Financing, project viability blamed for abandoned buildings

Estate surveyor and valuer, Olalekan Akinwumi, has attributed the prevalence of abandoned buildings in Nigeria primarily to funding constraints and poor project feasibility rather than a shortage of housing.

Akinwumi, who is also the Principal Partner of Lekan Akinwumi & Co, stressed the importance of knowing who owns the property.

This is coming months after the government announced that it plans to recover 250,000 abandoned buildings.

In October, The PUNCH reported that the Federal Government disclosed that about 250,000 housing units in abandoned projects could potentially be recovered and made available to Nigerians, including civil servants.

The Minister of Housing and Urban Development, Dr Muttaqha Darma, disclosed this recently in Abuja at the presentation of houses to 430 staff members of the Nigerian Midstream and Downstream Petroleum Regulatory Authority.

“The high rate of abandoned buildings in Nigeria is largely a financing and project viability problem, not simply a housing problem. However, it is important to ask who owns the property, why it was abandoned, and where it is located,” Akinwumi said.

He argued that citing a figure of 250,000 abandoned housing units without examining the individual circumstances surrounding each project would be misleading.

He explained that developers who initially had unrestricted access to funding but later lost their sources of finance faced different challenges from those who struggled to raise construction funds and were eventually overwhelmed by inflation and escalating building costs.

“The cause of abandonment matters. The government also abandons housing projects; therefore, the issue is not peculiar to private property owners,” he said, adding that the abandonment of buildings was largely caused by inadequate or interrupted financing.

Akinwumi noted that developers commenced projects without securing the funding required for completion, saying, “Rising costs of cement, steel, labour and other inputs can make an initially viable project financially unviable. Some projects commence without adequate market analysis, cash-flow projections, net present value, internal rate of return and sensitivity analysis.”

He said that completed units might remain unsold because prospective buyers could not access affordable long-term financing, adding that land, title and planning disputes, litigation, defective titles and approval problems could stop projects for years.