ADEBIYI ALEX-ADEDIPE, the managing director of Ragnarok Property Development Limited (RPDL), a Nigerian Real Estate and property company, in this interview with BUNMI BAILEY discusses his company and how Nigeria’s real estate sector can fully realize its potentials.
What are the challenges you have experienced so far and how have you navigated them to become opportunities?
The work of RPDL is predominantly property development. We acquire property in virgin form, develop and improve the form to provide a more habitable living environment for our prospective subscribers.
Our challenges include; cost of capital (considering high interest rates in this part of the world), time wasted on bureaucracy with approvals for building and registration of title, infrastructure in terms of road access to prospective sites, availability of well-trained skilled Labor, inflation as regards cost of building materials, etc.
The job of the businessman is to solve problems, and if there were no problems there won’t be existing opportunities. So for example, the problem of ‘capital cost’ we have been able to significantly alleviate by selling our units (whether serviced plots or houses) off- plan, this reduces the amount of ‘expensive debt’ we have to take on at the beginning of a project, while the buyer is able to enjoy a considerable discount at the same time.
Regarding bureaucracy with approvals, knowing that there will always be delays with most government agencies, we try to start our processing as early as possible. We also try to be open with our clients as much as possible, this builds trust and business can go on even when certain approvals might be pending, or in process.
Another example is the challenge with infrastructure.
What we have found is; every time we improve the road or access to a parcel of land, the value of that parcel appreciates, so even when we have spent a considerable amount on infrastructure (access), we are able to spread that cost across the units we have for sale there. This adds value to the property and thereby yields even higher appreciation for our subscribers.
Experts say that the high cost of building materials is seen as a real threat to the real estate sector’s growth. For example, the price of cement within the first quarter of this year moved over 70 percent, do you agree? If yes/No, please explain.
I agree that it’s a threat. It can’t be safe to have such price leaps especially for a necessary and basic raw material as cement. Stability helps in every business and the more stable the business terrain is the higher the likelihood of participation. Participation improves competition; competition brings about lower product market price, and therein lies value.
It’s also unfortunate in this instance that the commodity in question (cement) operates under some form of monopoly, so we can’t depend on the usual market forces (demand and supply) for price regulation.
Nigeria’s real estate sector posted 3.85 percent growth in the second quarter of 2021, representing its highest growth in six years, what contributed to this growth and what does it mean for the Nigerian economy?
I believe there is competition between the fixed money market (fixed deposit) and the real estate market. Interest rates on Federal Government bonds and fixed deposit rates for commercial banks have reduced significantly over the last two years.
Consequently, most investors are taking their monies out of fixed deposits that now pay between nothing and five percent per annum (maximum) and rather, investing in properties that can yield compound appreciation way higher over the years. This is a good thing for the economy by the way.
The housing sector is seen as important for stimulating economic growth. With over 10 years experience in real estate development, how do you think the sector’s growth potential can be fully realized?
I believe to achieve accelerated growth, the government must engage in purposeful partnership schemes with the private sector. If we look at economies like that of Singapore where they have completely solved housing problems, developers will always be willing to provide the funding and infrastructure for growth if incentivized.
I believe the government will have to strategically partner with real estate developers, leverage on available land, and maybe even have a ‘ceiling price’ for certain areas where government resources are being channeled, with conditions like -erection of a minimum number of housing units per size of plot. This will yield exponential growth and development in the sector.
For example, it is cheaper and more efficient for the government to allocate land to real estate developers at a significant discount with a specific maximum period to develop housing units on such land, than for the government to be using government money to build housing units.
The number of LSDPC Estates the government can develop is limited. But the number of housing units real estate developers in the private sector can develop is unlimited. Also in terms of actualization, it is easier for example for the government to partner with 1,000 real estate developers building just 20units each (That’s 20,000 houses) than for the government to embark on the construction of 20,000 houses. You can try to imagine the cost and bureaucracy that will be involved.
I am not speaking about the usual government contract here, I’m speaking about deliberate development of multiple housing units with the right scheme in place, such a scheme will enable government leverage on land, enable developers to get discounted land with a time bound delivery period, and it will enable prospective homeowners get houses at a discounted rate.
With a population of over 200 million, Nigeria is confronted with severe housing challenges as its predominantly low and middle income earners do not have access to qualitative housing. How can this be addressed or solved?
It is important to applaud the efforts of the Federal Mortgage Bank. However, there is a need to stretch such efforts to the point where developers can access funds to build rather than a situation where a mortgage is primarily available after the house has been built. Such access will greatly increase the number of units being constructed at once and in a short time competition will lead to cheaper houses.
Read also: Nigerian economy and real estate sector
There are a lot of Real Estate Developers in Nigeria today, what exactly makes you stand out?
We started this business mindful of the problems in the sector. One of which is the credibility of the company (developer), we stand tall in this regard. All our clients are reasonably pleased; our plan is to be able to completely eliminate the distrust that buyers bear due to lack of performance on the part of numerous real estate companies.
We also have our slogan- “what we quote is what you pay” we intend to eliminate this ‘hidden cost’ situation where clients are charged an amount of money for land, only to be told after committing money that they need to pay Development fee, survey fees, documentation fees, infrastructural fees and so on.
We pride ourselves on excellent customer service. We keep our customers abreast of the developments on site, we offer them flexible payments, and we try to be as transparent as possible.
Are there any upcoming projects that your company is working on? If yes, what should people be expecting from this project?
Yes, we will be launching ‘The Alverton Heights’ which is a project consisting of multiple units of two and three bedroom flats in the Abijo area of Lagos. We will also be launching ‘The Alverton 2’ early next year in Sangotedo, serviced, comprising 20-25units of two and three bedroom terraces.
Where do you see your company in the next five years?
In five years time, we should be able to deliver a minimum of 100 housing units annually. In addition to this, we should also be able to provide 100 serviced plots of land annually with infrastructure for those that want to build their own homes. At this point the volume and quality of our units will speak for us. We also intend to always deliver this at very competitive prices, so our subscribers can get value for their money.
Since being the director, what impact has your company had on society so far?
Over the last two years we have launched two projects, one of which is 85 percent complete in terms of delivery. We have been able to provide a proper estate with infrastructure that can harbor 76 families in the Lakowe area of Lagos (Westbury Homes).
We are also presently developing 24housing units in Sangotedo, a few minutes from Abraham Adesanya, called “The Alverton” which consists of two bedroom and three bedroom terraces, fully serviced and offered at affordable prices.
These units are sold off-plan so our subscribers have up to 12months to pay for their houses. The environment will be serene and fantastic with amenities such as Gymhouse, kid’s playground, boundary cameras, uniformed security, fire alarm, constant power and water supply, automated sound system, maid’s room, box room, sophisticated access door, backyard garden, adequate car parking facilities, etc.
QUOTE: Most investors are taking their monies out of fixed deposits that now pay between nothing and five percent per annum (maximum) and rather, investing in properties that can yield compound appreciation way higher over the years
