Tokunbo Ajayi was appointed Managing Director and Chief Executive Officer (MD/CEO), Propertygate in August 2008. Before joining Propertygate, he served as the Executive Director, Enterprise Division of Crown Realties Plc, a property development company in Nigeria. At Crown Realties he occupied various positions, which included Group Head corporate services, General Manager and Secretary, Board of Directors. With more than 20 years experience in real estate development, he has acquired extensive knowledge, skills and experience, spanning property development, investment, finance, construction, marketing, property management, legal services and general management. He told SEYI ODEWALE that housing could be government’s social responsibility, but it is a serious business venture.
Talking about Public and Private Partnership (PPP) in housing delivery, how has this helped in ameliorating problems with housing provision?
I would say, to an extent, taking into consideration places like Lagos, Abuja and other cities in the country, that it has recorded about 70 per cent success. Against this background is the question of if we don’t have PPP where are we likely to be by now? If you remember, the state was in the business of providing housing and in terms of quantum, the state could not do much just as we did not see anything spectacular in terms of quality. But when government tried to bring in public, private participation into housing, you could see that it has greatly revolutionised housing delivery. In Lagos for instance, all these HFP developments, Victoria Garden City (VGC) and many others along the Lekki corridor and even on the mainland of Lagos, are as a result of PPP. What we have now could be likened to an explosion from the private developers. And how did we have that? It is because Lagos State government allowed it. I know also about Abuja, where a mass hectare of land was given to developers under the private estate developers’ scheme. By this, their participation has not only uplifted housing delivery to an extent, the built environment. So, I will say that it’s been a very positive development.
Going by this, one may ask what business has government in housing delivery.
Well, I think before now the thinking was that government should be the provider of virtually everything for the public, but that thinking has changed substantially, not only in the global perspective, but also in the developing nations like Nigeria. That explains a lot of changes you have seen in the privatisation programme. Government is more of an enabler of good environment for private sector to thrive and government is to concentrate enormous energy of the provision of public infrastructure and other things that we know could be difficult for the private sector to provide. Housing could be social, but it is also a business venture. The private sector is better enabled to do that. And I think that is what governments of various states and at the Federal level have seen that is making many of them divest from housing provision. Even when they have parastatals doing that, they do it like a private concern. So, it is no longer a social thing. Government can now find a way of making houses accessible to others through policies and other measures. Going into businesses such as provision of housing by governments is like running an enterprise. And governments all over the world are not design to do that, even in communist China; it’s the private sector that is driving China now.
What is your assessment of built environment and the construction industry?
When you talk about the built environment, you are talking about the totality of real estate, construction, infrastructure and others. I will say we have made some strides, but we still have a long way to go, notwithstanding the gains made. If you look at our environment, you will see that it is still plagued with a lot of environmental issues. In the areas of provision of infrastructure, many governments are trying, but there is so much to do as we are extremely far behind. If you take for instance, Lekki corridor, the corridor is said to be a major developmental asset not only to Lagos, but other parts of the country. But for about 15 years now there has not been an alternative road to Lekki-Epe road, the only major road to the corridor. You see congestion and traffic gridlock all the time. Even if the road is extended, it can only do a little because what will naturally happen is that a lot of people will move to the area. If you look at areas designed long time ago, that have network of roads, you hardly experience traffic gridlock. But along Lekki corridor traffic gridlock is giving the area a different look. For instance, if you are caught in the traffic when you are almost getting to where you are going, you cannot do anything about.
Perhaps the topography of the area did not help in constructing alternative routes?
No, I don’t think so. Roads can be constructed on water and the area is not even on water. It is because the roads were not built and you don’t expect the private sector that is providing primary infrastructure expected from the state, which adds to the cost of providing housing by them, to go and provide these basic infrastructure. Note this, if they do this it will add to the cost of delivering the houses and there is a limit to which they can go. There is also the problem of non enforcement of physical planning. If you go to any civilized society you would not see people building shops anyhow. It is not just possible. These things desecrate the environment; they kill property values. You see people building houses thinking that they will be their source of income, but people just come and build shops and all what not, in locations that are hitherto, sought by people, nobody would want to go to such areas because of the blight created by the indiscriminate shops and shanties built here and there. Another thing is that such environments would harbour miscreants and create serious security issue.
This again will make most people to reconsider their living in such environments. Consequently, the value of property in those locations would drop and the owners of such properties would be impoverished. So, in a regulated society you cannot put even a table on the road or anywhere without permission, but here you can do it and get away with it. All these things have serious implications. One of the problems Lagos State has is population. A lot of people come into Lagos, but why? I know the government is concerned, but I don’t think the government has seen the linkage between this environment and population influx. People don’t come to Lagos because they want to see Bridges; they come to Lagos because they believe it is where they can make a living for themselves. If you can move into a city and start work almost immediately, then you will see that a lot of people will be interested in coming there.
If anybody comes into Lagos today and starts selling recharge cards what value does that add to the state? When you are looking at those coming into the city you ask about the quality of those coming in and what they are bringing into the society. Those people will create more problems for the city because the income they are going to make from such activities can hardly make them get by. As a result they are hungry, homeless, and they become threats to the society. But when you don’t have such opportunities, you will ask yourself what are you doing in the city when you can stay back in your village and help it grow? So, it is a win, win situation for everybody. But when you come into the city and have it desecrated and added no value to it, what happens? Erroneously we think adding value is about numbers, if that is true, the most populous city should be the richest in the world. But it doesn’t work that way. Unfortunately we are carried away by sentiments saying that if we move those people from the streets, what are they going to do?
But in a way government has a responsibility to put our people on the right path. A guy selling recharge cards on the road, putting a table on the road to display his wares may probably not have more than five thousand naira worth of things to sell. Ask yourself where would that lead such a fellow in life? That kind of business is not sustainable.
Before now, people engage themselves in various kinds of skills that helped them to make a decent living for themselves. In construction and real estate sector I know that a lot of services of artisans are needed. And they are well paid compared to somebody who stays on the street. People can learn that and become somebody and be useful to themselves and the society. But a man who sells on the road side can hardly become anything in the future. But again, because we always want populist policies, which in the real sense are not sustainable, we always have issues with them.
Again if you chase somebody selling planks and reinforcement iron along the road people will make noise saying you are pushing away poor people from earning a living. But a man selling those things is not poor. The value of those iron rods runs into millions. They take advantage of the state to put their stock on the road. When you have things like this you cannot have a useful environment. The built environment is also connected with the way it is financed. When we get to financing you will get the picture. If a place is not well financed, then you have a very big problem in the society. These are some of the problems affecting our built environment. In a nutshell, government must invest in a massive infrastructure
Sometimes I see it as unfair, while it is good to develop certain areas, but at whose expense? For instance, if I look at the massive improvement in infrastructures in places like Ikoyi and Victoria Island (VI), I say they are nice, but many of those who work there and do not stay there also pay taxes. Where they live have you provided infrastructures for them?
There should be a balance where you provide infrastructure across board for people to feel governance. You cannot go to London for instance, a put your shop anywhere it’s not possible. So, why can we not do that here? You cannot develop a property without an approval. Once we have infrastructures in place then we can begin to have a more presentable and tidier environment.
Is there any hope for a medium or low income earner to own a house in the city?
The Lagos State government then was interested in developing the neighbourhood and I can tell you that around 1994 to 1995, the state government was giving a hectare of land for about N100,000 to private developers because they believe that they would be able to do mass housing for people . But as at two years ago, a hectare was going for N65 million, this is in less than 20 years. I can tell you that those given the land as private estate developers to do housing schemes then, did not help matters. They allowed it to stay for long for it to increase in value. However, it is what you buy that you produce. That is one of the problems. Again, you see land in the hands of speculators, which also is a dangerous dimension.
However, whichever way it was done, you see land ending up in the hands of people who are not developers. So, when they had those lands, many of them held them back, thinking that they will make enormous money from it, so they are holding it. Consequently, economic activities are tied down, so everybody is losing. And for developers too, when eventually you are compelled to buy, start point of land alone is very expensive. And by the time you factor in the costs of infrastructure and because of the kind of development you have along the corridor, those ones have set the benchmark and you don’t want to do something below that because people will compare you to others. Now when you have that cost of producing infrastructure, then you have the cost of providing certain primary infrastructures, which ordinarily should be the responsibility of the state. A combination of all these would give you an expensive product.
Then you talk about cost of funding, by the time you put all together, you would realise that cost of houses are high. If you want to buy a plot of land in Lekki Phase I, it’s about N120,000 per square metre and for a thousand square metres; that is N120 million. What can that do for you? And maybe you get a loan of N500 million, the cost of land alone per unit is about N40 million to N50 million, you have not built the house and have not provided infrastructure. So by the time you do that you have a very expensive product. That explains why houses are expensive.
The shocking thing, we can be very funny here, we pride ourselves in things that should not be considered as things of pride. People accord much recognition to Lekki corridor as being expensive, money is money, when you take the value of this product and compare them to others abroad you will see the difference. If you buy land for about N150 million, that is about $1 million. If you have $1 million you will have property anywhere in the globe in choice areas, but if you compare that neighbourhood with the one you are spending exactly the same amount on you will see the different as clear as the difference between light and day.
Some of the places you have here do not have street lights, the roads are not good, you see shanties around and you are still going to spend a million dollars on them. For people who have lived abroad they find it extremely difficult to part with that kind of money. And when they do, it’s because they don’t have a choice. But that is not the way it should be. This tells us that the prices are off the mark. A property is as good as its environment.
What is the way out?
The way out is a loaded question and I will attempt it from every angle. From the environmental angle, I think various governments are expected to perform their constitutional roles with the provision of primary infrastructures. Let me quickly say that when things are not going right we usually put the blame on either the Federal Government or the state governments. But the reality is that about 60 per cent of our roads are actually under the management or control of local governments.
But there is no enough funding for local governments to do that?
That is one of the things we need to address, because if we don’t address them they are not empowered to provide roads. But they are constitutionally required to do that because those roads are under their jurisdiction. But the question is: how many of them do that? So, how do we ensure that this is done? This has to do with the demand of the public. As long as we keep quiet, nothing will happen. But the moment we begin to agitate for what should be done, we will move closer to a perfect situation. And when we start to perform our obligations as responsible citizens by paying taxes, government will be able to do its job. It is also a matter of demand and supply. Why are people coming to a particular location and prices of houses are rising? We talk about Lekki, prices of houses are not high in Lekki because it is Lekki, it is the demand on Lekki. The people coming to Lekki, where are they coming from? Why are they relocating to Lekki?
The simplest answer is that in life people want progression. The man is relocating from either, Mushin, Agege or Ajegunle where because of poor performance at the governmental level, those environments have been allowed to decay. Again, because of change of status he wants to move out of those areas. He then asks himself, where do I go? He cannot afford Ikoyi or Ikeja GRA, but he can try Magodo, Omole GRA or Lekki corridor. So as long as people are coming there the prices of houses will continue to rise
But if there is urban renewal programmes and environments like these are made worthwhile for people to begin to live in them and if roads and drainage systems are provided and everywhere is cleared of shanties, people will be encouraged to live there and not relocate.
For instance, when Oshodi was cleared nobody ever thought that the place could that beautiful. So if places like Bariga, and other areas that have shanties are fixed, people will ask questions like why do I need to go to Lekki? This will reduce considerably, the volume of people moving to other areas as prices of houses in where they are moving to will come down. For instance, people in Lekki/Ajah axis are moving to Lekki Phase I because they are reacting to traffic gridlock around VGC and Ajah round about. VGC in terms of ambience is much better than Lekki Phase I, but Lekki Phase I commands premium value than VGC because people are locating there. The cause of this, you will agree with me, is infrastructure-road network.
Abroad most environments are the same, some places maybe top notch, but most places are the same. That is one of the things to be done to solve the problem. Talking about policies to aid real estate development, you then ask yourself when you are giving land to people, who are you giving land to? Are you giving land to speculators or people in the business of real estate? This is because some people have been given land in Lekki for the past 20 years or more and if you ask them for the land they will ask you to bring billions. And if you say you don’t have that much they will tell you to live the land there. I think it’s proper for government to ask those given the land for over 20 years what they have done with the land.
Can’t individual developer approach government for land?
It’s possible, because the one my firm, Propertygate built on, which is Alexandra Quarters, is a direct allocation from the government. And I’m aware that some of the developments along the corridor are like that. But there are also quite a number of lands allocated to non real estate developers. I’m aware of lands allocated indiscriminately to people and the moment they got the land, they came to developers to say that they had lands for sale.
