Abstract
Real estate and utilities constitute an integral part of a modern city.in Nigeria it is vain saying that real estate sector has been underutilized over the year notwithstanding the chunk of money that the federal, state and organization have sunk in in the sector This research examines and appraise the bottleneck facing real estate public infrastructure in Nigeria. The availability of public infrastructure does not only add value to the estate settlement but it also increases the economic activity within the settlement there contributing to the economic development of the state. Generally, infrastructural utilities include such goods and services as the provision of potable water, electricity, sewage, telephone, gas and roads. The provision of these utilities is not without cost and this cost is usually included in or forms part of the cost of housing. Many developing countries, particularly in Nigeria, accord relatively low priority to housing in their overall scheme of national development, and the volume of construction generally falls short of housing demands. The approach to housing policy in Nigeria has tended to oscillate between the welfare mixed economy and the free market model.
CHAPTER ONE
INTRODUCTION
1.1 Background of the study
The major issue in real estate development and investment is finance. There is no iota of doubt that funding is an important factor in real estate development and investment. The complexity and to a large extent, its capital intensive nature demands proper and adequate funding to make it realizable. The terms and availability of the needed funds determine the trend of estate operation. Availability and easy accessibility of estate finance in sufficient quantity will definitely accelerate all forms of property development. Estate financing is concerned with the production of finance for building houses and office complexes which are basic necessities in a growing economy like Nigeria. Real estate and activities of private developers (REDAN) are essentials elements of economic development, economic growth and capital formation. Real estate has several bottlenecks that inhibit the growth of the sector ranging from finance, government policies, public private partnership and involvement of organizations, individuals and non-governmental organizations (NGOs) in the development of real estate which encompasses housing, parks, bridges road and other recreational facilities financing is all-important to successful property investment and development. Various forms of finance on varying terms from diverse investing agencies are available to the property market. The principal field where various forms of investment finance are employed is that of development where every loan has to be specially tailored for an individual scheme and the particular stages within the scheme. Since property development in particular involves huge capital expenditure, finance is therefore an essential input, the nature of which is to provide capital to enable the enterprise operate commercially. The cost and availability of finance for real estate development can influence the viability of such project. in spite of the importance of development finance in property development, there is dearth of information on the amount of funding that takes place, by whom, or the method used. Though this is not unexpected given the general characteristics of development funding: there is no central agency or institution to co-ordinate the business of property funding. The availability of adequate housing infrastructure on ground will dissuade the developers‟ pressures to the constraint in housing development. Thus, it is assertive that there is inadequacy in housing to cope with the ever-increasing population in Nigeria (Arayela, 2003). The causes of this dearth in housing are numerous. High construction cost is found to be present in all countries, albeit in varying degrees of significance (Adedeji, 2007). In Nigeria, the problems of the previous government-provider policies were lack of political will, institutionalized policy and continuity, politicization of the programs, political corruption, poor funding and inadequacy of mortgage institutions, poor socio-economic structures, among others have contributed immensely to the failures (Aribigbola, 2008; Awotona, 200; Ikejiofor, 2009; Ndubueze, 2009). The failure of provider approach prompted the government to adopt a change in its NHP beginning from the NHP 1991, 1997 and 2012. The current policies embrace the private sector as the vehicle to address the severe shortages of houses in the country. While the government position itself as enabler and facilitator in the housing delivery in the country. The limited success achieved so far in housing the Nigerian people through these methods is reflected in a 2005 socioeconomic household survey. The survey (Nubi 2008) showed that 31% of Nigerians are owner occupiers and 19.2% are squatters. It also showed that 24.1% pay subsidized rent and therefore 43.3% cannot afford a home. Only 26% can afford to pay rent for their homes. This failure has led to the introduction of the private sector as an alternative route for the provision of housing for all categories of people. Implicit in this approach is the government's assumption that the private sector is willing and ready to provide such funds and that mortgage finance is the most suitable route of housing finance for all income classes. The pooled effect of high population upsurge and urbanization in a declining economy has thrown Nigeria into serious housing problems. Ironically, the low-income groups who constitute the majority in the Nigerian society are the most affected by the finance menace. The problems of housing shortage grow worse by the day in many developing nations including Nigeria. Conceivably, a major trait of housing crisis notable in urban centers in most developing nations is that of inadequate supply relative to demand (Olotuah, 2000). Despite the housing situation in western states, residents make out ways to survive like in most cities of the world where residents are plagued by inadequate housing. Furthermore, private developers (REDAN) as a compassionate housing providers performance need to be compare whether they are performing to the much expectation of residents in their need of housing supply. According to Omuojine (2001) the major reasons militating against real estate development and by extension housing the poor in Nigeria are low income capacity, access to credit, land tenure system, high cost of building, low employment capacity of the economy and lack of a National Housing Policy. Badiru (2003) however opined that whereas availability of adequate finance in the private and public sectors of any economy is the hallmark of a meaningful, efficient and productive property development, more often than not it happens that funds for prompt property development are not readily available. He asserts further that factors like limited size of individual incomes especially in the third world countries, banks' paltry rates of interest on savings, inflation and government fiscal policies which are sometimes unfavourable for easy access to loanable funds from the financial institutions hinders access to finance for real estate development. Bichi ( 1998) was however of the view that “unaffordable levels of interest rates on housing loans and shortage of long term finance as the main constraints to housing delivery and the promotion of home-ownership.” He asserted further that “much of the housing finance problems experienced are an unequivocal expression of cumulative distortions from policy weaknesses in the past. Whilst a plethora of problems have been identified as constraining development of real estate in Nigeria, there seem to be an unequivocal and unanimous acceptance of inability to access credit/inadequate finance as the problem that portends a more profound impact on the development of real estate in Nigeria. In Nigeria, not until early '90s did studies begin pointing to finance as a more serious constraint than land to housing delivery Koleoso (2000). It is instructive to observe that the National Housing Policy of 1990 identified finance as one of the pillars of housing delivery. Omirin (2007) however assert that “prior to that time researchers had always concluded that once the problem of land is put to rest, houses should be delivered”. The acknowledgement of finance as a critical variable that affects real estate development as enunciated in the National Housing Policy of 1990 led to the promulgation of the National Housing Fund (NHF) Decree. Fortune (2002) however asserts that the National Housing Policy of 1991 is a socialist approach to solving the housing problem in a capitalist economy and cannot work”.
1.2 STATEMENT OF THE PROBLEM
The major bottleneck facing Real estate is finance. Finance can be looked at, as the fund needed to Cary out real estate development and other related operations. It is an essential ingredient in modern day real estate development and most large-scale development would not take their present scale without substantial credit. The housing finance system in Nigeria is not viable and this makes mobilization of finance and credit for housing development difficult. Finance constitutes a fundamental centerpiece in any real estate development; the ability of a developer to mobilize enough funds for the project determines largely, the success of the project. Over the years, the government had been the major player in the area of housing delivery in Nigeria, by providing direct finance for previous housing schemes. This was embedded in the housing policy of past administrations but today, the dwindling nature of revenue accruing to the government, coupled with gross mismanagement and misappropriation of public funds and revenue has prohibited the ability of the government to continue to play her role as before (Nubi, 2000). The mortgage finance institutions are faced with certain problems which include; i. Low level of awareness of the services rendered by the institutions ii. Bureaucracy in the granting and disbursement of mortgage loans to the borrowers iii. Misunderstanding of the banking terms by the depositors and the public due to the used of technical and professional terms which are not understood by a layman. iv. The problem of incompetent, unprofessional and unqualified staff. v. Problem of repayment of loans by the borrowers. vi. Divestment of funds meant for housing schemes by beneficiaries and corrupt staff of the institutions. vii. The unavailability of funds for long term loans required for real estate investment. Finance is an all-important factor, a sinequanon and very crucial ingredients to projects, no matter their nature. It is basically the fulcrum, which sustains the lever for development projects. The sourcing of funds for investment in real estate development poses a great deal of problem for the developer. This is largely due to economic instability and stringent measures imposed by most financial institutions. This is compounded by the fact that the interest rate structure has had an unfavorable impact on funding the development of real estate. Since the financing of real estate development is a long term project, it has necessitated the high interest rate that is being charged on the funds provided for such development purposes. Hines (1995) revealed that six major real estate financing methods are used across the world namely; Joint Venture, Equity and Debt Financing, Sale-lease Back Financing, Advance Payment of key money and Sale of Securities. The performance of any housing finance system will depend primarily on the volume and nature of funds within the economy and the proportion of it that can be spread, mobilized or even dedicated for housing.
It is in view of this that the research intends to appraise and examine the bottlenecks facing real estate public infrastructure in Nigeria.
1.3 OBJECTIVE OF THE STUDY
The main objective of this study is to examine and appraise the bottlenecks facing real estate public infrastructure in Nigeria, but to aid the completion of the study, the researcher intend to achieve the following specific objective;
- i) To examine the contribution of religious organization in ameliorating the bottlenecks to the development of real estate public infrastructure in Nigeria
- ii) To examine the effect of government policies in ameliorating the bottlenecks of real estate public infrastructure financing in Nigeria
iii) To ascertain if there is a significant relationship between government policies and real estate financing bottlenecks in Nigeria
- iv) To examine the impact of government budget in the development of housing and other public infrastructure in Nigeria.
1.4 RESEARCH QUESTIONS
The following research questions were formulated by the researcher to aid the completion of the study;
- i) Has religious organization contribute in ameliorating the bottlenecks to the development of real estate public infrastructure in Nigeria?
- ii) Does government budget has any impact in the development of housing and other public infrastructure in Nigeria?
iii) Is there any significant relationship between government policies and real estate financing bottlenecks in Nigeria?
- iv) Does government policies have any effect in ameliorating the bottlenecks of real estate public infrastructure financing in Nigeria?
5 RESEARCH HYPOTHESES
The following research hypotheses were formulated by the researcher in null and alternate form to aid the completion of the study;
H0: there is no significant relationship between government policies and real estate financing bottlenecks in Nigeria
H1: there is a significant relationship between government policies and real estate financing bottlenecks in Nigeria
H0: government budget has no impact in the development of housing and other public infrastructure in Nigeria
H2: government budget has an impact in the development of housing and other public infrastructure in Nigeria
1.6 JUSTIFICATION OF THE STUDY
In man's hierarchy of need by Abraham Maslow shelter come second after food. As essential as real estate and public infrastructure is to man's development, there are several bottlenecks that hinders the development of the real estate sector notwithstanding the chunk of resources sank in. it is no doubt that the cost of real estate and public infrastructure is alarming, but a critical appraisal of it benefit in the long run out way the cost.
As part of my requirement for the award of Bachelor of science degree (B.SC) in Estate management this study is carried out to examine and appraise the bottlenecks facing real estate public infrastructure in Nigeria.
1.7 SCOPE OF THE STUDY
The scope of the study covers an examination and appraisal of the bottlenecks facing real estate public infrastructure in Nigeria. The study appraises the several challenges inhibiting the development of real estate and public infrastructure in Nigeria.
1.8 THE STUDY AREA
The study was carried out to appraise the real estate sector in Nigeria. Nigeria is an African country on the Gulf of Guinea, has many natural landmarks and wildlife reserves. Protected areas such as Cross River National Park and Yankari National Park have waterfalls, dense rainforest, savanna and rare primate habitats. One of the most recognizable sites is Zuma Rock, a 725m-tall monolith outside the capital of Abuja that’s pictured on the national currency.
1.9 LIMITATION OF THE STUDY
In the course of the study, the researcher encounter some constrain which limited the scope of the study;
- a) Availability of research material: research material in the real estate sector in very scarce as there is no adequate records of public housing and infrastructures in Nigeria.
Time: time was a major constrain to the scope of the study as the time allocated tpo the study was very limited due to the fact that the researcher has to combine the research work with other academic activity
Finance: limited access to the required finance was a major constrain to the scope of the study
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