NBS is using the wrong approach to measure real estate performance – Estate Intel

Nigeria Real Estate Hub correspondent, Rianat was in an interview with the Managing director of Estate intel, Dolapo Omidire. He shed light on the reports shared by the national bureau of statistics on the performance of real estate sector

Read his interview below

NREH: What exactly do you do in Estate Intel?

Dolapo Omidire: We get a database of commercial property data policies to help people who work in the industry make better decisions

NREH: Looking at the researches you’ve done in the last two years, can you give us a brief review of what the property market looked like?

What I can do is talk about how things have changed in the last two years across the sector

The office sector in 2016/2017 has a lot of supply coming into the market. There were very high specs and high-quality office buildings and the market is yet to absorb them. What we notice now is that a lot of the leasing activity in the office sector is driven by relocation. Some people will move away from one building to another so there is no fresh demand that is coming to fill up. As one building is getting filled up, the old ones are becoming empty so in terms of take-up, it is still generally flat.

When you look at the residential hospitality sector, I think one key thing we have noticed is the high vacancy but people who are building new projects are trying to be more responsive to demand by giving like say, 1 bedroom to 2 bedroom apartments according to what the market wants and reshuffle the segments which are like a cross between residential and hospitality which is getting a lot more popular. That is a thing that can also be mirrored in the office sector where you are talking about space as a service. Just like a co-working space which we are currently occupying right now. Co-working spaces are just one-off fee, they are flexible and you get all the services that you need so you don’t have to worry about all the other hassles that come with renting a standard office space

Within the retails, that is just generally top of it all because of the effects. A lot of retails have started to import their goods and without stable effect, it would be very pricey in terms of dollar which makes it very hard for them to continue to scale, to restock and all but I think all the projects that haven’t been finished by now are still on hold with uncertain futures. Maybe they are making them slightly smaller and that’s because the retail themselves can’t take stand

NREH: What can be done about the office buildings that are vacant?

Dolapo Omidire: What they have to do is drop their rent or try and do a refurbishment so they can compete with the newer buildings a bit which is going to be very difficult. I will say think creatively. For me, co-working spaces and serviced offices are better.

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NREH: As a research company with detailed analysis of what the property market looked like last year, what do you think can be done differently this year?

Dolapo Omidire: It’s exactly what I’ve just explained now. People looking at a space not just as brick and mortal but more as a service and that’s the way tenants or consumers are trying to use their space within their office segment. They are not just looking for blocks that they have to furnish or manage themselves. They want to talk a solution; get a space that they just come inside. If they need to expand, they take more space, when they need to contract, they take less space and it’s not as rigid. That’s the same thing that happens in the residential sector where it’s more short stay; you don’t have to take a lease for the entire year. There are companies who are allowing people to rent spaces for one month. The focus just needs to be what’s convenient for the end user. So they drift away from the more rigid structures that have been in place over the past decade

NREH: Asides research, what other services do you render?

Dolapo Omidire: Just research. Pure research
What we do is to allow people to sign on to our online platform and get access to real estate data or if your requirement is a bit robust then you can request a custom report

NREH: How has that been fairing?

Dolapo Omidire: It’s been good. We fully launched the application that I just mentioned around last November and we’ve started working with customers. A few people have signed up

NREH: There was a couple of news last year that real estate sector is yet to get out of recession. What do you think?

Dolapo Omidire: The real estate being tracked by the Nigerian Bureau of statistics is not the real estate brick and mortal. It is the real estate service sector and how that is tracked is by making tax returns of people who are registered as real estate service firms so it is an indirect approach to measuring the performance of the sector. That is my general comment on that.

I think it’s been tough for everybody but based on the data that is being published, everybody seems to refer to that as the real estate performance when in actual sense, it is the performance of the service sector. Something that might even be a bit closer, though still indirect, is the construction industry which measures the quantum, the volume, and sales of construction materials, building e.t.c.

NREH: Don’t you think its tougher for the real estate pull out of this current situation?

Dolapo Omidire: I won’t say it’s tougher but I think the real estate segment in general is slow to respond to everything. So, as soon as recession begins, the sector feels the heat immediately because it is large, indivisible, takes very long to sell or to trade asset and also takes long for the effect to be seen in asset prices

NREH: Do you think the industry’s growth will be hinged on the outcome of the general elections?

Dolapo Omidire: Definitely
What we usually see before an election, at least 6 months around H2 in 2018 is that transactions begin to slow down and the speed of decision making especially with the big people who are investing slows down also. They just want to have a certainty that everything is going to be fine before they make a serious decision and as you know, real estate decisions are generally very expensive so they would rather hold off until after an election and wait till they are sure things are going to be stable but I guess a lot of people have different views about this

It’s not as bad as it was in the past though. People are now sure of some level of sanity post-election no matter what the outcome might be but things have slowed down a bit. I think after election, what people just want to see is an easy business environment, government that is responsive and cares about its participants. Once we can get that, whichever way, I think that would be good

NREH: So you think the future of real estate lies in the hands of whoever is elected?

Dolapo Omidire: The real estate market, especially when we are talking about the institutional commercial side is very private-sector driven but it still depends on the general macro-economic environment and the macro-economic environment depends on the leadership of the country so if that general investor sentiment is not strong then things are not going to be positive

NREH: Thanks for your time sir

Dolapo Omidire: Thanks for having me