PEJU FATUYI, a trained and experienced architect, is the CEO, EDGE Facilities Managers, a new entrant into Nigeria’s crowded facilities management industry. In this interview with CHUKA UROKO, Property Editor, Fatuyi speaks on the plight of the Nigerian real estate in a struggling economy; highlights the negative impact of lack of data on real estate investment and what needs to be done; she also speaks on the challenges facing the FM industry in Nigeria; explains why EDGE FM is in the market and the difference it has come to make, among other salient issues. Excerpts:
Nigeria’s economy is currently struggling and that has affected performance of various sectors. Where has this left real estate sector in which you play?
Indeed, Nigeria’s economy has been faced with significant challenges for sometime now, impacting various sectors, and real estate is not excluded. The real estate sector, despite its resilience, has not been immune to these economic difficulties. Several factors have contributed to this situation, such as persistent economic instability characterised by high inflation rates which have affected the purchasing power of consumers and investors.
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In 2014, inflation was at about 8.05 percent and, according to tradingecomomics.com, it stands at 33.69 percent as at May 2024; providing evidence to the significant increase in the cost of building materials and construction, leading to higher property prices.
In terms of development, the uncontrollable inflation has resulted in some abandoned projects, placed a high risk on real estate development and pressure on investor funds.
Foreign Exchange Fluctuations and the volatility of the Naira have further complicated the real estate market. Many real estate transactions and materials are dollar-denominated simply because there is very minimal internal production to meet the demand and taste of the Nigerian market. For instance, the Naira depreciated significantly from about ₦198 to the dollar in 2014 to over ₦1200 to the dollar in 2024.
Access to affordable finance remains a significant barrier due to high interest rates on mortgage loans which has deterred many potential salaried homeowners. The average mortgage rate in Nigeria is around 22 percent, one of the highest in the world. Despite different efforts by mortgage institutions, co-operative bodies, there remains a huge gap in housing delivery.
Policies and regulatory challenges have also hindered the sector’s growth. For example, the Land Use Act of 1978 has often been cited as a major bottleneck due to its complex procedures for land acquisition and transfer. Moreover, property registration and building permit processes are often slow and bureaucratic, leading to delays and increased costs.
Inadequate infrastructure, such as poor road networks, unreliable electricity, and insufficient water supply, has impacted the development and attractiveness of real estate in many areas. Nigeria’s situation is far from the ideal and infrastructure deficits have increased the cost of developing and maintaining properties.
Despite the challenges, there has been notable investment in commercial real estate, especially in major cities like Lagos and Abuja by the consistent demand for office spaces, shopping malls, and mixed-use developments based on the growing business environment for local businessmen and middle-class aspirations.
Some government initiatives aimed at stimulating the real estate sector also offer some hope such as, the Federal Government’s National Housing Programme, Family Homes Fund and other housing initiatives by state governments aim to bridge the housing deficit.
It is noteworthy that though Nigeria’s real estate sector faces significant challenges due to the broader economic environment, it also holds substantial opportunities for growth and overcoming these challenges will contribute meaningfully to the country’s economic recovery and growth.
Of the many problems confronting real estate investment in Nigeria, lack of credible data is stands tall. What are the implications of this lack for both investors and the sector?
It is important to address the significant challenges posed by the lack of credible data and proper sources in Nigeria’s real estate sector. The absence of reliable and comprehensive data has far-reaching implications for both the sector and investors. It affects decision-making, transparency, and overall market stability.
The direct implication for the sector is observed through impaired Market Analysis and Planning which due to lack of credible data, developers and planners struggle to make informed decisions about where and what to build. For instance, accurate population growth and migration trends are essential for predicting housing demand.
In Lagos, where urbanization is rapid, a lack of precise data can lead to either overbuilding, or underbuilding, which all have adverse effects. Overbuilding can result in unsold inventory, vacant properties and wasted resources, while underbuilding exacerbates housing shortages and increases prices. Accurate and current data can help define what specifically is in demand and what the demand can afford or needs.
Another challenge is for real estate valuation as it relies heavily on comparable sales data, rental yields, and market trends.
The lack of credible data means valuations may be inconsistent and subjective, leading to disputes and a lack of trust among stakeholders. For example, in Lagos Island, property values can vary widely within short distances, and without reliable data, establishing fair market value becomes problematic; it has also raised trust concerns due to speculative pricing and investors sometime become wary due to uncertainty on the ROI.
Facility management industry in Nigeria is still a fledging even though it has come a long way. Some people argue that its poorly regulated, making it an all-comers affair. What do you think
I am glad we get to discuss the challenges and potential improvements in Nigeria’s facility management industry. The earliest practice of semblance to facility management was through the public works department in Nigeria though this failed to sustain and properly maintain government facilities perhaps due to a reactive culture.
Undoubtedly the industry has indeed made significant strides having existed for about 30 years and through the establishment of the International Facility Management Association, Nigeria Chapter.
However, the industry is yet to achieve its full potential compared to more established markets and must overcome several challenges often attributed to lack of a regulatory framework and the need to develop an understanding of the value proposition of facility management throughout the lifecycle of a project and building.
Unlike developed economies with established regulatory frameworks, Nigeria’s FM industry operates with minimal or no oversight. This creates an uneven playing field, where some companies prioritize quality and professionalism, while others might prioritize cost-cutting measures that compromise service delivery.
This has also made facility management an “all-comers” affair, where unqualified individuals and companies operate without subscribing to standardization which results in inconsistent service quality and unreliable management practices.
The framework should include licensing requirements, professional standards, and regular audits to ensure compliance; it could be introduced by IFMA and her corporate members setting industry standards and providing accreditation, to ensure a high level of professionalism.
There is a shortage of formal training and professional development opportunities for facility managers that are mandatory and tailored to the needs of our environment. Very few higher institutions offer facility management courses and Nigeria lacks accredited programmes and certification bodies, which affects the overall competency in the field.
Whilst partnerships with international bodies like the International Facility Management Association (IFMA) to offer certified courses and continuous professional development exist, there is the need to find avenues to promote and sponsor these programmes which can elevate industry standards. Singapore, for instance, has implemented structured training and certification programmes that are mandatory for facility managers, ensuring a highly skilled workforce.
There is a pervasive poor maintenance culture in Nigeria, affecting the longevity and functionality of facilities and infrastructure (roads, bridges, etc). This cultural issue often results in reactive rather than proactive maintenance strategies, leading to higher long-term costs and inefficiencies.
A shift in maintenance approach can significantly improve facility longevity and performance. Implementing regular maintenance schedules and using predictive maintenance technologies can reduce downtime and costs. Japan is known for its meticulous maintenance culture, which ensures the optimal functioning of facilities and infrastructure.
The adoption of modern technology and management systems is relatively low, and this gap hinders efficient management of facilities and reduces the ability to collect and analyze data for informed decision-making. Startup technologies are required in PropTech and Computer-Aided Facility Management (CAFM) systems to enhance operational efficiency.
Whilst these technologies enable real-time monitoring, predictive maintenance, and data-driven decision-making, there is a need for a boom of activity in this sector comparable to what we currently have in the FinTech space. The growth could result in widespread adoption of such technologies enhancing the management of large and complex facilities.
Many property owners and managers are not fully aware of the value that professional facility management can bring. Facility management is still largely viewed as a cost centre rather than an investment and strategic partner that contributes to operational efficiency, improved building performance, asset value optimization, occupant health and productivity. This limited perspective underlies the underinvestment in proper management services and infrastructure.
The practitioners and industry have to raise market awareness by educating property owners and managers on the benefits of professional facility management. This can be achieved through industry conferences, seminars, and marketing campaigns that highlight success stories and case studies; the outcome of which should result in higher client engagement and investment.
A multifaceted approach is required and learning from global best practices will help build a more robust and professional facility management industry in Nigeria, ultimately leading to improved facility performance and greater client satisfaction.
Your organization, EDGE FM, is relatively new in the industry. Coming into the industry means you have identified gaps that needed to be closed. Tell us what you’ve come to do differently.
EDGE FM (Edge Facility Managers), though new in the industry, is the brainchild of three real estate companies (Estate Links, Eximia Realty, Ubosi Eleh & Co.) as a solution to addressing gaps in facility management of the Nigerian real estate sector and delivering transformational excellence to our clients. Our vision is to be the preferred facility management company that guarantees value accretion, minimizes environmental impact, and achieves great returns on investment for our clients across the continent.
We are making a difference in various ways. We understand that each client has unique needs and customize our services to align with their specific goals. Our client-centric approach ensures the provision of tailored solutions that enhance value and achieve great returns on investment. For example, we have helped commercial clients optimize their space utilization, resulting in reduced overhead costs and improved employee productivity.
Our processes are standardized and align with guidelines set by IFMA to ensure service quality and reliability. We emphasize a proactive maintenance approach and where a facility is properly set up with internet of things (IoT) devices, predictive maintenance techniques, can foresee potential issues before these escalate, thus reducing downtime and saving costs. For example, by using IoT sensors in Heating, Ventilation, and Air Conditioning (HVAC) systems, we can monitor performance and address issues proactively, ensuring continuous optimal operation.
We leverage the latest technologies in facility management maintenance to manage facilities more efficiently, improve resource allocation, and provide our clients with real-time data for informed decision-making. For instance, our computer-aided facility management system allows subscribed clients to track maintenance activities, schedule tasks, and monitor performance metrics from a centralized platform.
We are dedicated to minimizing environmental impact through sustainable practices. Our approach includes energy-efficient solutions, waste reduction programs, and the use of eco-friendly materials. At client request, we conduct energy audits and implement green building practices that reduce carbon footprints and operational costs. Through our initiative, we have guided our client on proper energy management measures that have helped reduce their consumption costs and adopt more efficient systems.
To deliver transformational excellence, we focus on continuous improvement and innovation. Our key initiatives include training and development, client feedback and engagement as we actively seek and incorporate client feedback to improve our services, performance reporting that offers transparency and demonstrate the value we bring, reinforcing our commitment to excellence and accountability.
As an organization, Edge Facility Managers is committed to closing the gaps in the Nigerian facility management industry by setting new standards for service quality, adopting advanced technologies, promoting sustainability, and delivering client-centric solutions. Through these efforts, we can make a meaningful difference in the industry and drive positive change for our clients, employees, and communities.
Beside rising cost of building materials which has reduced real estate assets supply and, by extension, narrowed your sphere of operation, what else are your major headache in facility management industry?
I earlier mentioned some of the challenges faced in the industry and would highlight a few that seem to be a major concern in our sphere of operation.
There is a significant shortage of trained and certified facility management professionals in Nigeria. The absence of formal training programmes and the inability of majority of practitioners to afford international certifications affects the quality of service delivery and operational efficiency.
This skilled shortage also applies to the technicians and artisans that work in the field, proper training and equipping with the latest and appropriate tools can increase productivity and efficiency by close to 30 percent. This highlights the need for improved training and certification programs for the workforce and in particular the blue-collar team of facility management.
The facility management industry in Nigeria has been slow to adopt advanced technologies that can enhance efficiency and service delivery across all cadres of its workforce; technology is not only for the managers but should be adopted for use by the entire team of electricians, plumbers, ac technicians, planners and schedulers. This would optimize operations and can allow for proper tracking and performance management.
Due to impacts from the pandemic and changing work models, many facilities are note designed with sustainability and energy efficiency in mind. It is usually beneficial for a project to include a facility management advisor from concept stage.
Managing energy consumption and promoting sustainability are significant challenges if not factored in from the beginning and the business environment is changing so fast that our facilities must lend itself to adaptive re-use and accommodate the evolving world of technology.
Without this in mind, existing and sometimes new buildings may require updates or changes without which it would lead to high operational costs and huge environmental impact. The Green Building Council of Nigeria (GBCN) notes that buildings designed with sustainable practices can reduce operational costs by up to 20%.
Client Education is an ongoing process for us to show to the key decision makers and C-suite executives the benefits of professional facility management, so they can recognize that it is an enabler in achieving high returns on investment, improve occupant comfort and productivity and it can further contribute to an organization’s ESG goals.
Despite the facility management industry in Nigeria facing several challenges beyond the rising cost of building materials, we at Edge Facility Managers are dedicated to addressing the issues through training, technological adoption, sustainability practices, proactive maintenance, and client education. By implementing these strategies, we aim to elevate the industry and deliver exceptional value to our clients.
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