Despite whatever is going on in the economy, there are still opportunities for investors

OLADIPO IDOWU-AGIDA is the CEO of Dradrock Real Estate Limited. In this interview with CHUKA UROKO, Property Editor, he speaks on the Nigerian real estate sector in the year of the pandemic. From a developer’s perspective, he laments the impact of the pandemic on the sector and the economy, but he sees opportunities ahead. He also speaks about Dradrock, how they have lifted families and also their ambitious plans for the housing market in the new year.

Year 2020 has gone down in history as one of negative growth. The global economy is still smarting from the impact of Covid-19 pandemic and, in Nigeria, there was the ENDSARS protest. Where, in your view, do all these leave real estate?

The year 2020 was, actually, a very interesting year. It depicted the kind of environment in which Nigerian businesses operates. It is an environment that is very vulnerable and uncertain. 2020 is a year to be remembered because there are so many lessons it holds. Covid-19 started as a health crisis, but along the line became an economic, social and even security issue.

Talking about its impact on real estate, we cannot do so in isolation. We have to look at the economy as a whole. In 2020, growth in the economy was mixed. It started with positive growth in GDP. But in the second quarter, it was negative growth while in the third quarter, it started growing again with about-3 percent. Even though this was in the negative, it was still better than second quarter growth which was about -6 percent. So, we ended last year with a positive growth in the GDP growth even though it was negative.

Pinning this down to real estate, you see that costs are very high as a result of inflation. Unemployment figures are also very high. But the interesting thing is that real estate is a key part of the economy. It is the 6th biggest sector in the economy. Its contribution to GDP is about 7 percent.

From a developer’s perspective, how are the global and domestic property market responding to this the Covid-19 pandemic? What are your concerns?

Looking at the impact of the pandemic from the perspective of a developer, you see that it is huge and this is reflected mostly in rising costs. Costs are going up every day despite the huge income loss in both personal and household income. This is affecting our sector very much. Looking at the economy, it is not growing, especially as fast as the size of our population. There is much pressure on disposable income. This has increased the size of the housing gap in the country. A lot of people are unable to pay their house rent.

Another impact is that, a lot of things have changed and still changing. Many people now work from home and therefore there is no new demand for space. Already this is affecting commercial real estate.

It is a new year and projections are being made here and there on where the economy is going and what is possible in the various sectors. What are your projections as an organization?

As an organization, this is a year we are planning to attack in a very strong way. We are very optimistic, but not unmindful of the way the economy is going. To take advantage of the opportunities we see, we are being creative and innovative to be able to pull through. As the economy is trying to recover from recession, real estate is proving to be very a strong investment asset, especially for people that have the funds.

Part of our projections for this year is to deliver 200 housing units before the end of this year. Some of these projects are already under construction. We have a project that will be delivering 40 units by the second quarter of the year. Another will deliver 78 units.

The economy is down and that is when people take position, especially people that have the funds. Recession is a cycle and we must surely come out of it and so, people that take position now will gain it at the end.

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With the slowdown in the economy, many developers are evolving strategies to stimulate demand for their products by making the products affordable. What is Dradrock doing in this regard?

Despite what is going on in the economy, there are still opportunities for investors. One thing we are doing is creating investment platforms beyond real estate development. We are making people put their money in real estate not as home owners, but as investors. We are also doing project partnership in which we do projects together, sell and share the profit.

To stimulate buyer- interest in our projects, we are offering installment payment plans to buyers. We are flexible and structure payment plans based on people’s income. We sometimes allow the buyer to spread his payment for two years.

I believe there is a role for the government to play in this sector. We cannot rule out social housing for the people because poverty rate in the country is very high. No matter the strategies you put in place to make housing affordable, some people cannot still buy. So, government has to come in and do social housing for this category of people who cannot afford what the open market offers.

Nigeria is very difficult business environment. The market is very competitive and competition is keen. How are you responding to all of these and what generally is your attitude to competition?

Because the environment is tough, it takes a lot of courage and boldness to do business here. The environment is scary and sometimes when you do your analysis, you feel like running to other countries where things work better. But, as scary as the environment is, there are still opportunities. So, being courageous to be able to face the challenges is important.

We do a whole lot of research and development. We don’t just go to the market. We first of all look at what the market says and what it can offer. We creatively come up with products and services.

Here, we believe that competition is a key part of life because it gives us light to see what is happening in the market. If competition is healthy, it puts us on our toes and shows us what to do and how to do it.

Unlike before, there proptech, blockchain and other tech products making foray into real estate and changing the way things are done. What are your fears, if any?

These are not by any means sources of fear. They are the new way to go. They are the future. The highest growth recorded in the economy last year happened in the tech sector and it grew at a fast rate.

For us at Dradrock, we are looking at more opportunities for us to incorporate technology in our processes, systems, buildings, etc. So, we are not afraid, we are rather incorporating these systems into our operations. Everybody including government is now using technology to do things.

How has the use of technology impacted your return on investment?

We have just exposed ourselves to the use of technology and so, we are still new in there. But it actually has the potential of increase our revenue. It is an enabler, especially in the areas of efficiency. With technology, you can reduce your cost of running an office. The efficiency which technology brings can increase the growth of an organization by almost 50 percent.

Talking about Dradrock specifically as a company, looking back to when you started, what would point to as your footprint in this sector?

We started with site and serviced estate which we called Annapolis Gardens where we did plots of land. Now we have moved on to Annapolis Court which is also an estate of plots of land. Then we came into our first housing project which we called Pacific Manor 1. Over time, we have introduced Pacific Manor 2 which is in Lakowe. Now, we have introduced Hibiscus.

From this, you see that we have experienced a level of growth and within those few years we have also helped over 400 people to own their own homes and become landlords in Lagos. In the process too, we have delivered several housing units to the market. We are now in the process of delivering about 200 housing units in the next six to 12 months.

We have also been able to provide direct jobs to our employees and also to workers on site. We are glad to see that from our own site we are putting food on the table of many Nigerians and by so doing, growing the economy.

For us at Dradrock, we are looking at more opportunities for us to incorporate technology in our processes, systems, buildings, etc. So, we are not afraid, we are rather incorporating these systems into our operations

Now tell us your next plan beyond the projects you have completed and those that are on-going?

We set up Dradrock because we want to make a mark in the real estate industry. We want to be a business that will last. In a decade, we want to see Dradrock become a multi- national. We want to make it the best real estate company to work with. We want to be one of the top three real estate companies in Nigeria. We want to see Dradrock at the forefront of expansion across different areas we have planned to operate in.