‘We believe Rent-Own-Earn is only answer to housing challenge in Nigeria’

For too long, Nigeria has grappled with ideas for solving its housing problems with minimal success and so the sing-song about 17 million housing units continues. With its 11.5 million housing units on rental, representing 85 percent of the existing housing stock estimated at 13.6 units, homeownership situation in the country is more than critical. In this interview, YINKA DARAMOLA, an Executive Director and Chief Marketing Officer at NatanelFlorens, speaks extensively on housing issues in Nigeria, revealing his company’s novel housing scheme/initiative that enables tenants rent, own and earn income from the houses they have rented. He speaks with CHUKA UROKO. Excerpts:

NatanelFlorens is a young company in the Nigeria property market; who are you and what do you do as a business?

NatanelFlorens is a child of necessity. We are the premier composite real estate advisory and development firm. Our mission is to transform the African property landscape with innovative, ingenuous but affordable solutions.

What is your mandate as a composite real estate advisory and development firm?

Being a composite real estate advisory and development firm means we are able to offer end to end solutions to our clients as regards properties. We develop at a cost that is clearly the lowest in this part of the world due to our procurement capabilities. We rent out these developed properties through our Rent-to-own proposition and also offer advisory services to property owners in a bid to get them to optimize the yield/return they get from their properties.

After a couple of years in Nigeria, what is your impression of the real estate sector in the country?

The real estate sector in Nigeria is clearly underdeveloped. There’s still a lot to be done in a market where we have an estimated housing deficit of 17 million housing units and also a market where out of the existing 13.6 million housing units, 11.5 million are on rental, representing about 85 percent. It has been said that we will need to build at least one million housing units per annum to bridge that gap considerably.

A World Bank study estimates the cost of building Nigeria’s 17 million housing deficit at about N59 trillion. This figure is huge and obviously can’t be funded alone by government. That is why the private sector must play a key role. There must be a robust, synergized approach to housing in Nigeria because something as basic as an increasing population could erode whatever gains one makes in trying to bridge the gap. Whilst we are thinking of how to cross the hurdle of development, we must begin to consider ownership of the built up properties. What is the sense in developing if people can’t own these same assets?

 You have a novel housing scheme called Rent-to-Own. How do you practice this scheme?

Our Rent-to-Own version is called Rent-Own-EarnTM. First of all, we believe that gainfully employed Nigerians have a right to own their own properties with ease. In a country where 85 percent of the population are tenants, there is indeed cause for worry.  The truth is that this high rental figure is a testimony to the large pool of people below the ‘rich’ line. Without your own house, the propensity to create wealth is zero. Owning your own home is an important factor to wealth creation.

Rent-Own-EarnTM is NatanelFlorens wealth creation version of Rent-to-own. It is being able to live in the property you want to acquire, pay a yearly rent and after a period, the property becomes yours. So, with NF’s Rent-Own-EarnTM, you can rent and own your property after a period and thereafter start earning an income while still living in the apartment.

This only happens after you have fully discharged your obligations and now own the property. This is likened to convertible long tenancy where the house fully reverts back to the tenant after the leasehold tenure on the land. This also allows property owners to earn free income for the tenor of the title leasehold.

What have you done so far with the scheme and what is the level of interest in it from the public?

The reception from the public has been overwhelming. And I am saying this with every sense of responsibility. That however, is not farfetched in an environment where the average middle class Nigerian takes like 5 – 8 years to develop his property. In those 5 – 8 years, he’s still paying rent somewhere else and struggling to complete his own. Isn’t that like double wahala? It’s therefore, pretty easy for Nigerians to deduce that it makes more sense to pay your rent in a property that you can own, live there and after a certain period of between 10 – 20 years it becomes yours.

Let me tell you something that happened last year when we introduced a 30-unit estate to the public through our rent-to-own proposition. In 36 hours, all the 30 units were paid for. This has been the reaction every time we put properties on sale through the scheme. Today we have assets taken up by our off-takers across 10 or more estates in Lagos. We are building another 250 units in Lagos and also a sizable number in Abuja. Our intention is to go into other states as soon as possible. Our fulfilment comes from seeing the joy on the faces of our prospective homeowners and their prayers for us keeps us at NatanelFlorens motivated to help in reducing the housing deficit by half over the next 20 years.

What impact do you think this scheme can make in the real estate sector in Nigeria; can it work with the government?

I believe that the impact is already being felt in the real estate sector across clusters. Developers are excited about our offer that hitherto unoccupied properties can now be populated and they can, in turn, get value for these assets which were hitherto lying unoccupied.

We have had to deal with developers because no matter how much NatanelFlorens develops, we can’t bridge that huge housing gap. Developers also have discovered that to get themselves out of the situation of sitting on assets that are ‘idle’ and without off-takers, it will make more sense to collaborate with an institution that has the capability of providing the off-takers as well as funding to eventually pay them off.  In the case of government, we strongly believe that this is about the only answer to the housing challenge we find ourselves in.

Renting to own is a convenient, hassle-free option to owning your own property. Government’s intention as always is to provide shelter for its citizenry and every government wants to do this without imposing burdens on its citizens. We therefore, believe there is a DNA match in NatanelFlorens intention and that of government. We are currently in discussions with some state governments who believe this is the way forward.

For some time now, your company has been bullish, through advertisement, in pushing your new initiative in the market; are the estates you are offering all built by you?

Would I say that we have been bullish?

Maybe not as much as we would want to and for genuine reasons.

When we started out, we thought it was important for us to create awareness for our first set of rent-to-own properties in the market. We planned a campaign that would have seen us run advertisement in three publications over a two-week period. You won’t believe that the first ad we ran was on a Thursday and, by close of work on Friday the following day, the properties were sold out. We were then forced to stop the adverts because there was nothing more to sell.

You can’t believe that since then we have really had no need to advertise, tactically, because usually we are sold out within hours. However, because we are particular about building a formidable brand, we still see the need to keep on putting our adverts out there so that we can become a household name in the very near future.

Now to your second question, No, not all the estates we are offering were built by us. Quite a number of developers heard of how quickly the properties we offer are taken up because of our Rent-to-Own proposition and thought that it might make sense to plug into our huge database of off-takers who are registered with us waiting for the next property to be offered.

We have therefore, been able to collaborate with quite a number of developers in this market who are desirous of having their properties taken up by our off-takers.

Please tell us how this developer’s scheme works?

Well, there are quite a number of indices we look at before we decide to work with developers. These indices would include location, pricing and quality.  We are very particular about location because that’s what, to a large extent, drives rental value of assets we take on. There’s an average rental value for specific types of properties in specific areas. For example, there’s an average for 4-bedroom semi-detached units in a place like Ikoyi, also in places like Surulere, Yaba, Magodo, Omole and so on. We therefore ensure that in discussing with developers on cost, the rental value we agree on is not different from the rental value of similar properties in such areas. This is actually borrowed from the NatanelFlorens development structure, in that NatanelFlorens, when developing, would develop and charge rent based on the rental value in the area it develops.

Once the developers satisfy all of these, we then negotiate/agree on the value of the assets and pay them off. In terms of quality, we at NatanelFlorens have standards we can never compromise on. We believe our prospective home-owners deserve the best, at a cost that is affordable. We therefore ensure that developers’ properties fit into our own standards. We have a full-fledged technical team that assesses their assets/properties, going through a proper integrity test.

 

CHUKA UROKO