areas to build. It helps in producing houses faster, especially mass housing, saves cost, and reduces the number of people at site. We need to rejig our system completely using technology. Operators must embrace technology and research in the construction industry, especially how we can use locally manufactured materials to improve our housing supply and minimise waste in construction through value engineering and terotechnology in projects. We must do away with things that will not generate value in the economy.
COVID-19 pandemic has affected global businesses, including the real estate sector. What kind of intervention is needed at this time to rejuvenate the sector?
Government should reduce its interference in the economy. Recently, the Federal Inland Revenue Service (FIRS) introduced a new stamp duty on properties instead of bringing in palliatives. There should be incentives for developers; we need a good mortgage system that is in single digit, property taxes and duties on imported building materials should be reduced. The government must also provide more infrastructure, site and services scheme. The government should reduce the pressure on developers and should provide infrastructures such as road, water and electricity. Due to the pandemic, a lot of people have lost their jobs, the demand for properties has reduced and prices have fallen. By the end of this year, it is either some people will not able to pay their rents or landlords will relieve them of the houses.
In the valuation of the solid minerals industry, the problem has been a lack of experts in those fields. Don’t you think the curriculum of tertiary institutions should be reviewed to correct these anomalies?
Most tertiary institutions have incorporated studies in the valuation of the solid minerals industry in their curriculum, but it should be reviewed from time to time. But the question is: do we have enough experts to teach in all the schools? We have few experts in all the fields and the country needs to train and develop more competencies in those areas.
Culled from The Guardian Newspaper, July 20, 2020