‘Slowdown in Real Estate demand in Nigeria’ – Ajayi

There has been a slowdown in demand for real estate products and services in the country, as a result of difficulties faced in both the industry and the general economic environment in the nation in 2014.

Development & Investment Plc’s Managing Director and Chief Executive Officer, Mr. Adetokunbo Ajayi stated this recently while assessing the current situation in the real estate industry in Nigeria.

Ajayi said the slowdown was felt by his organisation and by other industry players, adding that the run-in from the last quarter of 2014 through to the recent elections and handover of government power threw sizeable uncertainty into the general environment.
“However, our organisation has continued to progress in spite of these challenges. Our targets during the period were not fully met, but we still had notable achievements indicative of the organisation’s resilience and continued growth,” he said.
Regardless, Ajayi said, “The well being of the general economic environment will obviously impact the real estate sector. A troubled macro-economic environment is a threat to the subsector.

“We are however optimistic there will be an improvement in the general economic environment if we are guided by vibes from the new government. Regardless, we believe the huge need for real estate products and services will be an edge for the subsector.

“We expect to see heightened competition, innovation and rigour among players in a bid to woo consumers with purchasing capacity. Unfortunately, we may also see untoward practices from some operators who are bent to stay afloat if the inclement environment lingers.”
On the sector’s resilience, he said “We are beginning to see improvements in market demand, partly due to the stability of the nation after the elections and the smooth transition to a new government. In addition to this, we are seeing a rise in property value, which is indicative of an increased demand for housing.”

He said the industry currently remained largely as it has been in the past with noted challenges. “We are, however, hopeful that the new government at various levels will take a closer look at the issues with a view to improving the operating environment.”
The real estate industry in the country, he said was still hugely untapped, and as such “affords opportunity for exponential growth. Though currently hindered by a number of factors, we believe they will be resolved with commitment from government and all stakeholders.”
Some of the factors that can enhance growth in the sector, he said are a functional mortgage finance for buyers; a friendly  interest rate  on development and investment debt capital; provision of public infrastructure, particularly roads; functional urban planning and regulations; robust enforcement; access to quality and affordable land for development; sound government policies and administration for conducive operating environment; and capacity building for players in the development chain leading to higher efficiency.

On promises by successive governments of housing for all, he said there was need to “clarify what we mean by housing for all; if we mean everyone or family in the country should own a house, then the government has obviously failed woefully. “Nigeria will however be in the company of many nations in this respect, as there is hardly any country that has achieved this. Housing for all should be seen in the context of access to decent housing for all. This, in our view, is a realistic goal, which some advanced nations have already achieved. Nigeria is still far from attaining this goal. With renewed commitment on the part of the state and all stakeholders, we will get there.”
“We will not describe government as a major competitor in the real estate sector, as this may imply government has assumed business of property development as part of its main essence. “The government however they remain a formidable element in the chain, and at times, substantial impediment to the smooth flow of the development process by way of existence of unhelpful policy requirements and processes.

“We must however admit the direct involvement of some state governments in the business of property development. This situation we consider a setback to the progressive idea that government should be a provider of an enabling environment for commerce and governance, instead of being a participant in the market place.”
On what lessons the Nigerian government can learn from other jurisdictions, he said “There is this erroneous that there is something massive out there for Nigeria to learn from other jurisdictions.
“Without ruling out the need for learning in many areas, we think most importantly, what Nigeria needs to learn from successful jurisdiction are basically twofold.
“First doing the right things, and secondly doing them well. This is a cultural attitude we must form as a people and a nation if we really genuinely intend to make real progress.”
He expressed gratitude to the company’s shareholders for their belief in Propertygate. “We also implore them to continue to lend their support as we begin the next chapter of our business plan with a view to significantly growing the company’s various business lines and profitability.

“We assure them of growth and security of their investment capital, and sustainability of the corporate enterprise.”
On the company’s other portfolio of investment advisory services, he said “We believe the key to making a successful real estate decision, whether it is a personal development for use to extensive and intricate real estate ventures, is knowledge.”

He said real estate entails huge capital outlay, even for supposedly minor development, saying “We have painfully watched investors make costly decisions on real estate location, development/investment idea, implementation mode, financing structure among others.
“Through our advisory portfolio we help our customers, leveraging our domain expertise and wealth of experience, helping them make informed choices and develop projects best suited to their needs including investment objectives.”

The company’s portfolio services, he said include generating sound and viable development/investment concepts; evaluation and analysis of existing development/investment proposals; designs and construction; development monitoring to manage pitfalls between conception and delivery; advisory support to lenders and institutional investors by helping them analyze real estate proposals before they commit their funds; property rehabilitation through re-conceptualising the investment potentials of less efficient properties and putting them on the path to value and growth; and helping public/private sector institutions in building frameworks, policies and processes to address fundamental real estate issues.
He said, “We are pleased to say that our clients are reporting tremendous benefits from these services.”
Propertygate, he said primarily has three interest areas, which are; “Development for Sale – where we produce residential and commercial developments for sale; development for investment – where we develop residential and commercial properties to hold and generate rental income; and our property advisory service through which we position our clients to take informed decisions in their real estate activities.
“We have experienced success in these business areas and hope that in the near future we will also be able to share some of our diverse and extensive industry knowledge with others by way of real estate professional education. It has been one of the activities in the pipeline and we hope to realize this in the near future.”

The company, according to him, organises a Breakfast Meeting twice a year, and that this “emanated from the realisation that the positive ideas needed to grow and develop our industry and the built environment in general lie with diverse individuals. “There is therefore a need for knowledge exchange, which can be achieved through the coming together of industry players and stakeholders to discuss critical and relevant industry issues with a view to promoting the overall improvement and progression of our sector.

“We hope, as we continue with these sessions, we will reach out to more participants, possibly increase the frequency of the sessions, and help facilitate follow up actions emanating from discourse at these events.”
On the effect of capacity building on the quality of products in the industry, he said “We are all aware of the issues we face as a nation arising from scarcity of quality human resources. This challenge afflicts all economic sectors, undermining productivity in quantitative and qualitative terms.

“Our sector is not insulated. The long chain leading to eventual delivery of our products and services means there are several and diverse players along the way. There is therefore the need for capacity building for competence and innovation among consultants, contractors, construction material producers and vendors, lenders and developers is to enable them make more qualitative contributions leading to improvement in products’ quality and ultimately value to consumers.”

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