Real Estate Developers Association of Nigeria (REDAN), umbrella body of property developers in the country, is set to introduce two new products by February that will put interest rates on borrowing to fund building projects at between 12 and 15 per cent.
President of REDAN, Chief Olabode Afolayan, stated this at a meeting of the association in Abuja, noting however that it was for people with projects whose transaction cycle could be completed within a period of 24 months.
He disclosed that another arrangement is being worked out with Infrastructure Bank that could bring lending rate to developers down to a single digit if all conditions are met. He also announced that Kenya-based Shelter Afrique is set to open shop in Abuja early next year and will make funds available for capacity training among developers.
Meanwhile, the deadline imposed by the Central Bank of Nigeria (CBN) on primary mortgage banks (PMBs) to recapitalise by the end of the first quarter of 2013 is causing real estate developers in the country sleepless nights.
Afolayan, who stated this, lamented that many of the PMBs are not likely to meet the target of N2.5 billion for operating license within a state and N5 billion for those that want to operate nationwide, as against the current capital base of N100 million.
Afolayan declared that most of them are likely to go down because they did not have the required funds, noting also that it was now rather too late for them to go into mergers.
He pointed out that 75 per cent of the mortgage banks have virtually nothing since, according to him, nearly everything they owned was on lease, adding that some are working with contract staff.
The REDAN president therefore appealed to developers with investments in such banks to think deeply about the wisdom of continuing to retain them even though the CBN had announced that no depositor would lose their money.