Business News

Construction and real estate sector cannot access single-digit interest rates – Experts lament

One of the significant challenges faced in the construction and real estate sector is the inability to access long-term financing at single-digit interest rates.

This was a submission of Jamila Faniyi, the Managing Director of M&E Kaiser Limited during the Naijaonpoint Real Estate Industry Outlook Webinar that occurred on March 9, 2024.

Speaking on the challenges faced in real estate and construction, Jamila noted that the main challenge faced was the paucity of infrastructure.

Also speaking during the webinar was Obinna Onunkwo, the Deputy CEO of Purple and Kehinde Ogundimu, the Managing Director of the Nigerian Mortgage Refinance Company.

There’s an ideology mismatch between the financiers and the sector

Obinna Onunkwo, the Deputy CEO of Purple noted that one of the challenges in the sector is an ideology mismatch. As most investors tend to approach the sector from a short-term point of view while real estate is a long-term investment.

As per the last CBN report regarding lending rates established by commercial banks, it was found that the prime interest rate for lending to the real estate sector varied between 7% for SunTrust Bank and 28.50% for UBA.

Access Bank, First Bank, Zenith Bank, and GTCO had their prime lending rates at 22.00%, 13.57%, 19.13%, and 20.00% respectively.