Fresh insights for investors as Wigwe speaks on Creative Diaspora Financing at RIS UK
Part of the highlights of the Refined Investor Series (RIS), a premium real estate event to be co-hosted by BusinessDay Media Limited and Fine & Country West Africa International in London early October, are the fresh insights on investment through mortgages which the event promises to offer those who will be gathering for it from all over UK and beyond.
These insights are to be provided by Herbert Wigwe, the Group Managing Director of Access Bank Plc who will be engaging Diaspora investors using Access Bank UK and its global footprint to tackle this effectively. He will be speaking on ‘Creative Diaspora Financing’ at the two-day event.
Wigwe will be telling his audience all they need to know about the bank’s financing. Johnson Ememandu, head of commercial banking at The Access Bank UK, had disclosed to BusinessDay in an interview in Lagos that to get mortgage for property acquisition, there were steps which his bank required from potential property buyers with the assurance that what they would be entering into would be a relationship and not a transaction.
“For residential mortgages, we offer a minimum loan of £100,000 and a maximum of £2,000,000. Capital and interest repayment is for a maximum of 30 years. The interest rate is 4 percent over the Bank of England base rate while lending fee is 1 percent of loan amount”, Ememandu said.
RIS, already in its sixth edition, is an annual real estate forum organised by Fine & Country through which it speaks to the Nigerian real estate market by throwing up conversations that expose opportunities that the market offers amidst challenges.
But this year’s edition, also known as ‘UK and International Edition’, is taking Nigeria to the world with the aim of presenting the true picture of the Nigerian real estate market. The key objective is to correct the myths and misconceptions about the market and, by so doing, inspire investor-confidence in this market which, in spite of the economic downturn, still gives huge returns on guided investments.
Investors’ concerns about this market is mostly the near-absence of a structured and functional mortgage system. The event promoters affirm that the Nigerian mortgage infrastructure is weak compared to the highly structured mortgage frameworks in the UK, the US, and Europe, which in itself presents opportunities for investors and developers.
The UK mortgage market, for instance, presents a pleasant scenario with first-time home buyers borrowing £3.1 billion, which represented 50 percent of the mortgage market lending in the country in 2016. Ememandu disclosed that the market was worth £1.3 trillion, representing11.1 million mortgages which made it the largest in Europe in terms of amount lent per year and the total value of outstanding loans in 2016.
But, despite the limitations, there is always a way out in Nigeria. “Most developers offer flexible payment plans, and longer payment periods, which is an attraction for potential investors especially when tied to their cash-flow. Indeed many projects in Nigeria have routinely been sold through creatively structured payment plans”, explained Udo okonjo, Fine & Country CEO, in an interview.
She, however, cautioned that, in working with the current weaknesses that surround the mortgage infrastructure, it is important not to overlook the downsides of the high-interest rates, and the overall increased cost influenced by interest rates. “Despite these challenges, it’s interesting to note that there are banks that have become creative about Diaspora credit and this is an area that will be discussed extensively at the Refined Investor Series in London”, she assured.
The view out there, which is part of the misconceptions RIS UK is out to correct, is that the real estate market in Nigeria has crashed. Okonjo reasons differently. “We have always maintained that astute investors understand that every market not only has cycles but that within each cycle, real investors don’t look for last season’s opportunities”, she says, explaining, “astute investors engage a creative and intelligent process to unlock opportunities irrespective of the market cycle”.
Continuing, she says, “with the mid to prime residential market, we believe that the top executives, mid level professionals and high net worth Diaspora investors present a unique opportunity for residential developers. This is a largely untapped and confusing market for most Nigerian developers who tend to go after the Diaspora investors sporadically without a well articulated and coordinated strategy for not just exposing their projects but creating the right narrative that resonates with their target market”
According to her, back home, the mid level entrepreneurial class, including the long standing business owners with some measure of liquidity and stability looking to downsize and relocate to more convenient locations or to invest their capital in an inflation-proof solid long term real estate, are a segment for developers who are willing to be creative, recognising that their needs are unique.
She recommends that good quality properties, in residential and office segment, should not to be taken for granted, advising that, with quality, however, developers need to be mindful of balancing quality with ability and pricing, and with purchasing power significantly reduced, value pricing remains important while more efficient spaces and flexible terms have become necessary.
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