Oyeleke Ajiboye is the chief executive officer of Efficacy Construction Company and in this interview with Business Day’s Stephen Onyekwelu, he tells the story of his sojourn in real estate and advises young real estate investors about where and how to invest in the sector. Excerpts:
Let us start on a personal note. When would you say was that turning point in your career when you pivoted into real estate or have you always been in this industry?
My experience in the real estate sector started when I graduated from the university, as an engineering graduate my dream job was in the oil and gas but as God would direct my steps, I kept getting offers in construction companies and my final place of employment was with a real estate development company.After several attempts without gaining employment in the oil and gas sector, I decided to remain in construction and started developing myself in that light. I thereafter went for a master’s degree in project management and bagged other relevant degrees in the sector and I have been in real estate and construction sector actively for almost two decades, all thanks to God.I registered Efficacy Construction Company in 2008 first as Efficacy Homes Limited. Since then, we have been active within the construction and real estate sector.
What would you say are the three things that have stood out for you or sustained you in the construction and real estate business?
There are many things some Business owners miss out when they venture into a new business. I learnt early on that a business needs to be CONSERVATIVE. You will agree with me that it is possible to start a business and make good profit in the first and second years of business but make no profit for the next three years. This is why many businesses start yet easily but in the long run go under.
Another thing that has helped me is BOOKKEEPING. I know my turnover from inception off hand to date. Data is what will help you to analyze your performance. From day one I was particular about data and using them to manage and evaluate the company’s performance. At a point our growth came down by 30%, this was around our third year in business – 2011. It was an election year. Our income came down and I was asking questions. What happened? This was the first time as a business man, i was in business in an election year. Before, during and after elections, people are usually skeptical about investments, the investment environment is uncertain and people would rather hold on to their money. Only media houses and printing companies make money during an election year. Data helped me discover this. Coming to the 2014/15 election year, I was prepared. I knew the income might nosedive. I worked hard in 2013 and 2014 to secure projects that would keep us going till 2015. As it turned out, President Muhammadu Buhari’s first two years in office affected our sector. The economy was slow, our cashflow was made to sustain us because of some projects we already commenced before 2015 and 2016. The economic turndown at that period also helped us re-strategize, at some point, we stopped real estate sales entirely and focused on building, civil and industrial contracts. It is the same strategy we have adopted at this time considering the hike in market prices and inflation, this prompted our decision to suspend all off-plan housing sales. If you have sold a house for 10 million naira or 100 million naira three months ago, the same amount cannot build a similar house due to inflation. You cannot determine the cost of building materials from one week to another. So, paying attention to data is crucial for a business to track the changes in the market, customer behavior, customer drift to a particular product and the purchasing power of the target market.The third thing is the GOD-FACTOR, which is number one. God has helped us. Real estate or any form business is spiritual.
You cannot sit on the fence, you are either using spirituality for good or for evil. You cannot just jump into a business brandishing book knowledge. This is why business plans fail, especially in real estate.There have been times we made mistakes and God knew the mistake was genuine and HE created ways to help us, by providing a project that compensates for the losses from our mistake.
How are you navigating naira devaluation, rising cost of building materials and inflation?
The situation is scary for business owners like me. We wanted to buy some toilet seats the other day. Toilet seats that used to go for N50,000 – N60,000 were selling for N120,000. It is extremely impossible to deliver affordable housing currently, as affordability is now golden while people are trying to survive and hope for the best considering the recent improvement in the economy this month. However, for people that can go on, real estate is still the best hedge against inflation. As the foreign exchange is going up, your property price is increasing. And as prices are going up, your real estate value is in sync.
If you were to advise a young person starting in real estate or who wants to invest in the industry, what would this piece of advice be?
For someone starting in real estate, I would advise the person to surround themselves with the best of professionals. If anyone buys over your surveyor, you have a big problem on your hands because getting the right coordinates is critical. Your surveyor would guard you here.
You need a lawyer who understands litigation. A lawyer who understands litigation begins with the end in mind. Next, don’t eat with all your fingers. I have mentored a couple of young people and once they make their first couple of millions they start living an extravagant lifestyle.
When you advise them to be conservative, they think you don’t want them to enjoy themselves.
However, the thing with real estate is that you do not know your profit until you have handed over a property. For people who want to invest, treat real estate investment like any other investment.
Get sound advice. Just like when you are buying stocks, you may hear the stocks of a certain company are the rev and you rush in to buy but the next day it tanks. Get good advice.
Understand why you have chosen an asset class and seek professional guidance. Understand the purpose of your investment. Am I investing in Lagos, Abuja, kano, Port harcourt, ibadan, osogbo etc and why?
If you want to grow your money fast, invest in a corridor that is developing such as Ibeju Lekki would help. If you have N200 million you could go and buy 10 plots after Ajah such as Sangotedo or Awoyaya. It is easier for those plots at N20 million to get to N40 million, within three years and N200 million gives you N400 million. Some locations that are at peak value or with no government interest will be very slow in appreciation the most you might get could be 10% per annum in appreciation for such areas.So, as young investors emerging into the Real Estate Sector, you need to understand these things; The Title on your proposed land and the government’s interest in the location. You need sound professionals to get this right.
Where do you see Efficacy Construction Company in the next five to 10 years?
In the next five years, our goal is to become a publicly quoted company on the floor of the Nigerian stock exchange if it is the will of God, we want to become an institution that will outlive the founder as the number one affordable housing provider in Africa.
