Technology has transformed telecommunications and banking in Nigeria and it is expected that a similar revolution is possible in the country’s real estate sector.
This is the view of Babajide Odusolu, a real estate industry expert and the chief executive officer of Octo5 Holdings, who said that technology could transform homeownership in Nigeria.
“With technology, the real estate industry can experience the same transformation as the telecoms and banking sectors which were revolutionised by the introduction of technology and digital services in the 2000s,” Odusolu said.
The deployment of technology would make the Nigerian real estate sector more transparent and enable increased liquidity to drive greater homeownership. Odusolu stated this while speaking during a real estate event in Lagos recently.
According to him, surveys have shown that young professionals and millennials, who are the emerging market drivers in real estate, have a preference for mid-priced multi-living spaces and are willing to buy such properties if given the option of flexible payments.
This issue and other key market concerns can be addressed by disruptive technology, according to the expert.
Approximately 19 million Nigerians can afford to own homes priced around N20 million provided they have access to flexible payment options; he revealed, adding that Fintech and Property Tech can help the real estate industry meet the housing demand.
Despite a population of about 201 million, Nigeria’s urbanisation rate is barely 50 percent and while the country needs to provide at least 700,000 units of housing annually, real estate stakeholders say less than 100,000 units are available each year.
The realtor linked the limited supply of housing to factors such as high acquisition and building costs, lack of payment flexibility and mortgages, as well as a largely informal real estate sector.
According to him, there is immense potential in technology to make homeownership more accessible for Nigerians and bridge Nigeria’s housing deficit which presently stands at over 22 million units.
A recent World Bank report estimates that the construction of a 3-bedroom house in Nigeria costs about US$50,000, compared to US$36,000 in South Africa and US$26,000 in India. Odusolu believes this might be the reason why 80 pecent of city dwellers in Lagos, Abuja, Port Harcourt and other Nigerian commercial centres live in rented properties. He added that most of these properties are also suboptimal; without working infrastructure, hygiene and supporting social amenities.
Many millennials, who work in the Start-up, Fintech and entertainment sectors, do not mind these substandard rental properties, as the demand for 1, 2 and 3 bedroom flats in areas like Yaba continue to rise despite average rental prices being as high as N2.5 million annually.
Most young professionals and families cite the high cost of acquiring homes in urban areas as the reason why homeownership remains a dream for them.
“I am waiting to make my first N50 million before I start thinking of buying a home,” says Oludare, a software developer with one of the digital banks based in Lagos.
Reiterating the impact technology can have on the real estate sector, the Octo5 CEO said property technology solutions can help to create a digital marketplace and revolutionise homeownership, the same way GSM unlocked eCommerce.
Apart from this, he believes the introduction of technology and digital solutions in the sector will enable the industry to build credit history and gather consumer data that will make tracking market depth easier for long term investors.
He added that the most important benefits of Proptech for individuals would be transparency and flexibility.
“Prospective homeowners will be able to access apps from anywhere in the world and see real-time feeds of actual work progress. Integration with e-banking platforms and switches will also ensure transactions are traceable.”