Findings showed that work is moving slowly on building sites around the nation because developers are unable to secure financing for capital projects because of the cashless system and the dysfunctional electronic banking system. In general, the Central Bank of Nigeria’s (CBN) decision to make Naira notes scarce and to impose a redesign policy for the Naira with fewer transactions allowed through mobile banking platforms resulted in a huge economic loss of trillions of Naira in the real estate sector.
The regulation has slowed industry activity, according to analysts, who have also noticed a decline in market transactions, as evidenced by a decline in sales, leasing, and rental activity. New investors have adopted a wait-and-see approach to investing as agents observe how potential buyers and tenants are more concerned with immediate demands of life, such as food and health, as project site activity has plummeted. However, some close market observers suggested that the new policy will turn out to be a positive development or an opportunity for the sector, claiming that there will be a rush for real estate items via investment once the CBN is done cleaning up the old naira notes. They claim this is because deposit banks will have a large amount of money at their disposal to lend to borrowers and potential investors.
Developers have been given deadlines to handover projects.
Mr. Emmanuel Oyelowo, managing director of Roccio Carrillo and REDAN auditor, confirmed this, implying that the financing gap caused by the cash crunch policy had created wide margins and devastating effects on the real estate market, adding that a moratorium had been granted to developers with construction loans. He emphasized that the cash shortage has impacted loans, requiring developers to take extra time to complete projects due to a lack of funds in the system. He further noted that with the present cashless system, developers were given timelines to deliver projects for commissioning. That will slow their delivery rate, which will have far-reaching consequences for property renters.
He contended that the loans taken out by developers for the purpose of construction financing to address the housing deficit were already yielding high interest rates, and that the compounding effects would affect local investors in such a way that they would be unable to recoup their capital investment by milestones. Femi Oyedele, an estate surveyor and valuer, disagrees. He stated that the new naira policy is already having an impact on the volume and rate of sale of building supplies, and that block producers, cement, sand and gravel vendors, and craftsmen all take cash for their sales and labour.
Real estate, is a smooth channel for illicit funds.
Dotun Bamigbola, former chairman of the Nigerian Institute of Estate Surveyors and Valuers (NIESV) Lagos branch, sees little to no concern about the new naira policy and real estate because most transactions these days are done online, but he admits there is a slowdown. Several market observers expected the sector, as a capital-intensive sector and a big store of wealth and value, to provide a safe haven for investors with the old naira notes that the CBN is recalling from those who have them stored in their homes. But, according to analysts and players, the sector is not a choice for investing such old notes that are stored at home because the majority of them are the results of illegal transactions. They mentioned existing rules and regulations that are in conflict with such funds.
Kayode Adeluola, a Senior Advocate of Nigeria, also noted at a real estate event in Lagos that the Act is intended to ensure that illegal monies are not permitted to enter financial institutions or the economy, as it does not encourage criminals to continue to commit crimes wherever they may be. Adeluola stated that one of the simplest ways for illicit funds to enter the system is through real estate, adding that many people who commit crimes such as banditry, kidnapping, and drug trafficking usually do not know how to spend their illicit income, so the easiest way is to buy real estate.
MKO Balogun believes real estate does not channel illicit funds.
According to MKO Balogun, CEO of Global PFI, real estate does not serve as a safe haven for criminal funds. “It will still be traceable; what the CBN is doing is determining who is harming the economy by hoarding money,” he said. This is despite the fact that Gbenga Ismail, vice chairman of the Nigerian Institution of Estate Surveyors and Valuers (NIESV), Lagos State branch, stated that while real estate will undoubtedly be one of the investment options for those with such funds, the difficulty will be that any money received must still be processed and banked. Gbenga Olaniyan, CEO of Estate Links Ltd, said that because of the quantity of Naira involved and the difficulty in lodging, it is very difficult to accept cash for huge ticket sales, and he wondered how a seller or agency would lodge such money.
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The Financing Gap in the Real Estate Sector. – Building sites all over the country are experiencing slow pace in construction. – Express your point of view.
The real estate sector needs to mitigate the gap between the managers of the real estate and the owners. The real estate sector needs to be well managed.
The construction sites across the country are moving at a snail’s pace because builders can’t get funding for major projects due to a lack of cash and a flawed electronic banking system.
the decision of the Central Bank of Nigeria (CBN) to restrict the availability of Naira notes and to enforce a redesign strategy for the Naira currency.
The real estate industry experienced a significant economic loss amounting to trillions of Naira as a direct result of the reduced number of transactions that were permitted to take place using mobile banking systems.
They assert that this is the case due to the fact that deposit banks will have a significant sum of money available to lend to borrowers and prospective investors.
Analysts claim that the legislation has hindered industry activity, which has led to fewer market transactions and lower sales.
This is due to the fact that deposit banks will have a sizable quantity of money available to lend to borrowers as well as potential investors.
The new strategy regarding the naira is already having an effect on the quantity and rate of sales of building supplies, and that block manufacturers, in particular, are feeling the effects.
Because of the drop in mobile banking transactions, the real estate business lost a massive amount of money, estimated in the trillions of Naira.
The building of site will be slow in pace because of all we are facing in the country not fund to be use due to lack of cash and new policy effect
It’s a pity for real estate sector that CBN decision to make Naira notes scarce and to impose a redesign policy for the Naira affect them. I believe if the approaches and method investors are introducing turns out to be a positive, it will be a development and opportunity for the sector.
Block makers in particular are suffering the consequences of the new policy regarding the naira on the quantity and rate of sales of building supplies.
The real estate industry must address the trust gap between property managers and investors. It is essential to have competent management in the real estate industry.
The enforced cashless policy by the Federal government and the CBN has really made businesses to slow down making them to loss money. This evidence in Real Estate sector. Once CBN is done the economy will bounce back with greater potential.
Building sites all over the country are experiencing slow pace in construction. Nigeria economic has affected so many thing we just need to do the needful
The economy was in bad shape before the Central Bank of Nigeria decided to enforce cashless policy and redesign the naira note. The latter further created more hardship in the country making many business owners including Real Estate sector to loss trillions of naira.
The real estate business is one of the ways that illicit money can be diverted and the cashless policy may have cause the slow down paste in the development but also will help to reduce illicit money in the business.
Block producers in particular are feeling the consequences of the new naira strategy, which is already having an impact on the volume and rate of sales of building supplies.
According to analysts, industry activity has been hampered by the regulation, which has resulted in fewer market exchanges and reduced sales.