The Nation Newspaper

Tag: real estate

  • Online real estate portal makes debut

    A new real estate portal, propertynews.com.ng, has been launched in Lagos.

    Its  Publisher/Adrant Partners Chief Executive Officer, Mr. Ranti Adedeji, said the portal is a cost-effective platform that provides in-depth reports and analysis of events, activities and developments in the construction and real estate sector.

    “Practitioners, investors, as well as, individual property owners would find it most invaluable. www.propertynews.com.ng, the media arm of Adrant Partners, has regular segments, such as Building Planning, Sellers’ request, Buyers’ Request, Documentations, Real Estate, Investment, Supplements, Projects and  Interviews,” Adedeji explained.

    According to Adedeji, a former journalist on the real estate beat, www.propertynews.com.ng, affords landlords who have property to sell and estate agents who have direct instructions to help sell property an opportunity to publicise their stock.

    He added that buyers could indicate their demand in order to be matched with property in the organisation’s database. “We also provide free consultancy services about property documents like Survey, Land Information, Certificate of Occupancy and Building Approval.

    This is in conjunction with experienced property lawyers and relevant government agencies,” Adedeji added.

  • Experts: real estate in chains

    Experts have passed a vote of no confidence in the real estate sector. They are worried that the residential vacancy rate in three major cities  has hit an all-time 33 per cent high  by the shrinking of companies’and personal incomes. They argue that investors may have to tarry for the industry’s resurgence, MUYIWA LUCAS reports. 

    The statistics reeled out by the panelists in the conference room of Reality Point Office, Ikeja, Lagos, last Friday, sent shivers down the spines of members of the audience.

    It was  at the yearly review of activities in the real estate sector.

    “The vacancy rate in residential buildings in Lagos is estimated at around 33 per cent; in Abuja it is 28 per cent and 13 per cent in Port Harcourt. There is also no difference in retail development, which came down leaving a vacancy rate of between 33 and 50 per cent, among large shopping malls. Apart from few blue chip developers, who were able to raise capital, it was a sorry tale for many others,” Chief Executive Officer, Northcourt Real Estate, Tayo Odunsi, lamented.

    He noted that the statistics were impacted by the delay in passing the budget last year, and the recession. This he said shrunk companies’ and personal incomes in response to inflation. Based on this, investors in the sector, it is believed, may have to wait longer for light to appear at the end of the tunnel.

    Dotrubik Projects Chief Executive Officer Oladotun Olusola said there was an over supply of commercial real estate last year and that developments in some areas of Lagos went up by about 100 per cent with many of them not taken.

    “In the office and retail space, there was an oversupply because people were interested in investing in other things,” he said.

    Realty Point Limited Managing Director and Chief Executive Officer Debo Adejana set the tone of the discussion when he said the real estate industry was witnessing an anomaly. This, he regretted, was because while the prices of houses are plummeting, the cost of land is going up.

    He linked this to the depreciation of the naira value and unfixed cost of capital. Therefore, he said, unless relevant stakeholders took urgent steps, the sector, which had been seriously hit by recession since last year, would not fare better this year.

    Indeed, available data shows that the real estate sector contributes about eight per cent to the economy, which has now fallen into recession following two consecutive quarters of gross domestic product (GDP) contraction. The effect has been telling on the industry, which is believed to be on the decline.

    Adejana said the recession forced investors to pull out from equity market leaving the government as the principal actor, which borrowed extensively at ridiculous rates. The development, he said, has left businesses stifled

    Odunsi agreed with him. He said since last year, the real estate sector has not been able to compete because of foreign exchange problems. This was why, in the first and second quarters of last year, the industry witnessed a lull in housing, retail and office space prices.

    He warned that unless a defined foreign exchange policy was implemented, the situation would remain the same this year.

    “It wasn’t the best of year but there were a few bright spots here and there. Buyers became a little selective, so developers who met their needs in terms of pricing and creativity actually did well. Quality and price became king because money moved intelligently in 2016,” he said.

    Though the Business Development and Strategy Manager, Realty Point Limited, Akin Arogundade, said the forex issues impacted much on the input components of the real sector, which are majorly import-based, he called for the review of planning regulation, saying the regulation was archaic and not dynamic in meeting realities on ground.

    But all hope is, however, not lost. This is because the panel agreed that with the proposed Diaspora bonds being muted by the Federal Government, and the rent-to-own initiative that is gradually gaining grounds across the country, including the restructuring of the mortgage system, a brighter future may just lie ahead of the industry. They are optimistic that if the bond is successful, the real estate sector will be a major beneficiary.

    He said: “For 2017, I am betting that the Diaspora bond will make it bright. Should it be successful, the Ministry of Finance may begin to shift their focus by raising funds from the diaspora rather than internally; and then, it will reduce how much of treasury bills they are putting into the market; once that happens, it will reduce competition and the real sector will pick up.

    “Once foreign portfolio investors begin to understand where the government stands when it comes to fiscal and monetary policy, infrastructure plans and other things, there will be more investment.”

    The Group Head, Risk Management, HomeBase Mortgage Bank Limited, Arinze Adigwe, raised hopes for mortgage seekers, insisting that the mortgage sub-sector would play a more significant role henceforth, especially with the restructuring of the Federal Mortgage Bank of Nigeria (FMBN).

    “There is a lot of structures that need to happen in the mortgage sector. One thing that we need in Nigeria is the uniform underwriting standards,” he said.

    Other areas of note, which the professionals identified, that would stimulate the industry, included land titling and building approval process.

  • Many woes of real estate sector

    Many woes of real estate sector

    The recession ravaging the country has spared no sector. Experts say it has disorganised short and long-term plans. Particiapnts at the International Real Estate Federation (Nigeria Chapter) annual dinner in Lagos have warned of a further dip in investment in the built sector this year. They say unless urgent measures are taken, the woes of the industry will worsen, dashing any hope of it contributing significantly to the country’s Gross Domestic Product (GDP). What is the way forward? Stakeholders are, however, divided over which sector offers better returns than real estate. MUYIWA LUCAS reports.

    Dr. Doyin Salami, a lecturer and member of Faculty, Lagos Business School (LBS), is not a man who minces words, especially when it concerns the economy. When he ascended the podium at the Metropolitan Club Hall, Victoria Island, Lagos, last Friday, it was time for another confrontation with the stark reality of what obtains in the real estate sector, viz-a-viz the nation’s economy.

    Delivering an address at this year’s annual dinner of the International Real Estate Federation (FIABCI) Nigeria Chapter, with the theme: “Real Estate: It is All About the Economy”, he warned that although the real sector is about eight per cent of the nation’s economy, it has been in decline, contracting so many times.

    “The data are very clear. The real estate sector contributes between seven and eight per cent to the nation’s economy, but it has contracted consecutively for five quarters. In other words, for more than a year, the sector in which we operate have been shrinking. “What will happen to it in 2017, will depend on what happens to the economy generally because housing / real estate takes its cue from the general economy,” Salami said at the dinner.

    Lagos State Commissioner for Housing Gbolohan Lawal agreed no less with Salami. According to him, the sector needs to wake up fron it deep slumber because “we have noticed no growth in the real estate industry”.

    He, however, assured that the  state would  inject private capital into housing delivery as it now has 10 private developers, and several stakeholders across various layers in the real estate sector participating in housing delivery.

    Lawal further said the time was ripe for the government to reflate the economy with increased activities in the real estate.

     

    Budget 2017 vs real estate

    Salami noted that unlike last year, the Federal Government has projected that the economy would grow by about 2.5 per cent this year,  representing a turnaround from the past. “Last year, we shrank, this year we will grow. The extent of the growth, however, is what only time will tell,” he said.

    With the country’s population growing at about 2.8 per cent yearly, a 2.5 per cent growth, therefore, still represents a reduction in per capita income. In other words, according to Salami, income per head of the population is set to fall this year. Beyond that, the government’s assumption was that inflation would be at 13 per cent, although 12.92 per cent was the actual assumption.

     

    Housing supply and purchasing power

    Salami said if income did not increase at the same pace with inflation, it means that its real value would continue to depreciate and the capacity for demand/spending wwould equally continue to diminish. And once spending capacity diminishes, demand will fall and create difficulties for other sectors of the economy.

    On the supply side of housing, he regretted that the figure most regularly brandished was a housing deficit of about 17 million, which he said, seemed not to have changed in the last 10 years, irrespective of the growth in the population. This, he noted, gives a bit of concern about the accuracy of the data in the sector. “As far as the supply of the real estate side is concerned, if there is no construction, then supply suffers,” he said.

    FIABCI-Nigeria President Joseph Akhigbe said in the short period the economy took a downturn, operators and other stakeholders witnessed the good, the bad and the ugly of the devaluation of the local currency, rising inflation, excess supply of property as a result of the economic downturn and surprising stable prices despite the fall in the demand for property.

     Prospects

    The stakeholders are concerned about the attractiveness of the sector this year. For this year, both the federal and the state governments have a combined budget of N14 trillion. In his analysis, Salami explained that the over N2 trillion deficit in the Federal Government budget this year, could only be made up through borrowing – either domestically or internationally.

    “Therefore, if the Federal Government finds it difficult to borrow internationally then she will want to borrow domestically. The effect of borrowing domestically will lead to an increase in interest rate, which presently is at between 16 – 18 per cent for companies and for individuals, and it can go as high as 27 per cent.” He then asked: “The big question will be is real estate still attractive as at today?”

     

    Treasury bills and housing

    For Salami, given the evolving scenario, a discerning investor is better off buying government treasury bill than building a house. He will base it on the return-on-investment (RoI) because treasury bills will give 20 per cent returns and no risk to the investor- the risk of inflation and looking at standard economic parameters such as yields, inflations and interest rates. An investor in housing will have to face a whole lot of risks such as difficulty in getting government approvals and consent; non payment of rent by tenants and managing the house as a whole.

    Besides, to Salami, capital appreciation in housing is one of the slowest because it is a long-term investment. It may probably take another two years for the housing market to become productive looking at the present economy and the rate at which already built houses up for sale or rent are not occupied.

    “The housing sector needs to look at how to capture more information and data to help those who want to invest have a holistic approach on the sector; it is a major challenge that the professionals in the sector needs to solve. During inflation, the sector also suffers because it becomes difficult for suppliers to get commodities at reasonable prices, which create another fundamental issue,” he said.

    However, a former president of the body, Kola Akomolede, carpeted Salami on the RoI submission. Drawing example from the value of properties in Dolphin Estate, Ikoyi, Lagos, Akomolede said the theory of treasury bills having more RoI than real estate did not arise.

    “When we sold Dolphin estate in 1990-1992, it was just under N500,000 per unit of duplex. Now each unit is worth several millions of naira. If you kept your N500,000 in treasury bills since 1990, what will it be worth now? Certainly your principal investment would just be worth about $1,000 now. So, RoI on real estate is better,” Akomolede said.

    During the dinner, stakeholders were equally rewarded for their activities in the sector over the years. Notably, two journalists- Chuka Iroko of BusinessDay and Chinedu Uweagbulam of The Guardian, who were awarded certificates of merit for their journalistic contributions to the real estate industry in the country.

  • ‘Arbitration a better option in real estate dispute’

    ‘Arbitration a better option in real estate dispute’

    Nathan Searle is a partner in Hogan Lovells International Arbitration Group, who acts for multi-nationals and high-value international arbitrators in cross-border disputes. In an email chat with MUYIWA LUCAS, Searle speaks on the role of arbitration in the real estate sector. 

    What is the role of arbitration in real estate dispute resolution?

    As urbanisation increases and the size, value and complexity of real estate developments rise, the potential for disputes heightens. In particular, real estate developments are increasingly involving provision of key infrastructure such as power, water and roads. Real estate projects involve many parties including investors, lenders, construction firms, materials suppliers and the purchasers, who may be businesses or individuals.

    Arbitration is a means of resolving disputes in a fast, efficient, cost-effective and confidential manner.

    One key advantage of arbitration is parties can choose arbitrators with experience in the real estate sector. This means that the parties’ dispute will be determined by someone, who can bring to bear his expertise in understanding and deciding the matters in dispute.  This can lead to a more efficient process and be helpful, particularly regarding issues that are technical or relate to industry practice.

    Another advantage of arbitration is parties can determine, to a large extent, how they want the proceedings to be handled whereas court proceedings are conducted in accordance with court rules.  In the context of an ongoing real estate development project, it may be necessary for a dispute to be resolved quickly so that work on the project can continue. Arbitration enables the parties to agree to put in place procedures to ensure that an award is made quickly to prevent a dispute from derailing the project.

    Does Nigeria have trained personnel to handle arbitration?

    There are many leading arbitration lawyers in Nigeria. Many of these lawyers have experience of arbitrations in the oil and gas sector, where arbitration is the preferred means for resolving disputes.  There is a false perception that it is only used in resolving oil and gas disputes, this, however, is not the case, as arbitration is constantly evolving and is increasingly common in other sectors.

    The recent creation of the Association of Young Arbitrators (AYA) Nigeria, also shows that Nigeria is investing in promoting arbitration among young, up-and-coming lawyers. AYA is an organisation established by young Nigerian lawyers to facilitate mentoring, knowledge sharing and training of the next generation of arbitration lawyers in Nigeria. The Lagos Court of Arbitration has also offered arbitration training to Nigerian lawyers for a number of years.

    How can the concept of arbitration be related to real estate?

    When people talk about Arbitration, they are often referring to mediation.  Unlike in court or an arbitration, in mediation there is no final and binding judgment.  Instead, the mediator’s role is to seek to facilitate the parties reaching agreement on a final settlement.  The mediator’s role is to help show the parties how they can reach a win-win solution by helping them evaluate the strength and weaknesses of their cases to reach a fair and mutually acceptable outcome.  A key advantage of mediation is that it is faster and cheaper than litigation or arbitration.

    To what extent is the outcome of arbitration legally binding on other parties in real estate issues?

    Arbitration results in an award which the parties agree is final and binding, subject to any rights of appeal provided for by law.  Courts will usually enforce arbitration awards provided that the arbitration was conducted fairly and in compliance with the parties’ agreement to arbitrate.

    What other means are available for real estate dispute resolution?

    If the parties do not wish to use mediation or arbitration to resolve real estate disputes then these would usually end up in court litigation.

    Court litigation can be expensive and it can take a long time get to a final judgment, particularly if the case goes all the way through the appeals process.

    Adoption of arbitration in real estate disputes is a great opportunity in Nigeria. It takes pressure off the courts, and Nigeria definitely has the infrastructure for it, with high-calibre lawyers experienced in arbitration, and arbitral institutions like the Lagos Court of Arbitration. Arbitration has a broader role in resolving not only real estate disputes, but shipping and other commercial disputes, and Nigeria is well placed to capitalise on this.

  • ‘Don’t expect buoyant real estate business’

    ‘Don’t expect buoyant real estate business’

    Mr. Diran Adetunji, an Abuja estate surveyor and valuer, speaks on the place of the real estate sector in Nigeria’s economy and its prospects this year, among other issues, in this interview with BUKOLA BOLAJOKO.

    How important is the real estate sector to the economy?

    All over the world, real estate is very important and crucial to the economy and to the development of the nation. The importance of real estate sector cannot be over-emphasised. Apart from the fact that it creates and generates enormous employment opportunities, it also assist in ensuring that the citizens are empowered and their living standard is enhanced. When you have a major real estate activity in place for instance, there would be opportunities for plumbers to handle sanitary works. The services of artisans, electricians, civil and mechanical engineers, and even food vendors would also be required. In other words, people would be employed and empowered economically, and when people are gainfully employed, particularly in the real estate sector, it generates some other enormous activities, with a lot of positive trickle down effects for the people.

    How would you describe Nigeria’s real estate in 2016?

    Needless to state that the economy effectively ran into recession, due to the fact that it (the economy) contracted seriously in the fourth quarter of last year. The change in the government, coupled with the worldwide change in virtually every sphere of life, financial, economic, climate and several other areas all combined to define the real estate outlook in 2016. Also, the economic meltdown of the recent past; the effects are yet to completely disappear. Unfortunately, some nations, Nigeria inclusive, were not pragmatic enough to diversify sources of income, and expectedly, they ran into economic booby traps as other mono economy nations, and subsequently cannot withstand the pace at which the developed nations introduced creativity in all spheres of their life. The developed countries are busy devising other sources of energy; hence the wholesome demand for crude oil is no longer fashionable there. When you look at what Nigeria generate from crude oil today, you ask yourself how that paltry sum can effectively finance the budget of Africa’s biggest market and most populous nation

    All these have negative effects on the entire economic outlook, and when you now look at real estate, which is volume driven, you realise that it has a much negative effect on the sector. Even a small project of two-bedroom flat will run into millions of naira, and the mortgage institutions, which are supposed to provide and offer palliative measures for people buying houses or people going into property development are not really developed or strong enough to offer such services. Most primary mortgage institutions you see are practically and fully engaged in the usual banking business. So, you don’t have solid mortgage institutions that can support property development business and enhance it further. The banks don’t want to engage in real estate financing because it is a long-term gestation project, so loans given if at all are for short term runs, and you cannot use a short term loan for a long gestation project. All these create a major crisis in real estate.

    This is not to cast aspersion or score a political point, prior to the current regime, real estate business and activities were buoyant and dynamic, perhaps due to free money here and there. Crude oil  prices were high, production levels too were sustained, demand for it was stable and consistent, and money was everywhere in all the sectors and the FDIs too were coming. Funds trapped abroad were repatriated, and all these made the difference. These funds found their way into real estate because of the traditional belief that real estate investment is the only one that has an edge against inflation. You will never get it wrong with real estate investment due to its various unique concepts of location advantage, capital growth, and returns on investment, which makes real estate investment worthwhile. But right now, we are in recession fully, and that we operate a mono-economy complicates the problems with the price of crude oil nose diving to an all-time low, high energy cost, weak exchange rate all conspired to impact on productivity and competitiveness across all sectors of nation economic activities. By the time you add this to the unrest in the Niger Delta, militancy and destruction of pipelines, leading to shortfalls in supply, the unfriendly agricultural environment occasioned by the rampaging attacks of Fulani herdsman on the farmers and their farm produce, all have affected the national income, as well as every other sectors of the economy and the real estate has its share of the problem. When you go round the major cities of Nigeria, you find out that many buildings are unoccupied, and nobody is actually requesting for them, meaning that transactions have gone down drastically.

    Should we expect a different outlook in 2017?

    It will be truly magical for real estate to bounce back to vibrancy and buoyancy in 2017. Unless there is a major policy shift in the direction of housing and infrastructure development, I don’t see the real estate sector prospering in 2017. After the World War II, the western nations embarked on the Marhall Plan, which created enormous activities in infrastructure development. This is the sector with the ability to absorb a large chunk of unemployed people. We should look at the present situation as if we are emerging from war with the need for massive infrastructure development and similar activities. The government had introduced the Single Treasury Account; I will suggest that these funds should be administered by a few credible banks for government with the mandate to allocate funds and loans to different sectors of the economy to create vibrant economic dynamics because we cannot afford to be static. I think it is important on the part of the government to look into this aspect and have a rethink, because a few notes of naira that are working are better than millions  lying idle.

    Let me quickly add that real estate sector is a highly specialised area where government must introduce and implement the right policies. The government must engage the professionals in the industry for better results because you must listen to diverse opinions at times such like this. The Nigerian Institution of Estate Surveyors and Valuers is veritably placed to give the government the much-needed advice on how to restore the real estate business into vibrancy, structure the mortgage institutions and increase our housing stocks. Hitherto, the problems have been created by putting in place those who do not know much about real estate sector, hence you realise that most of the property developers are traders, otherwise, the issue of 17 million housing deficiency would not have arisen.

    What do you think should be done to quickly come out of the recession?

    It is a paradox that a nation like Nigeria, one of the leading nations in the comity of nations, finds itself in a recession. It is quite unfortunate. We don’t have to be in this recession in the first place because in terms of human and material resources, we have them in abundance. One would have expected a nation, such as ours to have envisaged and fully prepare for the raining day. If the right things had been done, we would not have been in recession. But to get out of the mess, the government must develop institutions. When you have strong and viable institutions, it will be difficult for people to run government as if it were their private estates and the nation would be better for it. We must begin to build institutions and stop building individuals. If you have strong institutions, funds meant for particular purposes would not disappear into private pockets.

    Another step we must take is to embark on massive investment in the construction and reconstruction of infrastructure. With this, many people will be gainfully employed. We must also diversify the economy as a matter of priority. We must invest in agriculture, this is the only country in the world where I see green grass grow on the rock, yet we spent billions of dollars importing rice from Thailand. This is shameful. Policy inconsistencies have contributed largely to this, and it is about time we harmonise our policies. We had the Operation Feed the Nation and we had the Green Revolution. The government should dust these policies, harmonise and implement them immediately.

    The tax regime should also be looked into. At the moment, it exerts too much pressure on the private sector. Mind you, it is the only sector that is employing now, and the sector must not be stifled to death. A willing horse must not be ridden to death.

    I am also of the view that those given the responsibilities of policy formulation should take proactive steps in creating enabling environment for real estate to drive the economy and ensure that mortgage institutions make cogent contributions to that extent. Granted that the government has set up the Nigeria Mortgage Refinancing Company (NMRC), we expect the mortgage institutions in Nigeria to come up with suggestions on how to revive the moribund sector and make it a driver of property acquisition, real estate and national development.

    What is the state of the Abuja property market?

    Abuja is a peculiar case because if you consider most of the rents and value of properties that are obtainable in Abuja, they do not have any economic justification because this is a civil servant city, take it or leave it. It is different from cities like Lagos, Kano, and Port Harcourt, which are laced with commercial potential and activities. You will find out that there is economic justification for rents and property values in those places. There are no industries here in Abuja; no manufacturing outfits.

    Most properties that you see here are built for opulence. With the seat of the government relocated to Abuja, with embassies relocating their operational headquarters to Abuja, with government and parastatals chief executives here, the classes and configuration of houses were constructed and tailored to meet the taste of these people. So, you realise that when there is a change in economic situation just as we find ourselves now, we are at the mercies of God to navigate through the current storm in the property business. So, basically what I am saying in essence is that coming from that perspective, it has created a big problem for us. We are the hardest hit by this economic recession and the entire change mantra.

    The crisis in Abuja is terrible. If you take a drive round the city, you will see that properties are just there, people and companies are not taking them. I can tell you categorically that some landlords are now telling the agents to reduce rents. It is as bad as that.

     

  • Real estate group to honour ‘drivers of growth’

    The International Real Estate Federation (FIABCI), Nigerian chapter, plans to honour individuals and institutions that are ‘’drivers of growth”

    in the sector.

    The plan, an integral part of FIABCI Annual Award and Business Dinner in the new year, will help motivate the domestic real estate space, and help to drive excellence, encourage creativity and promote good business environment.

    “This is an annual event through which we provide insights on real estate and contribute to national economic space,” explained Joseph Akhigbe, president, FIABCI Nigeria, at a forum in Lagos.

    He said the theme of this year’s award and dinner is ‘Real estate: It is all about the economy’. He listed the five categories of awards as Finance (Most Effective Real Estate Financier), Architecture and Design, Public Private Partnership, Real Estate Journalist, and Developer/Urban Planning.

    “FIABCI is the most representative organisation of the real estate industry in the world and holds special consultative status with the Economic and Social Council (ECOSCOC) of the United Nations”, Akhigbe said, assuring that the forth-coming yearly dinner would provoke thoughts on the economy and the real estate sector.

    Minister for Power, Works and Housing, Babatunde Fashola, is expected at the dinner as the special guest of honour while Doyin Salami, a lecturer at the Lagos Business School and a member of the Monetary Policy Committee of the Central Bank of Nigeria (CBN) will be the guest speaker.

    The federation’s Africa president, Chudi Ubosi, recalled that the body launched a campaign on moderately-priced or affordable housing for which it sought private sector interests to partner with in order to proffer solution to the problems associated with the delivery of such houses.

    “Our goal in this campaign  is to find various ways to reduce, as quickly as possible, the imbalance between the low supply and huge demand for moderately-priced housing units,” Ubosi said, assuring that through the campaign, FIABCI plans, among other measures, to identify beneficial financing formula that will encourage investors and developers to embrace the campaign and play an active role in planning tomorrow’s cities equipped with affordable housing.

  • ‘Real estate can help Nigeria overcome recession’

    Dr. Bolarinde Patunola Ajayi is the president, Nigerian Institution of Estate Surveyors and Valuers (NIESV) and the principal partner, J. Ajayi Patunola & Co, a firm of estate surveyors & facility mangers. In this interview with OKWY IROEGBU-CHIKEZIE, he proffers solution on how the nation can get out of the recession, among other issues. Excerpts: 

    What are the Nigerian Institution of Estate Surveyors & Valuers (NIESV) suggestions on how Nigeria can exit the recession?

    The real estate and construction sector can take Nigeria out of economic doldrums if we consider it for what it is – land resources including all things above and below it. If we apply land economics to the management of resources, we will consider those things that are attached to land that can help the nation out of recession. For instance, if you look at property investment, there are some areas of the property industry that if we put money into, it is likely to revitalise the economy. Infrastructure and construction development as a result of its many linkages is a huge employment generator as it involves consultants, artisans, suppliers and food vendors in its long chain. It is therefore imperative for the government to examine this sector and see how it can use available funds to put infrastructure in place; infrastructure provision is very key and that’s what can take us out of the current challenge.

    What kind of infrastructure construction are you recommending?

    At this time I will not advise that the government embark on housing construction in highbrow areas, but in the poor-to-medium income areas. It should be noted that housing for this level of people is not what you bring to the private sector that is mainly profit driven.  The project ideally should be driven by the government and l will recommend that it should not be made a-pay-and-buy option but rather a-rent-to-own option.

    In Lagos, for instance, if the government builds 50 units of one and two-bedroom flats in Agege, within a month, the flats will be  taken off the market. Not only will those who are engaged in the construction be gainfully employed but the government would have taken people out of the streets with the ugly effects of recession contained. If this is replicated in most of the local governments in Lagos, before long a major social problem would have been taken care off. Unfortunately, the government makes the mistake of not even auditing the housing needs of the people before going ahead to build; albeit, in most cases, luxury flats that are out of the reach  of those who actually need accommodation.

    How can the government develop programmes that will be all-inclusive?

    The public will be surprised to learn that agricultural investment is part of real estate because if we evaluate land resources, we will discover that products will come to the market, people will have enough to eat, and less demand for imported goods.

    If, indeed, the government wants to embark on projects that will affect the majority of the people, it will never do anything without considering the real estate. In addition, massive provision of infrastructure is also key to tackling recession as infrastructure upgrade and construction will aid in transforming the nation. For instance, if you go to Dubai or Singapore, the major industry there is real estate. So why can’t we start in Nigeria and see how we can use real estate to solve our problems.

    There are calls for the sale of national assets. What is your take?

    The question is why did the government come up with the idea to sell assets? As a nation we don’t even have enough assets, so why should we contemplate selling the little we have? I expect the government to find out ways we can develop the assets and make them work for us as a nation. If the assets are eventually sold, have we thought of what we want to do with the proceeds? In an ideal situation the government should have said what it wanted to do with the proceeds first, then it can decide which asset will yield the needed fund. The only thing I have heard is that we want to sell to combat recession; but after recession, what else?

    The person who brought up the idea should be properly advised that it is what they call half idea. As a matter of fact government should be advised that before they can bring such to the public court a list of what they want to sell and what they honestly want to use it to do should be disclosed.

    NIESV was not invited to present our position on the matter. A valuer will state how much a particular asset is worth; carry out feasibility and viability studies of even surrounding assets to the one you want to sell or build. Unfortunately, none of these was done and the noise is everywhere of the need to raise money through asset sale. This project is dead on arrival and should be spoken against by all lovers of this country except the right things are done.

    Estate Surveyors & Valuers have joined several international standard boards. What is the implication for the country?

    No nation is an island and non can exist without relationship with others. All professional practices now have a global link where standards are set in terms of principles, practice, control and ethics. Our institution, NIESV, has decided to work with international organisations that insist on standards. For instance, currently, we have international ethics standard coalitions. We pride ourselves as the first African group to be a member of the body, presently our member is the only African on the board of this prestigious body. We are there so that our own practice will be competitive while meeting international practice standards.

    NIESV is also a member of the International Property Measurement Standards and the International Valuation Standard Board. These bodies ensure that our practice is in tandem with best global practice. It is gratifying to note also that our member is a member of council of this exclusive body.

    We are also in partnership with the International Financial Reporting Council and, locally, with the Financial Reporting Council. We believe these are the ways we can maintain national and international standards in the practice of estate surveying.

    We are putting together our own standards book that will incorporate all the international bodies we have links with including the practice in United Kingdom, Australia, American Society of Appraisal Standards and New Zealand. This will enable us spell out how our members should practise the valuation profession.

    The Federal Government plans to build 50,000 units of houses. How possible is it with the recession?

    The idea is laudable; at the same time I would want the government to note that we have the resources in Nigeria to do this. We only need to harness our resources and tailor it to deliver on expected targets. For instance the idle Pension Fund and unclaimed dividends can be put together and used to invest in real estate; but like l advised earlier, it should be invested in real estate that will be taken immediately by the public so that the rental can be re-invested to produce more. This no doubt will not only stimulate the sector by creating jobs along the housing linkages but  will also provide the needed decent accommodation in the lower to middle income strata where it is need most.

    But, sadly, something very important has always been absent in our housing productions – maintenance of  houses built. It is common knowledge that whenever a housing project is conceived we only hear talks of design, contract and construction, nobody seems to be bothered about its management. Therefore the need to have an Estate Surveyor and Valuer from the inception of any project cannot be over-emphasised.

    I am advising the government that as they initiate the appointment of a contractor to undertake a particular project they should at the same time appoints an Estate Surveyor and Valuer who will not only manage, but also maintain the structure as it is required. Surveyors are trained to handle maintenance and facility management so when these things are not incorporated from inception it will always create problems in future.

    Besides there should be research into materials, design, typology and the type of houses to build. Have we found out how many people we are building for? You would be surprised that in Lagos we don’t even know how many people we want to build for; even nationally we cannot give the correct figure of those in need of critical accommodation. We got independence since 1960 but unfortunately we can’t still provide National Identity card for all Nigerian, it can be safely said that we may not be sure of our population. It is therefore very important that we research and find out how many we are and how many require houses and the types.

    Why do we have many vacant houses especially in the highbrow areas?

    The recession is driving people away from high rentals to low rental and it will continue like that until recession stops. It has always been like that during boom where people move from low rental to high rental. This happens when people get promoted in their offices and with status change the taste also scale up. Currently the top in most offices and businesses are frozen up, people are losing their jobs, that is why high rentals are receding. Besides expatriates are no longer coming in to take up big luxurious houses. So we will continue to have a lot of empty houses in otherwise upscale areas until the recession recedes.

    Can we say the Lagos tenancy law has been a success?

    When you have a tenancy law, it is to force landlord to accept certain amount and at the same time ask tenants to perform its own obligations. When tenants perform their statutory obligations the landlord will not have problem and vice versa for the landlord. The major problem may not really be the rent but whether the tenant has the rent to pay because of the current state of his business or source of income. Rental payment is the function of availability, if the rent is not there, there will always be conflict, and cases in court. In some cases the landlord is also expecting to spend that money it may just be his retirement benefit. It boils down to the fact that the recession is the major cause of what we are talking about.

    What is your take on the fight against corruption?

    Corruption in all ramifications is bad, wherever it is found whether in the Judiciary, Executive, Legislative, places of worship or indeed in any aspect of our public life; it should be discouraged. Corruption is a major challenge in the country and care should be taken to uproot it wherever it is found. Sentiment should be removed if we must exterminate it from our public space.

     

  • ‘Real estate is secret to wealth creation in recession’

    Nigerians seeking wealth need not look too far. This is because the real estate industry provides the secret to wealth creation for those that can key into it. Besides, the sector is the most viable to get the country out of its present recession, if the right things are done.

    These were the views of real estate consultants at a home ownership empowerment programme organised by Pertinence Nigeria Limited- a firm of real estate managers. Renowned realtor, Mr. Olumide Emmanuel, in an exclusive chat with The Nation, explained that for an individual to get to his desired financial destination, the right vehicle must be chosen.

    “The real estate is the secret to wealth creation. We want people to understand that getting to the desired financial destination requires choosing the right vehicle; and one of the best vehicles you can choose is real estate and that’s what we are pushing down today: the power of real estate,” he said.

    Emmanuel advised Nigerians on the need for a change in their mindset to overcome the challenges of recession. According to him, there is a need to understand the concept of recession and how it affects the individual. This, he explained, is because in spite of the recession, people still earn same salary and income, just that the value is lower.

    “The value of what your money can give you in the market is reducing because of the vehicle you choose. You choose the vehicle of salary, somebody else chooses the vehicle of real estate. Now, at times like these, realtors and landlords increase their rent, meaning tenants suffer more and then they enjoy more. So it’s all a function of understanding that what the economy of your geographical location is; it does not have to affect you if you have the financial intelligence and you know how to navigate your way,” he explained.

    In similar vein, the Founder of Pertinence Nigeria Limited, Mr. Olorunseyi  Sunday, agreed that real estate is the solution to Nigeria’s recession problems, saying that recession is a thing of the mind that could be overcome through a change in the mindset.

    Sunday, who spoke at the launch of his firm’s “International Business Mega Summit,”  said: “Everything in life is about mentality, it is your mindset. For us, our mindset cannot accommodate recession even though they say there is recession. An entrepreneur should thrive in all seasons. He does not see a dry season. What you look at is how can I take advantage of that season? And that’s what we are doing now.”

    Co-Founder and Managing Director of the organisation, Mr. Wisdom Ezekiel, also pointed out the opportunity his organisation sees in recession.

    “We see recession as an opportunity. A lot of people see recession as a drawback but we see it as an opportunity because most countries in the world that have become developed today thrived during recession. Recession helps people to start thinking outside the box and that is what it is helping us to do in Nigeria,” he said.

    He said recession is actually an advantage if properly managed by all. He explained that when there is recession, people want to invest in something that is tangible- in asset not liability.  This, he said, is why real estate will continue to thrive and provide a bailout for the country’s economy at this period.

    Ezekiel noted that the launch of the firm’s international presence is a way of contributing to the Gross Domestic Product (GDP) of the country. He, therefore, called for government’s partnership in the real estate industry in order to spur its growth and contribution to the economic development.

    To stimulate the market and encourage people to invest even at this time, the firm gave out free plots of land, an all-expense paid trip to Dubai and a two bedroom apartment to loyal customers.

    “We are giving because when you give in times of recession, when people have plenty, they will remember you and they would want to come to you; because when they had nothing, you were out there supporting them. So that is the strategy… when seasons like this come, innovation will be what will make you different,” he said.

  • ‘Real estate haven for laundered funds’

    Investment in real estate and surveying practice patronage have now become havens for looted and laundered public funds, the Nigerian Institution of Surveyors (NIS) has said.

    Its Chairman,  Ola Siyanbola who spoke during the annual general meeting of Oyo State Private Practicing Surveyors at the NIS Plaza, Ikolaba, Ibadan yesterday, said many of the beneficiaries of corrupt practices in the country have found it difficult to take the proceeds abroad. He said  the funds were now being used to buy properties at highbrow areas and acquire vast expanse of lands under the guise of investing in agriculture.

    He said members of the surveying profession have been warned of the consequences of providing professional services to individuals found to have corruptly enriched themselves as the Economic and Financial Crime Commission (EFCC)’s Act clearly stated the penalty for such connivance.

  • Laundered monies invested in real estate – Surveyor discloses

    Laundered monies invested in real estate – Surveyor discloses

    Real estate investment and surveying practice patronage have been confirmed to be saturated with funds believed to be stolen from government coffers.
    The Chairman, Nigerian Institution of Surveyors (NIS), Surveyor Ola Siyanbola (fnis) said during the annual general meeting of Oyo State Private Practicing Surveyors which held at the NIS Plaza, Ikolaba, Ibadan today.

    Siyanbola confirmed that many of those that benefited from corrupt practices in the country overtime have found it difficult to take the proceeds abroad as they were used to or buy properties at highbrow spots but now buy vast expanse of lands with the guise of investing in agriculture.

    He said members of the surveying profession have been warned of the consequences of providing professional services to individuals found to have corruptly enriched themselves as the Economic and Financial Crime Commission (EFCC)’s act clearly stated the penalty for such connivance.

    “We all are aware that those that stole from government or have corruptly enriched themselves now hide their monies in real estate investment by buying vast expanse of lands for security of their wealth.

    “Our members have been taken through trainings and series of admonitions on the ethics of our profession and I’m using this opportunity to reiterate the fact that our members should desist from acts that can dent the image of our institution.”

    The President of the Oyo State Private Practising Surveyors Cooperative Investment and Credit Society Limited, Alh. Adebayo Nafiu, in his address said the society had helped members survived the biting economic recession that have pervaded the country.

    Nafiu hinted that members have enjoyed credit facilities, savings interests for festivals as well as provision of food commodities that sustained the home front against hunger in the face of nonpayment of salaries, high cost of living and mass job loss.

    He assured members that the seven years old cooperative society would wax stronger and give financial protection that would sustain their status.

    “Our cooperative society has helped members survive the hardest, biting point of Nigeria’s economic recession in the areas of provision of credit facilities, soft loan schemes, savings interests and distribution of food commodities to our members.

    “Practising Surveyors who are not presently members are hereby enjoined to join and reap the gains of our cooperative society,” he concluded.