Skip to main content

Lagos set to review PPP processes as initiative achieves only 10% success in 5yrs

Efforts by the Lagos State government to boost housing stock with an output of 15,000 units through a Public Private Partnership (PPP) with private estate developers initiated in 2009 has achieved only 10 percent of the projected units.

The partnership, which involved the developers providing the needed capital while the state government provided land at different parts of the state, was expected to act as an intervention in affordable housing provision for medium- and low-income earners in the state.

Disturbed by the slow progress of the partnership and minimal result achieved, the state government says it is set to review the scheme by softening the process for developers who, the government understands, are facing tough times meeting their part of the bargain.

“Evidently, our PPP scheme has not met the target we set in 2009 for some reasons, which include lack of funds for developers to deliver the housing units as our model has always been to provide the land while the developer sources the funds and delivers the units,” Bosun Jeje, the state commissioner for housing, told BusinessDay in an interview.

“Real estate developers are not immune to present economic realities; so when there are unfavourable monetary policies and economic downturns, it also affects them, more so because housing projects are capital intensive. Also, the resources to buy homes have been on the decrease lately, so it’s been really tough for some of the developers to strike a balance in meeting their part of the bargain,” Jeje said, adding that the state government was already reviewing the scheme and was willing to soften the process.

A 2014 report on Lagos housing development by Residential Auctions Company (RAC) notes that the slow progress by developers to deliver these homes highlights the challenges faced by real estate developers in accessing funds and the complexity of securing adequate title.

Some of the units already delivered under this scheme include Sunrise Estate Ipaja, which consists of 628 units of two- and three-bedroom apartments. Another is CHOIS Gardens developed by First World Communities, which has delivered 400 units of two- and three-bedroom apartments in Agbowa, and the 78-unit Elegant Court in Ikota.

Jeje, however, revealed that more units were expected by year-end as some developers were already at advanced stages of delivering their units.

“Some of the units are at roofing level in different parts of the state, while others are still under construction,” he noted, adding that about 1,500 units were expected by year-end.

The commissioner revealed that the state government was working on a policy that would assist the developers, explaining that one of the steps they were considering was that once the homes were delivered, the state government would off-take them from the market and inculcate them into the LagosHOMS units so that developers funds would not be tied in the market.

On a possible penalty for developers who have not delivered their expected units, Jeje stressed that they could not be punished because most of them had contributed their resources and were willing to execute the project if not for the unfavourable economic conditions.

Odinaka Mbonu
Labels:

Comments

Post a Comment

Popular posts from this blog

Entrepreneurs should invest in real estate – Expert

An expert in the property market has described the real estate market as an investors’ haven, adding that the industry holds great potential for operators in the country. Speaking on the theme: ‘Growing a diversified group of businesses’ at the Fidelity SME Forum, a weekly radio programme being packaged by Fidelity Bank Plc, the Chairman/Chief Executive Officer, Genesis Group of Companies, Chief Nnaeto Orazulike, said the property business was one area where investors could expect to recoup their investment within a short period of time because of the high return on investment. He advised Small and Medium Scale Entrepreneurs desirous of growing their businesses to make conscious efforts to tap into the huge property market in the country even as they ploughed back the excess funds into their businesses. “Naturally, as you grow your business and develop it, the best thing to do with the excess, which the business doesn’t absorb is to invest it in real estate,” h...
Post a Comment
Read more

Common Mistakes Of New Real Estate Investors

Many people are convinced about the soundness of real estate investment as a wealth-building vehicle but most are not clear as to the path to follow and the pitfalls to avoid. More recently, I have had reason to clarify to aspiring real estate investors that real estate investment is not a get-rich-quick system. It is a system that requires knowledge, dedication and focus. We shall examine a few mistakes to avoid if you desire to effectively utilise this wealth building vehicle. One of the basic errors new real estate investors make is to buy properties blindly on the assumption that all real estate investments automatically go up. This common assumption is not true in its entirety. For instance, if you decide to buy a property in an odd part of town without considering basic infrastructures or basic advantages, and then you go ahead and develop the property, you may experience a high vacancy ratio (this means, it takes an unduly long time to rent the property to tenants) or it m...
Post a Comment
Read more

UPDC’s REIT Floats N30 billion Offering

UPDC Real Estate Investment Trust (REIT) has completed arrangements to raise N30 billion by way of offering of 3,000,000,000 units of N10 each at par. The REIT, is sponsored by UACN Property Development Company Plc. The floating of the offer, which is to commence on February 19 20123 was preceded by a completion board meeting held in Lagos on Tuesday, where the bank and all the financial advisers to the offer signed the necessary documents. The Chairman UPDC Plc, Larry Ephraim Ettah  said the offer which closes on March 28, 2013 is payable in full on application. He explained that the REIT is a closed ended one, adding that the units of the REIT  would be traded only through a licensed stockbroker once the offer is concluded. Ettah, while fielding questions from journalists explained that the company has huge projects waiting for execution, adding that the proceeds from the offer would be channeled on the projects. According to him, the REIT will invest primarily in a ...
Post a Comment
Read more