The need to create multiple lending windows in order to take banks’ existing windows of primary mortgage institutions to greater depth compelled the Federal Mortgage Bank of Nigeria (FMBN) to attract a N225 billion or $1.5 billion loan facility from the London-based financial institution, HSBC. While industry operatives considered this move as the highpoint of 2009, they believed that it will promote effective housing delivery in the country. The low interest facility from HSBC was part of the FMBN’s effort at attracting funding for provision of houses in the country while also providing a platform called ‘Euro Medium Term Loan’ to link the local capital market with the international capital market.
The $1.5 billion is being assessed through the platform called Euro Medium Term Loan which will enable us issue bonds on a very regular basis. Both parties are considering some factors, including activities in the international market where investors are moving towards high-profile and long-term investments, especially in real estate business. HSBC and FMBN are looking at what is happening at the international market as investors are currently running away from investing in liquidity assets, so we want to make use of this opportunity to look at the international bonds market and link it with the local market.
Meanwhile, calls from analysts and major investors in the nation’s real estate industry for Federal and State Governments to review and revamp activities of agencies responsible for the management of legal and administrative provisions in the housing sector did not yield any result. However, the Nigerian housing and construction market has recorded strong growth in key parameters over the last few months. The performance was particularly more over the last six months due, mainly, to several economic and financial market reforms. The reforms led to an increase in investor confidence, thus, driving the influx of local and foreign capital to the real estate market.
As a result of the speculative positioning that pervaded the market in the last quarter of the year, we saw the market real estate appreciate at a fast and unsustainable pace. Real estate speculators that were quick to enter the market were just as quick to exit and take their short-term profits through short-term mortgage and other housing finance facility.
Throughout its history, Nigeria has experienced profound change and should not be perceived as stagnant but rather in constant evolution, and capable of significant adaptation and progress. Faced by tough competition in traditional investment and core banking areas, which seems to be eroding their profit margins, banks operating within the nation’s financial system found solace in fast track real estate investment options. Hence, the market scenario that was experienced at the early stages of our national life could be said to have resulted from the vacuum created by the need to regain national consciousness. While the impact of urge notably impacted on the housing and construction market, it ordinarily did not hold any significance to the long-term investment drive. If not for anything, it served as another opportunity to redirect market inertia.
However, the experience of the recent upturn in the market comes with a vital lesson and highlights the need for the emergence of a regulation-driven market as against the existing speculation-driven market. It also makes a strong case for real estate investors to place greater emphasis on portfolio expansion in other correlated real estate asset classes.
No doubt, the construction sub-sector of the equity market of the Nigerian Stock Exchange (NSE), in the last 12 months, recorded high capital appreciation with a good average return. According to the economic review and outlook of industry operatives, the construction sub-sector’s record was attributed to increased government patronage and boom in the housing sector.

Growing demand
Continuing increase in population especially in the urban areas of Nigeria has lead to astronomical increase in the demand for affordable housing whilst the supply side remains for the most part underdeveloped and unable to meet growing demand.
Attempts by the Nigerian government to increase investments in the real estate side of the Nigerian economy have remained unsuccessful as a result of the following factors:
•Expensive, cumbersome and complicated land tenure and transfer of legal title in land procedures.
•Expensive cost of funds with high interest rates for construction and mortgages in comparison to the long term rentals expected by an investor in the real estate market.
•Rent control legalisation for the mass residential rental market.
•High rate of tenants default in paying their rentals on schedule due in some cases to diminishing purchasing power.
•Technical, cumbersome and expensive recovery of possession of premises legislations.
The effort of the Federal Government of Nigeria to address this problem by proposing a Rent Control legalisation has met with criticism as a result of the failure of the supply side of the real estate market and also, the failure of prior and subsisting Rent Control Legislations and homeownership schemes to address the problems of minimum housing in Nigeria.
This industry-wide review will also provide up-to-date legal information on the last two factors of rent control and recovery of possession of premises which have and continue to challenge and inhibit investments in the real estate market.

Increasing returns
Demand for commercial property was pulled down by a weak retail sector as estate surveyors watched investors shun the market. Estate surveyors reported that business demand for commercial property fell in the three months.
Another section of market reported a fall than a rise in demand compared to a substantial rise witnessed at the beginning of the second half of national life. A weak retail sector has been the driving factor behind falls in demand, although office property demand has also moderated. New enquiries have held firm indicating that expansion may be on temporary hold until real estate finance jitters subside.
The credit market turmoil has had a negative impact on investment into commercial property assets with capital values declining across all sub-sectors, particularly, real estate. Meanwhile, estate surveyors reported the biggest boom in investor demand within the office sector as the recent financial sector turmoil has seen investors re-price risk. More market operatives reported a fall than a rise in investment demand in the office sector which also recorded the biggest fall in prime capital values with the net balance falling. Confidence in rental expectations halved in third quarter but still remains positive outside of the retail sector. The turmoil in the credit market is being most acutely felt in commercial property as the sector is more dependent on capital market funding than in the past. Real estate business expansion has been put on hold in the short term with the near term outlook for rents weaker as a result. Fears of the impact of the credit crunch have made investors retreat to the margins as confidence in returns diminishes. Sentiment in the market is at the lowest point in last four months and is unlikely to improve in the short-term.

Evolution of new frontiers
The evolution of new frontiers in real estate development was further consolidated by the advent of universal banking which has broken all the barriers and impediments in the quest for real-time delivery of quality products and services that hitherto are not regarded as core banking. Also, the Ministry of Works, Housing and Urban Development had restated its resolve to give preference to the low-income housing segment of the property market. The ministry’s decision was informed by the need to inject life and relevance into the hitherto neglected segment of the housing delivery process.
Since the Federal and State governments had in the past endeavoured to play an active catalytic role in the economy by initiating and acting as sizeable stakeholders in a number of core industries and sectors, the government reduced its grip on key sectors including housing and infrastructure provisioning.

They also said that one of the major signposts of the emergence of an effectual secondary mortgage process is a market scenario where the prospective property owner who applies for mortgage facility from primary market mortgage lenders such as banks, thrifts which include savings and loan associations and savings banks, mortgage companies, and credit unions would have it sold in the secondary mortgage market almost effortlessly.
With the mortgage sub-sector in the country still at the lowest ebb, these operators restated the fact that the secondary mortgage market will not work without an efficient primary mortgage market in place.
According to them, the recapitalisation of the relevant agencies that are responsible for funding the primary and secondary mortgage markets, which presently includes the Federal Mortgage Bank of Nigeria (FMBN), should be embarked upon with utmost urgency. mitigate the effect through the provision of funds and technology transfer.
Mr. John Odey, minister of Environment, did not see any need for a new agreement saying that “the Kyoto protocol is the most important and globally accepted agreement to address climate change.” The processes that resulted in the Protocol commenced in 1992 in Rio de Janeiro when Leaders of the industrialised nations met at a UN Climate Convention and agreed to stabilise their greenhouse gas emission concentration at a level that will not be inimical to the Climate System.
By 1997 the industrialised nations agreed under the Kyoto Protocol to take legally binding targets on Green House Gas (GHG) emissions by 2012. Thus, the Protocol set a binding emission target for 37 industrialised nations.
However, the Protocol has virtually failed to address the purpose for which it was signed as developed countries failed to cut their emission as well as provide funds for developing countries to tackle the impact of climate change.
Since signing of the Protocol by over 184 countries, the green house gas emission situation has taken a turn for the worse as the industrialised nations have not been able to tame their emission level. The Protocol will span out in the year 2012.
As a result of the topical nature of the impacts of Climate Change, a 2009 deadline was given two years ago at UN Climate Convention in Bali to complete the negotiation of a successor to the Kyoto Protocol. The negotiations of the successor of the Protocol are due to be finalised in Copenhagen.
Under the Kyoto Protocol, Africa and other developing countries were exempted from any legally binding mechanism while they are to press for Climate justice under the principle of Common but Differentiated Responsibilities and Capabilities.
The Kyoto protocol despite being adjudged as one of the most important global agreements to save guard the climate was not accented to by the USA, the world leading emitter of greenhouse gases.