Babajide Odusolu is a real estate and property development expert and chief executive officer (CEO) of Octo5 Holdings Limited, a real estate and property development company. In this interview with Zebulon Agomuo, the immediate past managing director, Ogun State Property Investment Corporation (OPIC), spoke on the 17 million housing deficit in Nigeria, why government has no business in direct construction of affordable houses for Nigerians, what his firm is doing to bridge the shortfall, among other issues. Excerpts:
The issue of mass housing has been very predominant in the last couple of years. A major challenge for Nigerians is the issue of first installment demanded by real estate companies and developers, ranging from 10 to 20 percent. What are you bringing differently to the table?
Let us start from this premise. And this will be strange coming from somebody who has also run a public enterprise. Government has no business in business. The way government is structured, they can never succeed in doing a commercial venture. Because the exigencies for them is about political will, interests and all of those factors. So, any commercial project that is being driven and executed by government will be doomed from day one. And that has been the story of mass housing in Nigeria since 1963.
To get it right, there must be a mix and a blend of the public and private sectors. If we do not have a blend of public commitment and private capital, mass housing projects will fail.
Having experienced what it takes to make things work in the public sector and having successfully developed and delivered in the private sector, we are marrying both competences to create this scheme. For example, our mass affordable scheme like the one we are doing in Epe, where we are trying to build houses of between five million and fifteen million naira, are designed to ensure that those houses qualify for National Housing Fund and refinancing. And they are also designed to ensure that those houses take advantage of the various initiatives that government is introducing. So, we are designing the project to take advantage of all of those public policies that will bring the cost of acquisition down. And we are now blending it with private commitment and public capital to create those projects.
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What we are doing is that when you sign on to our project, ‘STOW’, we are not asking you to pay your 10 percent today. There are thresholds. For instance, if you say you want to buy a house at five million naira, and all you have right now is one hundred thousand naira, you can go on to STOW and open an account. And say “I am interested in this one-bed apartment. I want to pay for it over the next 60 months and I want to be paying monthly.” You will put it in and every month, you will be religiously dropping your initial seed money. Once you do this, nobody else can take it.
But let me say this: social housing is a government function. No private developer can do social housing because it requires subsidies, concessions that only government can put in place. What we are doing is affordable housing, driven by private capital. So, we are getting land from government, we are buying land. Government is not funding infrastructure, we are providing it. If you were to go and say you want to do the same project as public sector, what they will do first is to go put it in Badagry or somewhere where there is no infrastructure. The man that is working in Victoria Island, does he want to travel six hours to his work every day? No, he doesn’t. First, you have to put those houses in areas where there is economic pool. Once you are doing that, you are dealing with expensive land. So, it has to be blended. That is what we are doing as a private developer. We are creating blended communities where you have a mix of the high, medium and low so that it works together to ensure that it is viable.
Is the contributory part of this in anyway the same model with the Federal Government’s National Housing Fund?
This is a private sector-driven initiative. We have investors who are giving us capital. Because you know the money market has gone bad. So we have investors who are investing with us and saying “Okay! I’m going to give you this money to go and do this development. You are going to pay me back in this period of time”. So we are using private capital. It is not publicly funded in any way.
However, government has created schemes like the National Housing Fund. There is also the Nigeria Mortgage Refinance Company (NMRC) and Family Home Fund. These are all Government agencies that have huge capital meant to fund affordable housing. We have an understanding that we have our subscribers and their critical mass, they will fund them and give them long-term mortgages. It is like chicken and egg, which comes first? They want to see the subscribers. The subscribers must have been paying for a while to show that he is credible before they give you the funding. So that is where we come in. We are providing the bridge and saying “he is our customer and has been paying to us over this period”. They can see our records and know that this person has been contributing consistently for six months or one year, and that he will qualify for the facility.
Do you have special consideration for government workers and businessmen?
We are after anybody with predictable income. When you fill our form, one of the questions there is ‘how much do you earn on a monthly basis?’
Another question says “what is your average monthly household income?” Household income refers to the husband and the wife. Or for a single person, your side hustle, not just your salary. Because that is one of the problems with conventional method right now. Conventional methods will say “what is your monthly salary? Bring your payslip”. Most Nigerians do not depend on their monthly salary. The average Nigerian either has a shop on the side, or he has a farm or a side business he does because we all do multiple things to make money. So our model is designed to recognize that and allows you to say “Okay on a monthly basis, my salary is fifty thousand naira. I have barbing salon and I get thirty thousand naira monthly. I do an investment partnership and I get twenty thousand naira monthly. So my monthly income is a hundred thousand naira. Out of that, I can afford to invest fifty thousand naira”. And they will agree and ask you to sign. Once he is able to consecutively pay that fifty thousand naira, he builds a credit history. That credit history is what we will take to our partner mortgage banks and say “we want you to give Mr. Jide a mortgage for five or six million naira. This is his track record which shows how over a period of six months or one year, he has been paying religiously. They will then say if he has been paying like this for this period that means he will continue paying so they will give him the mortgage. It relieves him. So he is not paying fifty thousand naira monthly, he is now paying thirty thousand naira. But he continues to pay and he now owns a home.
NHF on the other hand requires you to be a contributor to the National Housing Fund. Not every Nigerian is a contributor. However, we are talking to a number of organizations that are in the public space or in the established private sector and are contributors to NHF. For such people, we are also putting in place a model whereby they can sign on to our plan. The only problem with NHF is that the maximum you can get is 15 million. It means most times, NHF is largely reserved for mass affordable homes, not for affordable luxury homes.
Lagos comes to mind as a state that is already overpopulated. How possible is it getting land in a place like Ikeja?
Let me give you an example. We have land in Ikeja. We are partnering to do a hundred unit development and sixty unit development in Lekki Phase One. We are partnering to do a two hundred unit development in Oworo. And we are doing one hundred units around Chevron. There are lands available. The question is: at what price gap and in what method?
The truth of the matter is this: we need to dimension the housing environment and housing needs. Let me shock you: seventy-five percent of urban city dwellers in Lagos, Abuja, Port Harcourt, Kano live in substandard homes. That is homes that are not well-serviced, where you put on generators, streets with portholes. Only twenty-five percent live in their own homes. This is so because a vast majority cannot afford the cost of buying land in their choice location. So, they keep renting. What we have done as developers is that we have gone to those areas and invested our capital to buy the land. And we now create building prototypes and models that will make it easier for people who are in paid employment and cannot afford full payment to pay for it over a period of time.
The problem with Nigerian housing sector is that while it is potentially the third largest driver of GDP growth in Nigeria, it remains laggard because there is no structure, government policies do not favour housing. Most state governments see developers as cash cow rather than as partners of development.
What categories of housing do you offer?
Our housing bouquet is three-fold. We have the Mass Affordable, Affordable Luxury and Premium Homes. In the Mass Affordable category where you have five to fifteen million naira houses in Lagos, we are doing what we call a one-bed expandable bungalow. It is not a face-me-I-face-you. It has living room, bedroom, kitchen, visitors toilet. But it is designed in such a way that when you buy it, you can afford to add one more room to it if you want. We also have two-bed and three-bed bungalow. These three prototypes are what we are delivering in Epe. We do not believe in selling land because people really want houses, they don’t want land.
In the same Mass Affordable scheme, we have one and two bed apartment. But we are branding those for Abuja because they have restrictions that you cannot do bungalows in certain areas. So we have to do apartment. But in Epe, we have enough land hence we are doing bungalows.
The next category is the Affordable Luxury. These are mostly apartments and terrace houses. And they go between twenty and forty million naira. We are doing these ones in Chevron axis, Oworosoki axis.
We also the Premium Houses which we are doing in Lekki Phase 1, Ikeja and our existing estate at Ocean Bay.
What about the issue of standards, especially in this era of incessant building collapse across the country?
I will answer the question in threefold. First, states are ones to set standards. In Lagos, because of the incessant building collapse, it is now overregulated. You have the Lagos State Safety Commission that certify your projects, Lagos State Building Control that certify every stage of work and the Lagos State Urban and Regional Planning Board that approves before you can start anything. And they are very serious. And the laws are there that if you deliver any house that has a problem and you did not go through any of the processes, you will go to jail.
Second is communal policing. We happen to be members of the Real Estate Developers Association of Nigeria (REDAN). And one of the things that we are pushing with our colleagues in the industry is self-regulation. Meaning we must police ourselves in the industry.
And that brings me to the third point which is professionalism. In our organisation, we have core professionals that manage all our projects. Any developer that is talking to you about a project and it is only him you keep seeing, he does not have a team, you should be worried. The only way you can police people from cutting corners is to ensure that every side is effectively policed and manned. For example, in every project of ours, you have a project engineer, project architect, project quantity surveyor and their only reason for being there is to manage every stage of work. But the last layer of control that we have put in place in STOW is that if you sign on, you can monitor what is going on on the site.
What about Nigerians in the Diaspora? Those who live abroad and send money to relatives to build and come back to the shocking reality of no house or a poorly built house. Are you also catering to this category of people?
The world is already going digital anyway. And what we have done is to create a digital app that is available on Apple and Google Playstores and on our web portal. With this, you can monitor progress of work on that project. You are going to have live images so that if we say, for example, you buy a bungalow in Epe and you are working in Ikeja, you don’t have to go to Epe and check progress of work. When you go on to the app, you will log in with your details, zoom to the Epe project, zoom through and see the level of work done. When you start paying money, the house that is supposed to be ‘growing’ as your money is growing. If it is not growing, you can immediately stop payment. It is about transparency and that is what we have decided to provide through STOW. What we have done is to say to people that are in Diaspora, with our partnership with Interswitch, you can pay from anywhere in the world. You can actually acquire property from anywhere in the world without entering Nigeria.
I want every Nigerian to know that with STOW, you can unlock the potential of your resources. In an economy where the money market is not going well, where things are tough, this is not the time to leave your money sitting in the bank account somewhere. You can invest in real estate. Not just in any real estate but a verified, measurable real estate that you are guaranteed, will not lose a value in the future. I urge as many Nigerians that are interested to go on www.stow.ng, sign on and explore the unlimited opportunities to become a property owner in Nigeria.
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