‘We need a structure to sustain today’s gains and growth seen in FM industry’
Gradually but steadily, the Facilities Management (FM) industry in Nigeria is evolving, the industry is attracting big organisations from advanced economies. In this interview with CHUKA UROKO, CEO, Global Property and Facilities International Limited, MKO BALOGUN, highlights the need for a structure to sustain whatever gains these organisations bring. He also speaks on the real estate sector, his company’s service offering among other issues. Excerpt:
Your company sounds so new yet so old. This is because, over the years, it has undergone what could be called metamorphosis in name and organisational structure. What can you share about the company?
Global Property and Facilities International Limited is a company I can say was born out of two necessities even though it is a company with rich history. It is a product of the pioneering efforts of professionals in the industry since 2000, with the birth of Facilities Management Company Limited (FMC) transiting to WSP FMC with the coming on board of WSP Group – a global engineering design, project management and environmental services company in 2003. In 2012, the company acquired Domme Facilities Management, one of the fastest growing and highly professional facilities management (FM) companies in Nigeria.
What prompted WSP’s divesting at a time the company could be said to have stabilised. Was it as a result of irreconcilable differences?
No. Changes in the global business focus of WSP in 2013 led to her divesting business interest from facilities management in the only two countries its FM interest existed, and these were South Africa and Nigeria. The focus of the country, for now, is purely engineering design and project management. The entity in South Africa, which was fully owned by WSP, was sold to Broll Group while the Nigeria entity was sold to existing shareholders.
With these changes, it became imperative that the Nigeria entity also refocused and rebranded and, for that reason, in 2014, the company was renamed Global Property and Facilities International Limited with focus on three areas rather than just one by the old company, WSP FMC Limited. The reason for the additional services is to enable us become a one-stop-shop for both our current and potential/intending clients.
Here you are talking about a company that has existed since 2000, which is 15 years in business. This is a milestone given the harsh business environment in Nigeria. How has it been with you these long years?
Nigerian environment for any entrepreneur is both interesting and challenging. But for companies like ours, we were not set to start and fail. We have evolved over time from the 2000 we started. One of the problems with entrepreneurship is that when you start out and want to do it alone, you will be having challenges, but when you bring in other people into it, they will not only share your risk but also help to strengthen the organisation and reposition it on regular basis and this is what has happened to us here.
We have been evolving on a regular basis. This is a business where we don’t assume we have reached where we are supposed to be. We keep challenging ourselves, reinventing ourselves and expanding the opportunities and potentials that we have. This is the reason we have ensured that we have more people in the business.
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Besides FM, what are these other aspects of property or real estate that you do?
Now, we don’t only deal in facilities management, but also in property management and infrastructure management in line with the way the industry is going. As an organization that has continued to evolved and recreate itself, we have found out that we did not have to do just facilities management. We want to be one-stop-shop for everything that has to do with property so that we could provide end to end service – we lease, sell, manage and maintain property. So, the idea of property in our name is strategic.
We now manage infrastructure. We have been saying as a company and also as a business that government does not have any business managing infrastructure. We believe that anywhere in the world today, government doesn’t get itself involved in the management of infrastructure.
The Federal Government created Federal Roads Maintenance Agency (FERMA) for the maintenance of its roads infrastructure. I think this is good because it shows that government is aware of the need for maintenance. If you look at the national stadia today, they are not what they should be after spending a lot of money building them. They are all suffering from lack of maintenance.
Go to South Africa, all their stadia used for the World Cup are being maintained by the private sector operators and are being used for other sports thereby yielding income for the government.
As a company, we believe that we have developed the capacity, upgraded our operational base to be able to maintain national monuments like that. If you are an advocate of property management, you should be able to provide all the services that will be able to justify that.
Real estate in this country has, over time, garnered some level of sophistication that requires the facilities manager to up his game to match global best practice. How is your company getting on with this trend?
One good thing about this market is that when you attract local players, the environment will challenge them when they want to operate at global level. What that has done to us in Nigeria is that it has challenged us to change the way we operate and the way we see FM.
Our happiness as a company is that it has made us to see FM not as a backroom organisation, but as a major strategic value giver. In our environment, if you don’t have the right structure, it is a big problem. We are attracting big organisations into real estate development and facilities management but we don’t have the structure to sustain whatever gains these organisations bring.
As a company or even as a country, we need to have a structure that makes sure we benefit from these organisations. As a group, we need to come together to ensure that we create a structure that will sustain the gains of today and the growth we have started seeing in the industry today.
When we segment the real estate market, we get the residential, commercial and retail. Which of these segments are you strong in?
We are very strong in residential and commercial and we are growing capacity for retail. The retail market is growing and if you look at the last one year in the country, the number of malls that have come to the market is more than the number that were built since independence.
Nigeria is defined by a young population economy and so for anybody who wants to play in the commercial segment of the real estate market, retail is number one. For any facilities management company, there is need to grow capacity around that segment also.
The commercial segment of this sector has, in the past couple of years, seen growth, but there appears to be what could be described as an anti-climax resulting from falling oil prices and the naira devaluation which have affected demand. What’s your view on this?
Falling oil price will not affect property market adversely because the return on investment in property in Nigeria is still high. But people should rather focus on retail and commercial real estate than residential because the challenge with residential is that it takes time to get tenants or get the units sold, unlike commercial which gets rented or leased easily.
The problem with residential again is that most of the houses being delivered are not targeted at young population. Developers are building four and five-bedroom apartments whereas what the young people want are one-two bedroom apartments as their first homes. And these are the ones that sell.
The naira devaluation may and may not affect house prices. All we need to do is to develop local capacity to source materials locally and develop the houses. There are companies in this environment that can develop houses with locally sourced materials. Such companies need to be encouraged. Let the country as a whole start to look inwards and see how it can depend on itself and de-emphasise imports.
Your facilities management services are targeted at up-market properties, which at the moment is challenged by falling demand, leading to high vacancy rate. How is this affecting your bottom-line?
We are conscious of that but as a business, but the impact of the vacancy rate on us is negligible because we don’t focus much on ordinary residential houses, but we do highbrow and premium residential property. We also focus on hotel apartments. We have found out that, in the past, that mass or low-cost housing is a big challenge and we need to incorporate facility management into mass housing. If we have this in mind, we wouldn’t be building single unit apartments, but multi-level apartments that have to be multi-tenanted making it easy to be managed and maintained.