Q:Let us look at economic growth in relation to real estate. Analysts say developed economies are growing at about 3.5 percent; African economy at 5.5 percent while Nigeria is growing at approximately 7 percent. In what significant way is this growth impacting on real estate?
I agree with the analysis that African economy is growing more than the rest of the world. The reason for this is that as a developing economy, there are greater opportunities. In Nigeria, for instance, infrastructure deficit here requires trillions of naira to build. I read recently that Turkey received $51 billion foreign direct investment and the bulk of that investment went into infrastructure development.
Here, the opportunities are more, especially when you look at power, roads, housing, water, airports, seaports, railways etc. The contribution of the housing sector to economic development is still very minimal and too insignificant to rejuvenate growth in that sector. Government has to intervene.
Our idea of this intervention is that government must find a way of ensuring that the loan gets directly to the beneficiaries, not the developers because when you fund project off-takers, they will fund the developers and the developers will be able to do more, leading to the growth we are talking about.
The housing sector is a grossly under-developed sector in the Nigerian economy unlike in other countries where it contributes 30—40 percent of the GDP. Here, its contribution is not up to 3 percent and that shows how poorly developed we are. In US, for instance, when the housing sector collapses, the economy collapses.
Government shies away from subsidy, but I feel strongly that it cannot avoid some form of intervention in the housing sector. The British government is planning 15 billion pounds intervention in the housing sector. They are doing this because they know its multiplier effect on the economy is huge. This is what the government in Nigeria should do. We want government’s direct intervention in this sector. The 20-22 percent interest rate on housing loan will never encourage growth in the housing sector. It needs to be brought down to single digit or at most 10–12 percent.
We are not saying that government should intervene to dash people money. No, what we are saying instead is that there should be some sort of soft loans at manageable interest rates. Government won’t lose the money it will be giving out because the money will be given through the banks and so, it has to be returned.
Your institution is very passionate about infrastructure. This is a country where you have an Infrastructure Bank and also an Infrastructure Concession and Regulatory Commission (ICRC). Is there any form of collaboration between you and these bodies to address the problems of this sector?
Our passion for infrastructure development is understandable. The infrastructure sector has the potential to grow the economy and create jobs. If you talk about global competitiveness, infrastructure is key. If a man cannot drive from Lagos to Benin and an aircraft cannot fly from Lagos to Abuja three times a day, the economy cannot compete globally.
At our conference in Benin, the managing director of Infrastructure Bank delivered a paper. Recently, we were at a meeting with the commission in Abuja. We believe that there are ideas we can share that can help. The infrastructure bank is just being revived. I am aware that the bank is about going to the Stock Market to raise N29 billion. They have just got approval to raise their share capital to N29 billion which is good starting point.
I however believe that ICRC holds the key to infrastructure development in this country, because they are the body that will formulate the guideline for PPP arrangement for infrastructure development. This is also because there is no way government alone can shoulder the enormous cost of infrastructure development.
We need to create an environment that will encourage investment in that sector and ICRC holds the key. If the commission plays this role well, it becomes easy for investors—local of foreign—to get involved.
Let me take you back to your maiden address to the press on assumption of office where you listed a number of programmes you and your team were out to implement during your tenure. What footprints have you been able to leave behind between then and now?
We were very clear as regards what we want to do as an institution. We have our agenda very well spelt out and we have done fairly well in some of them. Our Assets Data Bank project for our members is almost completed and will be available for use very soon.
The idea of this Data Bank is that many of us rely so much on multiple sources valuations which is why there are wide differentials in our financial reports. If you look at two reports by two valuers on the same property, the difference is usually much.
We will soon be launching our Multiple Listing Service which is a platform for marketing property. In developed countries like US and Canada, you don’t have to leave your office because you want to look for property. What you simply do is to log on to the multiple listing service and you get what you want from whatever location you want it. Our members are already logging on to it and also benefiting from it. This differentiates us from the quacks because it is only available to our members.
We are also looking at the issue of land reform because it is crucial to the development of any economy. The economy cannot develop where people don’t have titles to their land. We have done very well in this regard. Right now, we are working as major stakeholders in the presidential implementation committee on land reform which is the government body in charge of that reform.
We are passionate about bringing estate management students in universities closer to the fold because the challenge we have is that we have many schools offering estate management but on graduation, they disappear into thin air. We do programmes in schools where we advise the students. We want them to come out and join us. We visit them, and even send books to them.
Part of our challenges again is that people do not know that the key distinction between us and quacks, apart from the services we render, is being able to have a working internal disciplinary mechanism.
Through this mechanism, we discipline our erring members and this is why we advise that anybody who has issues with any of our members don’t need to go to the police, but should rather come to us. We will handle the case very well with our mechanism which is fast and efficient.
You also mentioned the issue of a body that would regulate and sanitise the estate agency practice. What level of success have you achieved in this regard?
We are working to establish a body of estate agent. I must say that quackery is in every profession but in our case it is too vast because housing is crucial to human needs. What we have done is to establish an Association of Estate Agents in Nigeria. This is not strictly for our members. The idea is that people who have a minimum qualification of a school certificate should join the association. The advantage the members have is that the association is backed by our institution which is regulated by law.
We will give some level of induction to such members; we are going to teach them how to operate, and they will swear to our code of ethics and practice so that when something goes wrong, they will have references unlike the man on the strict who will take money from a client and runs away.
This is a consumer protection function on our part which we are using to serve public interest.
This consumer protection function is quite interesting because in Nigeria, consumers are not protected in any way from the exploitative tendencies of service providers especially GSM network and PHCN. So, tell us more about the level of success you have recorded?
The association has been registered and it took a while for us to be able to do that with CAC. An interim exco committee is working out modalities for membership. When that is done and our council meets and approves it, then people will be free to join. As we speak, lots of people are willing and ready to join the association. I believe that this will go a long way to improve the estate agency practice because by virtue of this association, you can trace your agent to his office unlike the man on the street with a brief case who will collect money from you and disappear.
We want to achieve some level of standard and sanity in the practice as it’s done in developed countries where the practice is regulated. Here, unfortunately, it is an all-comers affair. We believe that the new effort will be good for the society because even property owners will be sure of their rental income which they will be taking at the appropriate time.
This could also be an avenue to track the issue of money laundering because if everybody is under one umbrella, it will be easy to track who does what unlike now that nobody knows who is where.
Is the association going to be independent of your institution with a separate office?
Of course, yes. There will be a separate office for the body because it will be independent of the institution. Already, it has an interim exco made up of our members. By the time the new members come, they will hold an AGM to elect substantive exco which will include the new people that have joined.
What are the likely challenges you envisage in driving membership for the association?
Challenges are part of life but challenges can be surmounted if you work hard. We will be going to the press soon to ask for membership and again there are people already waiting to join. We know that challenges will be there but we will be able to contain them.
We are a bit familiar with the leadership of your institution and we know that you major programme has always been your annual conference. In what significant ways have you been able it do it differently since you came in?
If you were in Benin City for our last conference, you would have seen how we have been able to do it differently from what used to be the norm. This was the first conference where nearly half of the attendees registered online before coming to the conference venue.
We have also succeeded in changing the pattern of speakers. Normally, we would just assign topics to our members to deliver papers on. But we believe that conference should be a place where you share ideas and learn new things and that was why we had to source speakers from outside.
Our keynote speaker in Benin was Oby Ezekwesili and she was well received. The idea was to hear from an authoritative voice that everybody would receive very well. We had other speakers from the Infrastructure Concession and Regulatory Commission (ICRC); Infrastructure Bank Plc; Lagos Business School etc. All these are new pegs we have introduced into the way we had been doing things in the institution. We believe that going forward, by the time we get to Uyo in 2014, all the mistakes we must have made in Benin, we will be corrected and improved upon.
You still have a number of months to the end of your tenure. What would you like to leave behind in terms of enduring legacy for the institution?
Let me tell you that I will leave office by March 2014 and there will be no extension. The biggest legacy I would like to leave is that of a strong and vibrant institution that is well received by the public. I believe that the biggest challenge that we have is poor perception and if people don’t perceive you to be strong, they won’t do anything with you. So, our partnership with the media is to tell public in clear terms who we are. We also want to tell the government that we can be partners in the fight against corruption, in housing development, land reform and also in the over all development of the country. These are all areas of national interest.
Our work has gone beyond mere valuation, leasing or letting of houses. The national economy is now part of our concern which is why when you come to the issue of corruption, we have told the conduct bureau, for instance, that they should use our members to value assets of public office seekers because it is only our members that can determine the value of assets. Government should not allow individuals to determine the value of real estate. The use of individuals to do this has led to all manner of abuse. Often times people tell you they are declaring their assets in principles such that somebody who has a bungalow will tell you he has a story building meaning that before he leaves office he must have got one. If there is a valuation report, such a person can’t do it because the law will go against him.
One tangible legacy I want to leave is the Assets Data Bank project because I hope it will revolutionize the way we do our work. The Multiple Listing Service is also another tangible programme I want to leave behind; a steady growth of our institution is yet another legacy I want to leave behind..
Getting our students folks integrated into the profession when they leave school is another legacy I would like to leave. I don’t like losing any of them to other professions like banking, oil companies or becoming accountants etc. Each time I go to schools, I encourage them, telling them that this profession is the best in the world.
We have about 3,000 estate surveyors and valuers in this country of 160 million people. So, the work is much and the opportunities are immense. On a lighter note, surveyors are the only professionals who have work on earth and also in heaven because Jesus says that “in my father’s house are many mansions”, meaning that we still have valuation and letting job to do even after our lives here on earth.
We have developed a volunteer scheme in which some our members volunteer their time to go to schools to encourage the students and mentor them on what they are supposed to know and do. They talk to these students and share private sector perspectives and practical experiences with them.
The property market, especially the Island market, seems to be taking too long to recover from the economic slowdown as against what obtains in some middle-class settlements particularly on the mainland. What’s take on this?
My take here is that slowdown follows convention. The general convention is that when the market drops, the high end is always the one that is badly hit because people will leave this end for the lower end while those planning to enter will stop. If you look at Ikoyi in Lagos, it has taken the hardest bashing and it is taking some time to recover. However, a place like Banana Island in Ikoyi has appreciated well because it has good infrastructure. This area has recovered by about 10 percent.
It is difficult to measure the level of appreciation or recovery in terms of percentages but a place like Parkview Estate has appreciated by 10-15 percent. The same goes for Osborne Phase One and Second Avenue Extension.
Between the last quarter of 2012 and now, what has been the nature of market movement in terms of pricing and demand in both sales and rental market?
It all depends on the neighbourhood. Ikoyi, for instance, is recovering very slowly. The same with Victoria Island. The mainland and even Lekki are doing very well. Part of a project that we did recently shows that returns on investment in places like Ajegunle is huge because here landlords charge any rent they like because demand is high.
Assuming you have a group of investors looking for a viable location to move cash to, which location and segment of the property market would you advise them to invest in?
I know that the biggest gap in the real estate sector is in the low income segment. Medium income, yes, because any project below N30 million sells faster. If it is within N10-15 million, you will even sell off before you finish. But once it goes to N50-100 million, you are going to struggle to sell because the market here is thinning out. The biggest of all is the low income; here you cannot fail because the market is huge. And with what the government is doing about mortgage, by the next one to two years, mortgage will be available for low income earners.
Some developers say that why they avoid this segment of the market is because it carries higher risk and bigger challenges especially if it is for lease or rentals. How true is this?
Unfortunately, in this country, our laws are becoming impediment to real estate development. This may not sound populist but it is the truth. A man who is investing in housing development for rent or lease wants to be sure that at the end of the month or year, he will be able to get his rent. A situation where a developer has to be in court for many years to repossess his property following a default is not good. People shy away from that segment of the market mainly because of its peculiar problem.