Emerging Investment Opportunities in low-cost Housing

Everybody needs housing. That is why housing just as food and clothing are classified as basic necessities of life. Taking a cue from preceding articles, there is an abundance of local materials that can be utilized to erect the buildings we need; which buttresses the fact that a new economy that we must build should be inward-looking. Accordingly, this section focuses on the construction of residential complexes for low-income groups in Nigeria, using local materials.

It had been truly pointed out in an earlier article that for our housing and furniture needs, we have Mahogany and Iroko trees, and these are found in the equatorial forest zones of the country. Again, it was also candidly pointed out that we have large deposits of sand and clay and limestone (found in sufficient quantities in Nkalagu, Sokoto, Ewekoro, Zamafara, Calabar, etc), with which to erect our houses, without resorting to any imported inputs. Likewise, we also have abundance of other related materials, and local engineers and architects that are capable of building the houses and producing the furniture we need. A new economy must disregard foreign inputs and manpower whose equivalents can be found within the shores of our country. We must promote our own local products through mass-awareness campaigns.

Except for the few low-cost residential quarters undertaken by sub-national governments at the grassroots, it is commonplace to see majority of the private-sector developed housing estates in urban centres – lofty and exotic – standing at the beck-and-call of wealthy people. The reason may not be far-fetched, given that the profit motive is what might have been driving property investors to keep on erecting bogus housing edifices targeted at the rich, rather than low cost housing for the masses. Apparently, the investors think that the monumental expensive structures will fetch more money than the simple less-expensive ones.

However, the reality is that the market for the outlandish buildings is already saturated, given that the high-and-mighty in the society are fewer in number in our society than the common people. The rich constitutes only about 5% of our population whereas the medium and low-income groups constitute as high as 95%. So far, the rich have already accumulated so much property at home and abroad that they do not have any more demand for new buildings. Moreover, apart from the demand point of view, social and security considerations favour the development of low-cost housing in the Nigeria of the future. What this means is that it is riskier to keep on constructing sophisticated buildings for commercial purposes. This is because the histories of developing nations are replete with revolutionary experiences of investors who had to forfeit their posh properties, wrongfully or rightly, through forceful seizures in times of protests and mass uprising, because most of those properties are usually thought to be associated with ill-gotten wealth. Hence, the odds favour the construction of low-cost buildings for the poor.

So far, the good intentions of government to provide cheap and affordable housing for the masses in the Federal Capital territory are yet to have meaningful impact. This runs contrary to the sated policy that aims to ‘provide all Nigerians with decent and affordable housing’. The mass housing scheme prototypes that litter the landscape of Abuja, such as Gwarimpa Estate, Lugbe Estate and the Re-settlement scheme, are way out of the reach of the common man. Most of them still remain unoccupied, ever since they were constructed decades ago. Therefore, by way of assessment, they cannot in any way be said to have addressed the housing needs of the masses; a large retinue of the low-income group of people, who constitute the majority, still live and operate from remote districts far away from the city centre where they work. This situation evidently creates a lucrative opportunity for private-sector entrepreneurs. For the investor to get it right and make his money, emphasis should be on the construction of lots of one or two-bedroom apartments (also called self-contained/ mini-flats) on tenable lay-outs in centralized locations.

Now, in terms of action, it may be necessary at this juncture to ask the question: ‘if a prospective investor boldly decides to construct an estate made up of one or two bedroom mini-flats, what will be the possible cost of developing that kind of low-profile, mass-housing estate?’. Below is a picture of what it will entail.

Cost Analysis of a 2-bedroom mass-housing unit
The integrated costs comprise the cost of cement, sand, ready-made blocks, roof, wood, doors, windows, kitchen and toilet facilities, building foundation, fencing, borehole, labour and other prerequisites. To reiterate, it will not be a bad idea utilizing local materials as much as possible.

The schedule below summarizes the cost of constructing a unit of a low-cost 2-bedroom flat.

Cost of building one unit of a 2-bedroom Flat
Unit Costs per metre (N) Quantity needed (30 x 10 meters) Amount (N)
1 Preliminary Costs
a Architecture & Business Plan fees (estimate) 350,000.00
b Official building clearance fees 100,000.00
Sub-total 450,000.00

2 Roofing Materials
a Zinc (3 pieces per sq metre) 2,000.00 300.00 600,000.00
b Wood/ Facial Board (100 pieces) 650.00 100.00 65,000.00
c Ceiling & ancillary Materials
d Emenite Variety (4 x 4 metres) 2,500.00 18.75 46,875.00
e Nudging Materials for holding the Ceilings (low grade) 200.00 51.28 10,256.00

3 Windows (4 x 4 sq. m) 12,000.00 20.00 240,000.00
4 Doors (about 15) 18,000.00 15.00 270,000.00

5 Nails (Kg) 300.00 50.00 15,000.00
6 Nailing Repair Kits (premium quality) 2,000.00 5.00 10,000.00
7 Cement or Mud Bricks 3,000.00 200.00 600,000.00
8 Plaster Sands 200.00 200.00 40,000.00
9 Toilet facilities with Tiling (average cost) 150,000.00 2.00 300,000.00
10 Bathroom facilities 150,000.00 2.00 300,000.00
11 Kitchen & Store Facilities with Tiling & cabinet 150,000.00 2.00 300,000.00
12 Water (150 drums) 150.00 100.00 15,000.00
13 Support Blocks (6-inch) – interlocking, estimates] 3,840.00 60.00 230,400.00
14 Paint (Buckets) 2,000.00 30.00 60,000.00
15 Small Gate with installation 45,000.00
16 Flooring (estimate) 150,000.00
17 Labour (estimate) 450,000.00
18 Gutter/ Culvert, etc. (estimate) 180,000.00
Sub-total Costs 4,377,531.00
19 Contingency (logistics) 5%* 218,876.55
TOTAL COSTS** 4,596,407.55

  • Contingency costs will cover unforeseen expenditures, including subsidised land costs. The overall estimates are obtained from a recent market study.

The cost of constructing one-bedroom flat is estimated at two thirds the cost of the 2-bedroom flat profiled above. A neighborhood will contain about eight to sixteen of these units depending on the availability of a straight stretch of land; whereas an estate can contain a string of interlocking quarters, with central patches of open spaces.

If you are a property developer needing a proposal or business plan to build an estate comprising one to two-bedroom apartments, contact the author for assistance via his email: chukwudiodili902@yahoo.com

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