Saturday, 10 December 2016

Analyzing the latent cost of Estate Infrastructure: What developers should know - Engr. osaz' Enobakhare

A residential estate without basic amenities to support healthy and safe living is no better than a Slumville, hence the need for an estate developer to make adequate arrangement for the provision of critical estate infrastructure when planning a housing estate or allied settlements. 

Often than not during the cost planning stage, developers tend to under-estimate the cost of providing the requisite infrastructure within the estate and before long, they battle with capital inadequacy and loads and loads of complaints from clients/occupiers. 

Although it is common knowledge that investments in housing estate developments in the Nigerian space yield high returns and have made multi-millionaires of some ordinary people, poor cost planning for infrastructure can make a mess of such a great venture. Estate infrastructure includes perimeter fencing, motorable road network, drainage/sewer, refuse collection and renewal systems, CCTV/Security furniture, water works, estate electrification, lighting, recreational centre, landscaping and beautification, learning centres/schools, shopping mall/market, security house/police station, estate office, estate pharmacy/medical centre, etc.

In Nigeria, the cost of estate infrastructure is nearly half the cost of putting up the entire housing units within the estate or even more depending on the nature of the site and the occupier-capacity; this cost is normally a multiple of the initial value of the land, therefore if the cost assigned to infrastructure at the planning stage is not within this region the developer may be heading for some horrible shocks as the project progresses. Some estate projects are at a halt today because the developer has sold out almost all the plots or housing units without ensuring adequate budgetary provisions for infrastructure and they are now at a dead end –no more properties within the estate to sell and raising money to complete the infrastructure works becomes extremely difficult.

From recent industry estimates, the cost of basic estate infrastructural development per acre of land hovers around 20-25 Million Naira and 45-55 Million Naira for affordable and luxury housing estates respectively. Of this cost, perimeter fencing, roads, drainages and electrification often amount to at least two-third of the total infrastructure budget. As at September, 2015 a thorough cost analysis of a proposed 1500-unit affordable housing estate to be built on 200 acres of land in Abuja shows a gross estate infrastructure cost of 4.63 Billion Naira while the combined cost of the housing units (comprising of bungalows, duplexes and blocks of flats) was pegged at 10.74 Billion Naira; amounting to 43.11% in excess of the estimated cost for the design and construction of the actual housing units. 

These costs, some of which are often difficult to deduce at the initial planning stages are relatively significant and should be taken seriously as many private and public estates with beautiful cartographies are now a shadow of themselves. 

For estate developers who sell serviced plots only, it is important to correctly incorporate the cost of estate infrastructure into the cost of the traded plots in such a manner as to sufficiently take care of infrastructure without incurring any financial losses. 

Using several low-cost, cost-effective and maintenance-free construction methods/techniques like the rubber-road technology for the construction of estate roads, the PHP technology for perimeter fencing and drainage construction, solar LED lighting techniques for street lighting, etc and by employing the service of a competent contractor that can handle all aspect of the work singlehandedly in order to save the cost associated with multi-contracting, developers can drastically reduce the cost of providing estate infrastructure in the short and long-term while maximizing profit.

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