As Nigeria’s economy struggles with a hyper-inflation that is eroding values of virtually everything, viable investment assets classes are, increasingly, becoming hard to find. In this interview, LAIDE AGBOOLA, Co-Founder/CEO, Purple Group, speaks on the real estate sector, highlighting investment opportunities in the sector. He also speaks on Purple Group, the subsidiaries and their footprints in the property market in the last 8years. He speaks with CHUKA UROKO, property editor. Excerpts:
There’s a curious statistic out there showing that 70 percent of investments in Nigeria’s real estate sector come from Nigerians in Diaspora while only 30 percent is from investors at home. As an investor, what is the true position?
The statistics speaks to the need to expand access to the real estate market and provide more homes in a market where many remain underserved. Data on house ownership demonstrates that the difference between Diaspora investors and domestic investors is not about demand but inequitable market access.
Foreign currencies and high disposable income further enable international investors to access our country’s housing sector more than the locals, who mostly earn, save and spend in Naira, without robust longer-term financing options to acquire properties.
Inequality is rising, and we want to lead by increasing access to property ownership. Purple is committed to levelling the playing field.
For example, in 2011, the World Bank found that only 2 percent of Nigerian households had an outstanding loan from a formal financial institution to purchase a home. In 2015, only 5 percent of the 13.7 million housing units in Nigeria were financed using mortgages.
This needs to change for the immediate and long-term benefit of the market and Nigerian citizens. We must create ways to democratise the real estate market and revolutionise housing finance to work for as many Nigerians as possible.
Amid rising inflation and devaluation of the Naira, experts say now is the right time to invest in the sector. Why is this so?
Historically, real estate investment has proved valuable protection against high inflation rates. Savvy investors participate in the sector as it can provide passive income and a way to gain from investing in real estate without operating or financing properties. In addition, it offers exposure to a hard asset that typically provides a high rate of return, and if the asset is held in the long-term, there is a guarantee it will appreciate over time.
The market for residential property in Lagos, for instance, has been in a perpetual state of undersupply despite the rise in population. Property demand continues to outpace supply. A sector where demand outruns supply offers compelling investment opportunities.
The opportunity to invest in Nigeria’s real estate sector is a matter of creating a solution to trends in urbanisation and the unmet needs of many Nigerians. At Purple, we have spotted an increased demand for high-quality experiences and the need to broaden access to affordable housing and prime commercial space. We are dedicated to being a reliable partner who can fill the gap wherever there is a need.
You operate in a market that is very dynamic in terms of changing demand and taste. But you seem to be stuck with the market’s premium and luxury segment. How true is this assessment?
Our aim is not to create divisions in the market nor exclude populations from engaging lifestyle offerings but to ensure that our offerings unlock affordable assets to a range of investment appetites and incomes. We aim to broaden access to premium, secure, high-quality Grade A assets for millions of aspiring property owners. To this end, our products are dynamic and come in various sizes, shapes, and forms.
Purple specialises in properties and mortgages through investments in residential, mixed-use developments and low-high rise office buildings in Grade A locations. Why this choice?
Nigeria is the financial gateway of West Africa, and our urban hubs are crucial for our economy as local and international companies begin to grow their base in Africa. To sustain this upward trend and encourage innovation, investment, and the creation of jobs, we are positioning Purple as a provider of high-quality infrastructure to accommodate and facilitate pioneering industries’ growth.
The Covid-19 pandemic changed how we live and work by underscoring the value of hybrid-use properties and all-inclusive living. This informs how we design, develop, and manage spaces for professionals, families or businesses of varying sizes, functions, and locations. To this effect, we have partnered with the Bank of Industry and Keystone Bank to expand our offering in Lagos. We are also exploring partnerships with domestic and international development partners to construct and develop attractive assets in prime locations.
Inequality is rising, and we want to lead by increasing access to property ownership. Purple is committed to levelling the playing field.
Covid-19 pandemic impacted every sector of the economy. In real estate, what the sector lost in retail and hospitality sub-sectors, it gained in healthcare which has become an investment destination. What are your plans for expansion in that direction?
The pandemic exposed the state of the healthcare sector. It highlighted the importance of investing in higher quality public healthcare, social protection, and safety nets in countries across the globe. With over 200 million people, Nigeria is reported to have 0.5 hospital bed space for 1000 patients as of 2014, long before the pandemic.
This statistic is a testament to why the offering is critical, and as we expand our portfolio to include health assets, we want to bring world-class healthcare infrastructure to where there is a need.
We believe our initial investment alone will not be enough; opportunities for more development and growth remain, and we are willing to mobilise more actors to do their part. With the population increasing at an average rate of 2.41 percent annually, Nigeria needs more robust social infrastructure.
The private sector can further support the government to bring more innovation, quality housing and hospital beds to the people—but the solution starts with real estate.
Students also occupy the largest demographic in Nigeria. So, we have identified opportunities to invest in safe student accommodation that supports education and well-being. As the number of students within private and public universities increases, so will the demand for purpose-built student accommodation (PBSA), and we are an attractive provider for this rising sub-sector.
Development finance institutions and impact investors such as the International Finance Corporation and the Private Infrastructure Development Group are also entering this space. Purple is also ready to get behind PBSA – an emerging asset class we expect to thrive in Africa.
Increasingly, technology is gaining traction in almost every aspect of real estate. To what extent have you deployed tech solutions like Proptech to drive the transformation we see in this sector?
Technology is gaining traction in several areas of the market. We have noted the rise of digital rental platforms, property management, and recently the rent now, pay later (RNPL) model, a spin-off of the buy now pay later (BNPL) credit solution gaining popularity in our sector.
Nigeria’s digital transformation has helped reach a vast chronically underserved population. In Nigeria, digital financial services increased financial inclusion from 21.6 percent in 2010 to 64.1 percent in 2020, signalling how the rise of technology can impact a sector.
As fintech products become increasingly integrated into different proptech offerings in the market, we see an opportunity for technology to further our customer base and enable more access to property ownership. We want proptech to be leveraged to increase access to housing and property ownership through a suite of intuitive investment solutions that can be accessed digitally in a way that is safe and easy to manage.
What I can say now is that we are developing a game-changing product and look forward to sharing this with you soon.
As a member of the Purple Group, Purple Real Estate Income Limited opened for business 8 years ago and, within this period, has done so much. Take us through your footprints so far.
We founded Purple in 2014 to provide a modern world-class lifestyle experience to mainland Lagos and the growing demographic of culturally engaged Nigerians with an aspirational take on how they eat, work and play.
Our success is also a testament to our country’s growth story and increasing purchasing power of Nigerians at home and abroad. Over the years, Nigeria has experienced an increase in the size of its expatriate community, the number of Nigerians from the Diaspora coming home to relocate or holiday, and the rate of increase in the number of high net-worth individuals with appetite for state-of-the-art residential developments.
Read also: Co-investment in real estate can reduce Nigeria’s housing deficit—Lifecard boss
Responding to an underserved market, Purple Maryland Mall began operations in 2016. Within the first six months of opening, the Mall attracted one million visits and had let 90 percent of its properties. Today, the Mall’s tenants include an eclectic mix of local and international brands – providing customers with essentials such as banking and finance, groceries, food, pharmaceutical goods, affordable fashion and more. Purple brings together household names such as Stanbic IBTC Bank, Krispy Kreme, Genesis Cinemas and goes beyond to create a comprehensive offering that matches various consumers’ needs.
As part of our expansion plan and timely response to growing consumer trends, in 2020, we broke ground on PurpleLekki, an upcoming mixed-use development located on Freedom Way. In 2021, PurpleNano, our construction atop PurpleLekki, announced that it had sold all 157 units.
Having done this much within this short time frame, what is the focus for you going forward?
As we focus on completing construction at PurpleLekki, we are scaling the business and exploring how existing, and new customers can benefit from our pipeline of projects. As we broaden our services and better deliver against the growing demand for experience-driven solutions, we are meeting the needs of how modern communities in Nigeria want to live and work.
We have noted the rising demand for commercial buildings and residential properties in key strategic cities such as Lagos, Abuja, and other growing urban centres. Importantly, we are creating new and large-scale investment opportunities that integrate our residential, commercial and entertainment solutions. We are also exploring how we can tap into purpose-built student accommodation and the provision of medical facilities. Purple is more than just a real estate company; it is a real estate revolution delivering the needs of a new generation ready to invest in property that serves the changing needs of communities.
