Real estate mogul and esteemed clergyman Pastor Matthew Ashimolowo has called for reform in housing finance.
Pastor Ashimolowo, serving as chairman of the opening ceremony at the 18th Africa International Housing Show, held under the theme “Financing the Housing That We Need,” advocated for innovative financing strategies, such as ‘Land Banking,’ which his organization has successfully employed.
Delivering his keynote address, restated the critical importance of capital in housing and real estate, echoing the sentiment that “Real Estate is a financing game.”
Projecting the challenges facing the industry, Pastor Ashimolowo lamented the scarcity of long-term housing finance options, citing exorbitant interest rates reaching up to 30-40% and short tenures that often do not align with project gestation periods.
He cautioned against the risks associated with off-plan sales and finance, worsened by economic volatilities such as exchange rate fluctuations and inconsistent monetary policies.
In response to these challenges, Pastor Ashimolowo advocated for innovative financing strategies, such as ‘Land Banking,’ which his organization has successfully employed. He described land banking as a strategic approach to acquire land at lower costs, secure titles, and capitalize on future value appreciation to fund housing projects. However, he cautioned potential practitioners to navigate the complexities of land ownership, particularly under Nigeria’s Land Use Act.
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“With the high cost of funding in this environment, we have to be intentional, innovative, and pragmatic about our financing strategy as developers. One strategy which has worked effectively for our organization is “Land Banking”. Land banking is a veritable strategy to create, consolidate, accumulate, and unlock finance for your projects in the future. In our experience, land banking is very atractive for several reasons – apart from providing a robust source of financing for your current and future projects.
“It is imperative for me to state that if properly harnessed land banking could provide you with up to 30 or 40% of your new project – which would be a great relief to you. I have discovered that this is a less stressful way of aggregating funding for your future projects.”
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Addressing the role of government, Pastor Ashimolowo stressed the urgency of implementing reforms to support developers and mitigate risks in the housing delivery process. He urged federal and state governments to create an enabling environment free from bureaucratic hurdles, which he described as ‘landmines’ obstructing progress in the sector.
“Financing the housing that we need will require our government to implement reforms that will support developers and de-risk the housing delivery process. There are too many ‘landmines’ in the path of developers under the present dispensation. Government at the Federal and State levels must be intentional in creating the right and enabling environment for developers to ply their trade,” He asserted.