By Abisola THOMPSON
The Association of Estate Agents of Nigeria (AEAN) has called for a review of the Real Estate Investment Trusts (REITs) laws to allow direct investment of pension fund in real estate development.
TBI Africa said Mr Adeolu Ogunbanjo, AEAN Chairman, made the call in an interview with the News Agency of Nigeria (NAN) in Lagos on Friday.
According to him, REITs laws and the National Pension Commission (PenCom) guidelines prohibit pension funds from being directly invested into real estate.
He said that REITs regulations directed that pension funds could only be invested in mortgage-backed securities.
Ogunbanjo said that contributions to PenCom under the national contributory pension fund had accumulated to more than N6.3 trillion.
“These are idle funds that can be unleashed into the real estate sector to stimulate business activities and create room for people to invest in the sector.
“The fund is enough to grow the building construction industry and the economy as a whole if properly harnessed and managed,’’ he said.
Ogunbanjo suggested that stakeholders in the industry should dialogue with PenCom and other financial institutions to create a financial and mortgage platform for developers to access loans.
According to him, the platform should be designed in such a way that developers would be able to access loans at four to five per cent interest rate.
He said that such mortgage loans should be repayable within 25 to 30 years to allow enough time for the investors to recoup their investment and repay back.
According to him, with such an arrangement, the impact of the funds will be felt.
“Operators in the industry need to look for how the pension fund can be used to finance the mortgage industry because funding has been a major challenge.
“The guidelines and regulations should be reviewed to allow direct investment of pension fund at the low end of real estate industry where it will have great impact.
“Real estate industry is safer, stable and rewarding, while it remains a viable venture to invest the pension fund,’’ Ogunbanjo said.
