The Lagos State branch of the Nigerian Institution of Estate Surveyors and Valuers (NIESV) is championing the establishment of office of the valuer-general and regulation of estate agency practice.
In this interview, the State chairman and managing director, Niger Insurance Properties Limited, OFFIONG SAMUEL UKPONG, explained to The Guardian’s HAPPINESS OTOKHINE, why the institution is promoting a bill to empower estate surveyors. He also spoke on other sundry issues.
How would you describe the real estate sector. It is growing or stagnant?
In my own opinion, it is growing but maybe not at the rate expected because the quantum of disposable income available for real estate investment is low. Every individual would have attended to his or her feeding, clothing, education, and medicals before thinking of investing in real estate. So, the income that is available for individuals for investing in real estates is being depleted by the high inflation rate, high cost of living, devaluation of the naira and others.
The devaluation of the naira in particular, is not allowing growth in the real estate sector. So growth in this sense would be marginal and below expectations. If you also look at the population of Nigeria viz a viz the quantum of houses that need to be provided annually, then you would agree that what is happening is not what it should be. People are still living in blighted areas and in squalor. So, put all this together you will understand my position that it is not meeting expectations. Still, everywhere you look, you will see constructions going on but it does not match up to the population growth rate and funds are not available. A lot of times we have seen adverts by the Central Bank of rates for interests for real estates – it goes between 18 to 25 per cent. No one can commit funds into such venture and expect reasonable returns.
What would you say is responsible for the skyrocketing price of property?
The skyrocketing price of property is a function of many factors. When you calculate all the costs viz a viz the exchange rate of the naira to other currencies where materials are being imported from, then definitely the prices would go high. Right now, the cost of production of one property is so high compared to the returns it is going to bring. So, when you even have high rate of void, you still do not find people taking them or people are not prepared to take and the landlords are not willing to let at a cheaper rate, because in how many years are they going to recover their investment? So they would wait for when the market will improve so that they can recover their investment. So, the cost of production is quite high. If you go round, so many projects are just abandoned. Some of them could be for reasons of improper visibility and viability appraisal. Some of them the appraisal could have been good but there is no money to complete the construction. Therefore, the off-takers and people who were supposed to pick up the accommodation can not. And when you go to an estate that is virgin, and there is no security and out of share lack of funds you go and stay there, you would be endangering yourself. So, those are the issues that make the cost of property very high.
People blame the situation on the greed of landlords, developers and estate surveyors. Do you agree?
Greed? There is no greed. An investor is a businessman. If all the things he needs to develop the place are expensive, then how can you blame him? Like it is said, the soup that is sweet, it is a function of the ingredients that went into it. Some people have developed buildings that are collapsing because they are cutting corners. Some people do not even have the money to develop, so they develop substandard property. But those who want to develop property that will stand the test of time and that will be functional, will have to pass through the right channels. Building is a process. It is not an event; it is a process that will lead to the event. So, these are the things that would guide a genuine developer in coming out with their price. So, when people are talking about greed, the landlord is greedy, the property manager is greedy… How do you consider him? The reward to land as a factor of production is rent or the sale price. When Nigerian Labour Congress is looking for increase in wages, oil prices are going up, the financiers are collecting so much interest rate, why would land also not be prepared to gain its own income? Besides, the people that are there to make some of the cost reduce, are not prepared to. Let’s take for example the cost of getting a title to your land. Lagos state government said it is bringing it down. But the thing is still high. In some places, it is about 30 per cent, if not more of the cost of the land. The cost of survey has gone up and other professionals who are in that industry need to meet the inflationary rates in the country. So, their fees will also have to increase.
What does this trend portend for the future of the real estate sector?
The future of real estate sector is bright in the sense that what is keeping every human being, especially Nigerians, is hope. The day you take away hope from Nigerians, then it is all over. I say this because all the parameters that are surrounding Nigerians are bleak. Fuel, has gone up, therefore it has increased the cost of living. School fees have increased. And what about interest rates, you cannot even get a loan from the bank. But to answer your question frontally, it is hope that sustains; therefore, the future of real estates is bright. For instance, not up to five per cent of the land mass of Nigeria has been developed. By the time we have the valuer-general of the federation and then all these yields and statistics are given in Nigeria, we will be able to know what is the area of land in, say, Abia State, what proportion of it has been developed, and so forth. It will come to public glare. The point is, if not up to five per cent of Nigeria’s land mass has been developed, then the future of real estate industry in Nigeria is very bright.
So, do you foresee the price of property coming down anytime soon?
Yes, the prices of property are coming down; rentals have come down. In economy there is sometimes recession and even depression then sometimes, there is increase too. Prices can come down and I know that in some places rentals have fallen. When the demand falls, then what do you expect? For instance, there was a property we were marketing for N6million in Ikoyi. We didn’t get a tenant. We came down to N5million and still got no tenant. So we had to come further down to N4million before people started showing interest. So, if you juxtapose N6million and N4million that is 33per cent reduction. But when reduction will not be commensurate with the value of the property, the price will not be brought down. Although, it may lead to foreclosure of the property, the person may not even mind, probably because if the price is too low, you may not even be able to prepare the principal and the interest. So, even foreclosure will be a disincentive or disinvestment.
The Institution has started the process of regulating estate agency practice. How feasible is that?
It is feasible by regulations. There is a law that establishes the profession. For a long time, we were not able to come together to see how to do it. But with the right leadership we are coming together and putting our heads together to get things right. It is very possible. You get everybody to be registered. And there is a regulation that except and until you comply, you cannot parade yourself as a member of the profession; you cannot practice it. But in Nigeria, things are done anyhow. All these property that EFCC have been seizing, selling and recouping the money, who gave them the value? Not estate surveyors. And does EFCC not know that there are estate surveyors and valuers in this country? They know. It is after people have been duped by these charlatans and quacks that they will now come and start making arrests. So, why not nip the problem in the bud? Even our policing should go beyond crime reporting. The police can create a department for the purposes of investigation of professional matters. It is possible to have a database where they can check for reported quacks in the profession so that if the person’s name does not appear on the list of accredited practitioners, he or she would be called to order. That way, people will know that without being dully registered you cannot just carry on anyhow because if you do, you will be caught. That is part of policing. But they have to wait for someone to be reported before they now say ‘yes, you, you have been fingered’. I think we have a long way to go. As for the regulation, we have started it and we will go the whole hog.
What would be the next line of action for NIESV in the demand for the Federal Government to create the office of a Valuer-General of the Federation seeing that the request is yet to be granted?
Well, for Lagos State Branch, we don’t just want to go back to the government like that, we want to go with a document. So, we have drafted a bill for the law to create the office of the Valuer-General of Lagos State. It is hoped that our national body will do the same. If they want to adopt what we have done, better. We are still going on with our bill. The committee that we set up has reported back to us that they have finished. They have sent it to the EXCO. EXCO has looked at it and added flesh to it. Now we want to send it to our general members and give them a particular date to send their opinion. When we finish, we will get it together, ask to see the Lagos State governor. Where we are fortunate to see him, we will present it to him and plead with him to take it as an executive bill to the House of Assembly. But where we are not able to see him, we will take it to the House of Assembly ourselves. We hope that as people who voted for them, they will listen to us. Assuming they don’t, we will partner with the press to create awareness about it that it is expedient, it is important that we should get this thing done. Not because we want to benefit but because Nigeria will be better for it.
What do you want to leave as a legacy in the institution at the end of your tenure?
Oh! I want to leave a better profession than I inherited. I want to create in the minds of people that the land economists, which are the estate surveyors and valuers have so much value to give.