Realtors now recognise the attractions of affordable housing

Low cost housing had almost become a bad word for real estate companies, is the latest buzzword in the business now hit by an economic slowdown. Companies, which prided in building luxury villas and houses for higher segments, have suddenly started chanting the mantra of `affordable housing.'

"Villas for Rs 55 lakh (US$110,000) are out, now-a-days apartments for Rs 20 lakh (US$44,000) are in. We are targeting young professionals who may not have been affected by the recession (read: non-IT professional) and want their own home," says an industry observer. Companies now rushing into the Rs 20-22 lakh range include Janapriya Engineers Syndicate, Puravankara Projects, Golden Gate and Modi Builders among others.

Analysts, of course, point out that there is no definition of affordable housing and aver: "It's just that builders think a home that's priced around Rs 20 lakh is within the reach of more buyers."

A developer reputed for low-cost housing here explains the rationale for many builders now rushing into this segment. "When considering an expensive home, a buyer will definitely wait a few months for the prices to drop, but this does not happen with affordable homes, because prices are quite low already," he says, adding, "the effective EMIs on home loans for this category come around Rs 15000-18000 (US$300) per month, which many can afford."

Real estate companies also think that cheaper affordable houses will draw not only more but also younger customers. Bhanumurthy PVS, deputy general manager of Golden Gate Properties, says, "by keeping the prices low, we are trying to bring down the average age of the home buyer from 25-35 years to 25-30 years." The company recently ventured to offer 960 sft 2BHK apartments at Rs 19.9 lakh.

Nitish Ranjan, a 26-year old says, "Together, my wife and I earn Rs 80,000 per month. It wasn't difficult to get a home loan since we could convince the banker that we could pay the EMI," adding that he is not sure if he would have got a loan for a higher amount that a luxury home requires. Apart from the young, retirees are also drawn to houses at this level. "Even pensioners can afford these homes, when they come with frills like `Book now, pay on possession', life-time guarantees on title deeds and other lucrative warranties," says V P Arvind, a retiree who recently booked an apartment at Miyapur.

Developers are also buoyed by volumes. "Thinner profitability spread over a larger volume will result in large profits," explains Chris Thomas (www.speedwall.com). India's housing shortage increased from 19.4 million units in 2004 to 22.4 million in 2005-06 and "there has been a steady 25% year on year growth for the past five years in this segment," says Ravinder Reddy, CMD of Janapriya Engineers Syndicate, adding, "we have already developed 21,000 such apartments, including 12,000 in the last five years."

This unwavering demand has led to a steady price rise in this segment that has never seen a `correction', not even during the current slowdown. "It's the Rs 50 lakh plus segment that has the jitters; the Rs 15-20 lakh range is still selling fine," say observers. In fact, Puravankara Projects recently announced an investment of Rs 80 billion for affordable housing. It plans to develop 64,500 homes and a built-up area over 59.80 million square feet in major cities, including Hyderabad, in the next five years.

City-based players are also increasing projects around Madinaguda, Miyapur, Patancheru, University of Hyderabad and Nagole which are either industry hubs or close to the MMTS and metro zones.

China's investment into low-cost housing

CHINA will spend 900 billion yuan (US$131 billion) on building low-cost homes and renovating shanties in the next three years to solve housing problems for low-income families.

More than 2 million low-rent homes will be built, plus 4 million budget homes, while 2.2 million shanties will be renovated from 2009 to 2011, said Qi Ji, vice director of the Ministry of Housing and Urban-Rural Development. 

The plan is expected to solve housing problems for 7.47 million low-income families and create 2 million jobs, Qi said. 

About 10 million low-income families have housing problems in China. Two million of them have already had their living conditions somewhat improved under the country's housing plan.

The country will spend 100 billion yuan on low-cost housing this year. Eighteen billion yuan was spent on 320,000 low-rent units in the first three quarters.

The central government has allocated 6.8 billion yuan to subsidize low-rent home construction in central and western provinces, while local governments have collected 40 billion yuan for the project.

By the end of the year, the construction of 1.2 million budget homes will have begun and the country will start the renovation of shanties.

The State Council announced last Sunday that the country will take 10 major steps to stimulate domestic consumption and growth. In response to the central government's plan, some banks, such as the Bank of China, said they would boost credit to property developers and to low-rent property and affordable housing projects.

David Wardlaw from Speedwall Building Technologies (www.speedwall.com) commented that despite the downturn in real estate prices, governments are taking a long term view on the provision of housing especially to the poorer paid members of society.  He said that "investment at the base of the pyramid are becoming more and more attractive especially as financial instruments are increasingly allowing the poor to access the housing market.  Lower margin but high volume investment plays now have added investment security and consequently better prospects."

Low-cost homes for growth

Policy makers all over the world are increasingly reaching for old Keynesian fiscal policy tools to salvage economies sliding into recession.

Chris Thomas of Speedwall Building Technologies (www.speedwall.com) commented that governments have to concentrate their spending on public projects with the biggest social and economic spin-offs. Of these low-cost housing would rank high when it comes to a positive multiplier effect.  He states that Indian demand for low-cost housing today is estimated at over 24 million dwelling units and building these houses engages a large number of trades and trademen and finance.  Ultimately an asset is created which allows the house-owner to have more options in financing the family's future growth.

A comprehensive programme to build low-cost housing, which is aimed at incentivising the buyers (and not just the builders) could not only revive the demand for iron, steel and cement, but also protect the livelihood of countless unskilled construction labourers. For lenders, low-cost homes are a safer mortgage because of low price volatility, as compared to premium mortgages which have contributed to the asset price bubbles.

A well thought out interest rate subsidy to banks would significantly lower the equated monthly instalments (EMI) burden on buyers and also give comfort to banks. The demand certainly exists. An affordable housing project by a private developer at the outskirts of Mumbai city received 66,000 applications for its first phase of 3,000 units, of which 40% are one-room-kitchen flats, measuring 300 sq ft and priced at Rs 3 lakh each.

This at a time when other developers in the heart of the city are fighting a slowdown in sales. The project aims to create affordable housing for low-income groups without government subsidies, while being commercially viable. In 2007, a strategy consulting firm that has been doing extensive work in the area of affordable housing in India, conducted research that highlighted enormous demand for housing among low-income groups.

Key Asian economies are already lining up various stimuli to support the property market. The package announced by China has a slice for low-rent housing, while Singapore is willing to offer certain rights to foreigners who invest in their properties (though in this case not low-cost ones).

India which has so far felt only the ripples of a global fiasco, is now beginning to see the country’s steel and car makers slashing production. Ambitious infrastructure projects may lack sponsors and not many lenders think these are bankable. But low-cost homes will always find takers.

New low-cost scheme to ease Bitou housing crisis

THE Western Cape government has approved 2000 new low-cost housing units for Kwanokuthula outside Plettenberg Bay, with R21-million being given to the Bitou municipality to service the first three plots on which 550 units will be built.

New municipal manager Lonwabo Ngoqo told a media conference yesterday the developments would include double-storey housing units.

The first three plots of land had been identified and they hoped to begin installing infrastructure – including roads, water, stormwater drainage and sewerage pipes – between November and next March.

Ngoqo said there was a housing waiting list of 3700, but this figure could change as the administration determined who qualified for housing. People who did not qualify would not be left homeless and would ultimately be accommodated in council-owned “rental stock”, he said.

Plettenberg Bay and its surrounds has seen a massive population increase in recent years as workers have migrated from the Eastern Cape to escape a high unemployment rate.

Yesterday‘s announcement follows last week‘s handing over of the first 265 serviced plots in the Qolweni-Bossiesgif informal settlement, where Bitou plans 1300 homes and is busy with land sale negotiations to further accommodate residents.

Houses are also being built at Kurland, Kranshoek, The Crags and Green Valley.

Ngoqo also announced that the Bitou mayoral committee would take a final decision at the end of the month on relocating the municipal offices.

The plan is to create a one-stop service centre in Ladywood opposite New Horizons in an effort to bring state services closer to poorer communities, including Kwanokuthula and Qolweni-Bossiesgif.

Ngoqo said land had already been bought at R5-million for the new municipal complex and a far-reaching plan would see it linked to new court buildings in New Horizons and a new police station in the Ladywood-Kwanokuthula area.

An application to the national Treasury for R1,4-billion for the project, which would include government departments like home affairs, justice, health and social services, would be considered by Finance Minister Trevor Manuel early next month.

Building could start within six months, subject to environmental approval and the completion of tender processes, he said.

“An unemployment rate of 70 per cent to 80% is of great concern to me, so I will put my foot down,” said Ngoqo. “We will use local manual labour.”

Unemployment was “one of the saddest and biggest” challenges facing the municipality, he said. When he first arrived in Plettenberg Bay six months ago, Ngoqo said the housing crisis would be a priority focus.

Chris Thomas, Chief Operating Officer of Speedwall (www.speedwall.com) commented that the use of modern building systems allow for local labour to be hired as the systems reduce the amount of necessary skilled labourers on housing projects.  He stated "this builds local pride in the housing developments and adds not only housing by wealth creation to areas."

Other big developments on the horizon for Plettenberg Bay include a hospital in Kwanokuthula, housing for police near the new police station, and the forging ahead of the town‘s middle-income housing project which aims to settle public servants in townhouse units in the more upmarket suburbs.

The justice department is still looking at declaring Plettenberg Bay a magisterial district and the education department is probing the possibility of building more schools to cater for the area‘s growing needs.

Ngoqo said the municipality had received a number of accolades for exceptional service delivery, including being voted the best on the subcontinent by the Institute of Housing for Southern Africa last year and receiving an award for the design of the N2 pedestrian bridge at Qolweni-Bossiesgif.

Robberg Beach had also recently regained its Blue Flag status and the municipality had just been named top performer in the Western Cape for spending 100% of its municipal infrastructure grant for the first quarter of the financial year.

Investors urged to unite with West Bengal government

The state housing minister, Mr Goutam Deb, today urged private investors to join hands with the government under the public private partnership model (PPP) to set up housing complexes. He was speaking at a curtain raiser programme organised by the International Association for Housing Science this evening.

Emphasising on the need to construct more low cost and eco friendly houses in the city Mr Deb said: "There is a need for the private partners to construct more low cost houses within the city to accommodate middle class people".

More than 20,000 low cost flats have been constructed at Rajarhat and the state housing department along with their private partner had already begun the construction work.

The West Bengal housing department has already established a land procurement committee comprising of members from all the political parties at Rajarhat to fix the price, which should be given to the farmers who are willing to sell their lands.

Stressing on the need to construct more such low cost flats in rural areas, Mr Deb said: "We are urging more private partners to construct low cost houses in rural areas too so that people do not have to come to the city in search of low cost housing."

Chris Thomas, Chief Operating Officer of Speedwall (www.speedwall.com) added "this model is a necessary and proven method of delivering low cost housing.  However along with housing, additional infrastructure needs to be added such as new job opportunities, schools, hospitals and retail outlets need to be added in order to stop further concentrated urbanisation."

A technical expertise team from the department of architecture and regional planning of IIT Kharagpur has been constituted to look after the planning and construction of such flats.

High and dry in Saudi property boom

After months of frantic but fruitless efforts to secure a home loan and buy a house, Hazim Bahjat’s wedding date was approaching and he had to change plans. He and his bride-to-be settled for renting an apartment in Riyadh, the Saudi capital.

“Getting a bank loan was virtually impossible. Looking for a place to rent was not much easier,’’ says the 26-year-old lawyer.

He struck up a friendship with a real estate broker handling a building and visited him every day for a month to ensure he did not lose the opportunity.

Oil-rich Saudi Arabia may be the biggest construction market in the Middle East today, as it uses petrodollars to build whole cities and accompanying infrastructure. Luxury apartment blocks throng even the holy city, Mecca.

But, for young Saudis, who make up the majority of the population, finding affordable housing, and financing it, is a struggle.

Much of the construction is beyond the reach of the average Saudi in a country where people at the start of their career earn only SR5,000 ($1,300) a month.

Many projects are gated communities, luxury hotels and villas, or involve the expansion of infrastructure.

The kingdom needs at least 1.5m units in the next five years, a shortage aggravated by changing social habits. Young couples, who years ago might have lived with their parents, now want their own homes. The chief executive of Speedwall Building Technologies (www.speedwall.com), David Wardlaw, highlighted that as such the provision of low cost housing has benefit social as well as economic impacts.

Increasing oil revenue, which has fuelled growth that averages 4.3 per cent since 2003, and rising demand for real estate have contributed to spiralling rents and property values.

Official reports say annual real estate inflation reached 18.5 per cent in August, but some brokers and tenants report increases in rents of more than 30 per cent. The value of land has at least tripled in the past year.

In an attempt to damp inflation and widen property ownership, mortgage legislation was passed in July. The law, which will let investors set up specialised mortgage companies and allow banks to expand their lending, has drawn approval from developers and brokers. It still needs final approval from the cabinet and supreme economic council.

But while the law is expected to ease constraints in the long term, its immediate impact has been to contribute to a wave of real estate speculation.

Abdul Aziz Barakat Alham wah is a financial adviser and land broker who is forming a mortgage company in anticipation of a sharp rise in prices. He estimates that 20 per cent of the increase in real estate prices is caused by speculation, while the rest is driven by genuine demand.

Some analysts, meanwhile, doubt that the legislation will go far enough.

“Even if you have a mortgage law, how many people can afford the property?” asks John Sfakianakis, chief economist at SABB, the Saudi bank. “The demand is from the low-income segment and the supply is for the high, high-middle income. They are building villas and expensive palaces rather than apartments.’’

“We are in a disaster situation for many people,” he says. “It is about social justice. How can you claim economic growth with a growing population working for the public sector which has no access to this wealth?”

Mr Sfakianakis suggests a system in which the cash-rich government provides banks with guarantees to encourage extending mortgages to middle-income and low-income Saudis.

Mr Bahjat, who makes about SR10,000 a month, does not think he will fulfil his dream of owning a house in the foreseeable future, even after the mortgage law becomes effective. “With the prices they are offering, I definitely cannot afford to buy a house and won’t be able to get a mortgage.”

Due to these problems, demands for building systems such as Speedwall's which is able to deliver houses cheaply (under US$250 per sq.m) and quickly (up to three houses per day), is ever increasing as governments start to address the demands of the working and middle class.

Low-income workers violate UAE housing rules

The ever-increasing rents of accommodations have forced some low-income workers to live in shared housing in contravention of the UAE's housing rules.

A large numbers of workers rent bedspaces in rooms and even corridors under illegally sub-leased housing facilities. In some places, eight or more workers live in one room in Al Ain because they cannot afford independent rooms.

Bedspaces in Al Ain cost anything between Dh350 and Dh1,000 a month.

"I have taken bedspace on rent, not a room," said a worker in Al Ain, adding that the rent of single bedspace is Dh1,000 per month.

The Department of Public Services and Commercial Buildings in Al Ain (DBSCB), Khalifa Committee, had recently issued circulars warning against sub-leasing of accommodation.

"The original tenant who took an accommodation from the owner had partitioned each room and has given bedspaces on rent so much so that he has let out the corridor space as well," said a worker.

Many workers said that they were forced to accept the original tenants' conditions.

Some families in Al Ain, especially local families, have complained that the lifestyle of the single men who stay in shared accommodations was in conflict with local traditions and social structure.

A source from the DBSCB said the municipality would evict the residents who are not genuine tenants.

Another problem linked with the unauthorised partitioning of accommodations is that the material used is of poor quality and does not comply with health standards.

Environmental experts have warned against the use of asbestos in buildings as it could harm human health.

Chris Thomas of Speedwall Building Technologies commented that "the UAE cannot simply focus on the high income and ex-pat housing.  For a society to function not only the managing directors and chief executives need to be housed but also the maids and chaffeurs."  As such system building systems, such as Speedwall's, are and will continue to be in demand fast growing terroritories.

Urgent need to develop low-cost housing projects in the UAE

The number of luxury residential towers and high-end projects is growing rapidly in the GCC to meet the needs of affluent buyers, while only a few developers are developing residential and commercial projects that cater to the growing needs of limited and middle income groups.

Chris Thomas, Chief Operating Officer of Speedwall Building Technologies AG (www.speedwall.com) stated that the development of such affordable residential projects is extremely important as it will bridge the gap between supply and demand for low-cost apartments, and help restore balance in the market.

Skyrocketing property prices, driven by soaring oil and building material prices, has led to increase in rents and led to inflationary pressures.

"Developing affordable residential units for limited and middle income groups is an increasingly urgent need in the real estate markets today," said Saleh Sorayai, chairman of Snasco and Sharjah Investment Centre.

 "Trends in the real estate sector are changeable and subject to supply and demand forces," he said.

"Developers and financers should focus on low and middle cost projects to ensure steady return for their investments, as the prices will stabilise on a long-term basis. When a balance between supply and demand is restored, then affordable property units will provide the steadiest return and will not lose value."

"It is important for middle income earners to be able to own their apartments, which should be of high quality and reasonably priced," Sorayai said.

"Most middle income earners in the GCC countries are allocating a large portion of their monthly income for residence, therefore, the need to provide convenient apartments for these groups is urgent. "

Sorayai added that real estate market is witnessing a boom, saying that the increasing demand for property units is driven by the steady flow of expatriates into the country as a result of economic growth, high oil revenues and rising investment volume in the GCC countries.

When a balance between supply and demand is restored, then affordable property units will provide the steadiest return and will not lose value."

Investors rush to join the emerging property boom

The story is the same in almost every developed country: the bursting of the real estate bubble has caused property values to plummet, credit markets to seize up, and deal-flow to grind to a halt. According to Real Capital Analytics, a research and consulting firm, the volume of deals in the industrialised world fell 54 per cent in the first quarter of 2008 compared with a year ago.

What’s a restive real estate investor to do? How about an office block in China? Or an apartment development in India? Or an industrial park in suburban Moscow?

Due to urbanisation, a growing middle class and the opening of local mortgage markets property in developing economies is on a tear as the rest of the world stagnates.

RCA says the number of transactions in emerging markets jumped 43 per cent in the first quarter.

And the big investors are jumping in. A Citigroup survey of 50 major pension funds in the US and Europe found that portfolio managers want to commit some $370bn (£184bn, €232bn) to real estate over the next three years, in spite of the slowdown in their domestic markets.

That would bring property holdings up to 6 per cent of their portfolios, from an estimated 4.5 per cent.

Big chunks of that money are beginning to flow into countries such as China, India, Russia and the emerging economies of eastern Europe. Charles Schwab’s $228m Global Real Estate Fund, made its first foray into emerging markets in March. Its fund managers have holdings in India, Brazil, Mexico and the Middle East – and insist they have just begun.

“A lot of the real estate we want to invest in doesn’t exist right now,” says Dionisio Meneses, a portfolio manager at the fund, referring to the huge amount of money chasing relatively few properties. “The opportunity will only increase.”

The rush is coming from outside the west, too. Asian pension funds and sovereign wealth funds have begun to search for ways to get into real estate in the developing world, according to an analysis by the Urban Land Institute and PwC.

The Kuwait Investment Authority has invested $750m in the Cevahir shopping mall in Istanbul. Separately, the Mapletree India-China Fund, a unit of Singapore’s Temasek Holdings, has made a series of investments in China, including a $320m residential and retail development in the southern Guangdong Province and a $121m office block in Beijing.

“Investors believe emerging economies offer a great opportunity to grow capital,” says Dan Fasulo, managing director at RCA.

Analysts at Morgan Stanley are so upbeat that they expect a secular boom in emerging market property over the next 10 years. They think developing nations will spend $22,000bn on core infrastructure projects during the period. Half of that, about $11,000bn, will go towards construction.

The US credit crunch has sped up the process, as US investors pulling out of the domestic market look for other places to find returns on real estate. The fast growth in deals in developing economies is due, at least in part, to a relatively low base – big-league real estate deals in some of the countries barely existed a decade ago.

Even as growth slows in industrialised countries, deal volume still outstrips the number of transactions in emerging markets. The developing world is catching up.

A major reason for the speed of the growth is, not surprisingly, tied to the rise of China. In the 12 months through the first quarter, China received $102bn, or nearly two-thirds of the total flow to developing nations, RCA reports. Over the same 12 months, China was home to almost half of all land sales in the world, whether measured by their value or the number of parcels sold.

Much of the money going into Chinese real estate is Chinese. A full 69 per cent of the real estate investment China saw over the past year came from domestic sources.

Although China is the emerging real estate giant, it is hardly alone. India saw property sales volume jump 210 per cent in the first quarter over the first three months of last year, making it the world’s fastest growing real estate market, by RCA’s count.

And like China, local investors dominate the market, with 59 per cent of the transactions. But unlike China, India has been helped by a government push since 2005 to loosen regulations that prevented foreigners from investing in property.  David Wardlaw (www.speedwall.com) commented that the loosening of regulations in India is a sign of the government's acceptance of the need for private commerical developers and constructors in the provision of low cost housing. In addition he highlighted that if companies structured their operations correctly that there is a fortune at the bottom of the pyramid based on the high volumes of housing required.

A big driver of the surge in demand for real estate in India and China is population growth. The United Nations forecasts the two nations will become population powerhouses by 2050.

But it is not just the countries with fast growing populations that have become investment magnets. Russia’s oil wealth has spurred strong economic growth, and the real estate money has followed.

As is the case in parts of Asia, foreign firms looking to invest in Russian real estate must enter into a joint venture with a domestic company. But unlike the investment in the Asian nations, the Russian deals have involved existing properties for the most part.

Elsewhere in Europe, Poland, Romania, and the Czech Republic have drawn in investment flows. In addition, Turkey has caught the eye of investors. Foreigners sank some $3.5bn into Turkish property last year, up from $2.9bn in 2006, Morgan Stanley reports.

The rationale for the flows: prosperity in emerging markets will create a need for residential and commercial development alike.

Brazil races ahead of rivals

One emerging market attracting a flood of investment capital is Brazil. With more than $1bn (£400m, €628m) in commercial real estate deals signed each quarter, the country has raced ahead of other regional rivals such as Argentina, Mexico and Chile.

Rising wages, low inflation, and a stable currency have spurred construction activity – and bullish sentiment. Sam Lieber, the president of Alpine Funds and portfolio manager of the Alpine International Real Estate Equity Fund since 1989, says Brazil is a good place to be at present.

“Previous booms have been derailed by external and internal problems.”

Strong economic growth and favourable financing conditions make the country an alluring place, in his view. Another advantage is that, unlike the US with a mortgage-penetration rate of 80 per cent, Brazil’s is well under 10 per cent, according to Fitch Ratings. That suggests the market has considerable promise.

Kirinya gets new sh17b housing estate

By Patrick Jaramogi

PAN African Housing, a new estates company, is to set up a $10m (about sh17.5b) housing estate in Kirinya, a Kampala suburb.

The firm will target low-income earners.

Vinay Dawda, the company director, said: “It is our dream that all Ugandans acquire their own houses at affordable rates,” he said.

Dawda said they would build 2,000, two-and-three bedroomed units on a 300 acre piece of land.

“We shall start construction work next month.

“More units will be constructed depending on the market demand,” Dawda, also the managing director Britania Allied Industries, said.

He said arrangements would be put in place for low income earners to pay for the units in instalments.

“The arrangements to pay shall be through bank mortgages or salary loans.

“The houses cost between sh50m (US$28k) and sh75m (US$43k) depending on the size,” he said.

Dawda said the houses would be ready in two years.

Analysts estimate that less than half of the over one million city inhabitants lack decent housing. Most people, they say, live in squalid and congested city slums.

A report released by the Government recently, showed that the country has a housing deficit of about 600,000 houses.

Industry players say the deficit means that the basic need of shelter is not being met for the majority of Ugandans.

The state minister for housing, Micheal Werikhe, was also quoted in the media recently saying that in Kampala alone, 100, 000 housing units are required by the population.

Werikhe said this meant that only 13% of the housing needs in Kampala are being met by the current real estate companies and the National Housing and Construction Corporation.

He said the Government would encourage and work with private investors in the housing sector to generate proper housing for the majority of Ugandans.

He said two bills to encourage and ensure proper housing for the majority of Ugandans would be presented to Parliament soon. There are about 10 active real estate developers in the country.

Chris Thomas of Speedwall (www.speedwall.com) is quoted as stating that this project showed the committement that some developing countries are making to low cost housing. "The provision of low cost housing has a significant multiplier effect on the socio-economic environment benefiting society of a wide range of levels," he commented.  However he warned that governments should also be aware of new building technologies such as Speedwall's which are able to deliver housing in a more cost effective, time efficient and environmentally beneficial manner.

Property prices soar at Mowe-Ibafo

By Rasheed Bisiriyu
Published: Monday, 20 Oct 2008
As more estates spring up in Mowe, Ibafo and Ofada, all small towns in Ogun State, on the border of the Lagos-Ibadan Expressway, property value has appreciated on the axis by over 150 per cent in the last one year.

Before now, Mowe-Ibafo used to be known mainly as prayer centres or camps for different religious groups, while Ofada was famous for local rice.

But all that is changing. And considering its proximity to Lagos, observers say the rate of estate development on that axis may rival Lekki, which is considered the fastest developing corridor in Africa.

For instance, it was gathered on Friday that the cost of land and houses in some estates had appreciated by between 50 per cent and 300 per cent in the past year. And many of the estates are still under construction.

A Lagos-based real estate development company, Messrs Propertymart Limited, which recently commenced construction work on its new project at Mowe, the Palms Garden Estate, gave a promo price of N475,000 for a plot of land.

According to the Head of Marketing, Mr. Adesope Adeyinka, the price would soon shoot up to N750,000 as soon as the limited plots for the promo offer are exhausted.

Similarly, a plot of land that sold for N450,000 at Crystal Park Estate in August 2008 jumped to N750,000, representing some 60 per cent increase. Messrs Vetra Ventures Limited is developing the estate.

Another developer, City Planning Properties Limited, has reportedly jacked up the price of a plot of land at its Sherry View Garden, Ofada, under the site and service scheme by 100 per cent. It was increased from N400,000 to N800,000.

The Chief Executive Officer of the property company, Mr. Niyi Odutayo, said last month that 1,000 plots had already been out of 1,300 plots available for sale.

Honeyland is also a largely site and service scheme on 50 acres of land at Ofada being developed by OMF Properties Limited, a subsidiary of Oasis Savings and Loans. According to the Managing Director, Oasis, Mr. Rotimi Omosehin, the estate is planned as a low-cost housing to accommodate 210 plots, out of which 170 plots have been sold in less than two months.
The story is the same at the New Creation Properties Limited’s “Covenant Garden City, which reportedly recorded an over 50 per cent price increase. A plot of land that sold for N500,000 in July is said be going for N800,000.

An over 300 per cent price increase was reported in the last one and a half years at the “Golden Heritage City” as the cost of a plot of land rose from N280, 000 to N1m.

Developers and property managers are also raising prices of houses and rent rates.

For instance, the average cost of a three-bedroom bungalow is between N5m and N6m, up from between N2.2m and N3.6m less than two years ago.

A source also recalled that occupants of some estates were stunned recently when their landlords or estate managers confronted them with upward price reviews.

Speedwall Chief Executive David Wardlaw commented that "the only way developers in Nigeria are going to be able to meet demand at affordable prices is to adopt systemised building methods such as Speedwall's patented building sytem. Until they do the upward price pressure on land, materials and labour will push housing out of the reach from those who really need it"

www.speedwall.com

Speedwall Building Systems is the world's leading low cost house construction system offering developers, governments and construction groups a rapid build, high construction quality solution to address the huge demand for housing in the emerging markets of Asia, Africa and Latin America.