Funding still a challenge to estate developers – Urban Shelter GM

Urban Shelter is well diverse and active in these states

Urban Shelter is an Abuja-based real estate developer in Nigeria. Engr. Bachir Abba, General Manager, Projects, Urban Shelter Ltd., in this interview, speaks on projects and challenges in real estate development in Nigeria.

What does the Urban Shelter brand stand for?

Urban Shelter stands for delivery; for the past 30 years we have specialised in the delivery of housing for all. Our mantra has been affordable housing. We have delivered in the course of these years over 5,000-,7,000 units of houses across the country. We have also delivered several commercial projects in Abuja, Lagos, Niger, Kaduna and Kano states.

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Urban Shelter is well diverse and active in these states. We run about three projects in Lagos, also in Enugu, Port Harcourt and we are also working to develop a market in Aba, and are exploring opportunities in Jos, Plateau State, and Bauchi. We have completed a project in Sokoto and we are currently exploring international opportunities; we own assets in Dubai that we are managing, and we are also looking at expanding in West Africa i.e., Ghana, Ivory Coast and Senegal.

We have diversified in addition to other endeavours other than real estate. We own the manufacturing plants for red bricks in Minna and Funtua. We also diversified in Enugu and we are co-owners of Shiroro Dam in Niger State.

What projects do you have ing in Abuja?

In Abuja, basically, we have divided our projects into three major components; affordable housing, which is the low income, the intermediate housing in the middle cadre, and we have the high end. On affordable housing, we are currently developing Brick City which has been on for the past six to seven years. We are currently in Phase 5, and right now we have about 2,500 families that have moved into their homes. Brick City has house prices of below N10 million and up to about N30 million. There are 1, 2 bedroom apartments, 3 bedroom terraces and semi-detached and 5-bedroom stand alone.

In Abuja, we are also developing in Kyami district which also falls within the lower income; N15 million and below. It’s basically being patronised by the Nigerian Police. We are also working for private off-takers; it’s a 10-hectare development that has a site and services scheme for those willing to develop on their own; we provide the infrastructure. We also have what we call the foundation where we build up to the foundation for you and allow you to finish on the carcass.

Still on the low-income housing, we also have the Promenade in Lokogoma, we have 1,2 bedroom terraces for professionals; once you pay 50% you move into your home. This provides flexibility for buyers.

On intermediate housing, i.e., between N30-60 million depending on location, we have that at The Promenade, a 20-hectare development, being developed in clusters. We are about to start Phase 5.

Our aim and objective is to facilitate easy acquisition of homes through flexible payment plans for all cadres of persons.

For intermediate housing, we also have projects in Dawaki on the expressway going to Kubwa, identified as News Engineering, a development of about 120 units. There have been tremendous requests from people, location excellent, very accessible. We still have some availability but very low. We are proceeding into Phase 2. It’s also intermediate with prices from N30 -70 million.

For the high end, with prices above N100 up to N400 million, they are exclusive. We have them at the waterfront development. They also include condominiums that we’ll be doing in Asokoro and Central Area. For the high end, we have the Bellavue Residences in Life Camp at the roundabout; we have delivered Phase 1 and 2. We are currently winding down Phase 3,  and we’ll soon start Phase 4. Prices range from N90-250 million, 4 bed terraces and semi-detached and stand alone.

We have The Hill Residences in Guzape, about 5 hectares, its high end with 102 units of 4-5 bedroom terraces, semi-detached. The difference here is that it’s mixed use with a shopping mall; we have limited availability.

In Asokoro, we have high end properties going from N120-300 million.

At Urban Shelter like I said, we are focused on delivery. We’re in, we’re out; we make people move into their homes, and we proceed to the next project. That’s why we’re different. We’re client-based and focused.

How do you market your projects?

I always say the secret to Urban Shelter is credibility; the company has been around for quite a number of years. Our predecessors stood for credibility, made sure whatever commitment you had you delivered. We have never started a project that we did not finishe, we’ve never abandoned development, and we have never had a court case with clients.

And regarding quality, it speaks for itself; 90% of our current buyers are from references, from people who live in our houses. Before we complete our houses, they’re mostly sold. We have several instances where we have sold houses still in foundation.

There are two factors when it comes to housing; one is the cost of land in Abuja, now taking the trend of Lagos. If you are within the first ring road, the cost of land is incredibly high, the second is the cost of materials, even before COVID-19 and beyond lockdown, the cost has increased tremendously.

Is there no more allocation  of land by the FCDA?

It is difficult, most of the lands have already been allocated to people; where available outside the city, there are no infrastructures and by the time you add all these costs the house price will be so high.

The cost of cement like we all know has increased tremendously; cement, iron rods etc.; these in addition to the cost of the Naira because we import most of our materials.

What about projects outside Abuja?

In Lagos we are developing two major projects, one in Ajah, Abraham Adesanya, prices below N10 million, about 250 units, currently about 70% complete. We also have in Victoria Island extension, bordering Oniru, about 58 units of town houses and apartments, prices from N59 million.

In Kaduna we are developing in Millennium City, about 80% completed and sold, it is in partnership with the Kaduna State government which is commendable. Prices start from N15,000 per square metre.

We are also developing Kasuwar Bacci, a commercial development, having experience from the Garki market development in Abuja, and Apo market and also in Minna. At Kasuwan Bacci, it’s red bricks and we are in Phase 1 and have reached the roof level. We intend to deliver Phase 1, over 1,500 shops, this year for people to move in. We are working with the Kaduna State government to give original owners the right of refusal to allottees. There is a mortgage system with Sterling Bank. The shop prices start from N5 million, for lock-up shops, then you have open stalls for N1 million. The idea was to bring sanity, modernism to the market. We had initial challenges but now people have accepted it from what they’re seeing.

At Urban Shelter we are very fortunate to have had and still have the services of experienced management who are disciplined even financially, allowing us to tap into that experience and wisdom.

Finance is no doubt a challenge; how do you surmount this?

Urban Shelter has through the years developed a funding system for the  projects in three parts. One is equity, which brings the project into life, then we support by bridge financing from financial institutions. Over the years we have developed a good relationship with our banks and have received a tremendous amount of support and credibility, and the third part is depositors’ funds. So, we have a tripartite funding system.

What about interest rates?

Some few years ago the interest rates were jumping from 20% and above but with the relationship we have with banks we see it dropping. We also develop strategies, and we also seek funds when we need. This has mitigated and made the interest rate softer, now below 18%, but when you compare with international rates, it’s still on the high side.

Do you have a mortgage system in place?

We have gone into several partnerships with the Federal Mortgage Bank of Nigeria (FMBN) through the EDL and have done partnerships to develop low-income estates. We don’t have an in-house mortgage system; what we do is profile, then it’s up to the primary mortgage institutions to mortgage.

But funding is still a lot of challenge to developers, and in addition to interest rate, inflation is still a big issue. Many developers are not able to deliver due to the cost of funds but we believe and hope to overcome most of these challenges. A lot needs to be done to make funding cheaper so that people can own their homes.