Tax incentives advocated for cooperatives to increase housing supply
by CHUKA UROKO
August 22, 2017 | 12:14 am| | | Start Conversation
Governments at federal and state levels have been urged to give tax incentives, such as a holiday, for cooperative societies investing in real estate to enable them increase housing supply and ultimately drag down house prices for buyers, especially the low income earners.
Meckson Innocent Okoro, an estate surveyor and valuer, who made this call recently, also urged the governments to give free land to cooperatives as a way of encouraging them to deliver houses for the benefit of the larger society.
Okoro whose views were contained in a speech he delivered at the launching of a housing scheme being developed and promoted by Perfection Real Estate Investors Cooperative Society (PREICS)in Ibeju Lekki, Lagos, observed that cooperation and collaboration were the way to go for homeownership because of the capital intensive nature of real estate investment.
“Real estate is too capital intensive for just one individual to embark upon. If the individual is wealthy enough, there will be no problem, but how many Nigerians can afford their own houses? We are affected by low income and lack of opportunity for private wealth creation. For instance, it takes a productive individual in Nigeria to save up to cost of N5 million to buy a house except he is one of those engaged in corruption in their work places”, he said.
He noted that, in a country of over 180 million people, not up to 20 percent of the population can boast of owning their houses unlike countries such as Singapore, Cuba, etc where home-ownership is a secondary problem. “Up to 75 percent of the population of these countries can boast of their own homes”, he added, advising that the shortest way to solving homeownership problem was through a cooperative society like PREICS.
PREICS, born out of the need and passion to provide solutions to real human problems in the real estate sector of the economy, is also aimed to empower people financially and, as a player in the real estate industry, it understands what the challenges are.
In the last five years of operation, the society has been pooling its members’ resources together and, according to its president, Niyi Adeleye, “we have been able to get involved in some mega real estate deals; we have also invested in expanse of land in different locations that are today known as the Perfection Cooperative Estate brand, and this is the reason we are gathered today to unveil and launch the housing scheme”.
Okoro advised Nigerians to see real estate as a viable investment asset class which serves as a store of value, appreciates exponentially and makes reasonable return on investment. “Real estate is a better store of wealth because it appreciates in value and, therefore, enhances returns on investment”, he said.
Continuing, he said, “if you check parcels of land which were cheap back in the years, their values have now gone up significantly. Also check the house rents that were peanuts back then, you would see how much the rents have increased. For example, between 1995 and 1999, one could buy a plot of land in Lekki Phase 1 for N1 million or less, but today, the value of that same land ranges from N150 million to N200 million, depending on location”.
He also cited instances in Dolphin Estate, Ikoyi where 4-bedroom duplexes that cost N240,000 per unit between 1984 and 1988 now go for N80 million to N120 million per unit, depending on location, while the rent that ranged from N40,000 to N50,000 then is now about N4.5 million to N5 million per annum.
Okoro added that the cash flow from real estate investment is constant and predictable, but subject to good tenants who are willing to pay their rent as at when due. “There is also high return on investment with little risk potential in real estate because of the ever-increasing demand for housing and land”, he assured.
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