SEGUN JOHN-ADEJUMO is an ex-finance banker with good knowledge of the property market and the economy. He is the managing director of Precioso Homes, a property investment and development firm. In this interview with select Property Editors, he gives insights into opportunities in real estate investing, especially in small-size residential apartments which, he explains, are market movers with a quick and significant return on investment. CHUKA UROKO was there. Excerpts:
As a real estate developer, you also pride yourself as an entrepreneur. Tell us about yourself and what you do.
I am an entrepreneur focused on the real estate market. But our core area of focus is an investment. So, we target investors and people that are not first time home buyers. These are people that buy for the purpose of investment and generating income either for capital appreciation or normal rental income. We started with two and three-bedroom apartments, but now we are into one-bedroom apartments.
How long have you been in this business and what is your motivation; what drives your interest?
I was in finance banking before now. You see, when you go into some apartments in Lagos, very expensive ones for that matter, you find that the level of work done is not impressive at all. So I told myself that I could make a difference in this business. My motivation was not money, it is about adding value to assets so that assets could be more valuable than what the competitor offers.
Now, we add value for the investor so he gets more than he pays for in terms of the quality of finishing and the entry price. So, for us to achieve that we usually sell off-plan. With this, people rent at a lower price than the current market value so that, by the time you finish, they already have capital appreciation on their property.
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Our customers normally come back happy and that’s what gives us joy. We don’t have clients that are cursing and chasing us around. With that, we are always happy with what we have done.
Besides adding value, you also make an impact on people. Looking back five years when you started out, how much impact have you made, especially on families, individuals and businesses?
We have done, at least, 200 apartments and when we build we usually don’t look for customers because people that had bought from us before are happy and satisfied. So, they are our marketers.
We have a project we have not moved to site to do, but people have already paid for the apartments because of what we had done in the past. That, for me, is the impact we have made because we are trying to change a perspective. People didn’t wish to buy lands until about seven or eight years ago. But some developers are crafty. You pay for a property and delivering becomes a problem. Such developers would tell you they will deliver in 12 months, but four years after they are still struggling to deliver.
You said your focus is not on first-time buyers. Why are you a lot different from other developers?
There are some people who haven’t owned their own home. For instance, when you cannot afford to buy the kind of house you want now, you buy a smaller one for investment purposes and watch the investment build your own income stream and capital after which you can fund what you genuinely want. Such people buy from us.
They have bought before and now they want to buy again for investment, because for two bedroom apartments, the turnover is high, the demand is extremely high in terms of rentals whether for short let or normal rental. So, if you have a two bedroom apartment and you put it in the market, if it’s nice with good location, within one month you have rented it out unlike people that stay in three bedroom apartments. Within two or maximum of three years they are out.
For instance, as a young bachelor or young couple and you are renting a two bedroom apartment, you are going to move away, and that allows you as a property owner to rent a property.
Let us look at the economy which is slowing at the moment, leading to reduced income and purchasing power. Covid-19 came and made matters worse. What is your story as an investor?
During covid-19, there were different perspectives to different things. You are talking now from your own perspective. But I know some people that had full occupancy despite the restrictions during Covid. There were restrictions and scandals around hotels and so people were going for short let.
We had foreigners that were stuck in Nigeria during that time. They couldn’t stay in hostels so they were staying in short let apartments. That tells you that demand for short let didn’t decline. While things were going down in some places, there was a rising elsewhere. The market is changing, and if you are not moving at a very good pace, you will get stuck.
We have Nigerians in Diaspora and more than 60 percent of our properties are bought by them. People in Nigeria buy properties too even though there is a slowdown in economy. They still need to own assets and also buy property. Market and cash will always find themselves; pricing might change and that is why, for us, even though we offer luxury property, we ensure our entry point is lower than what other people are offering.
There are cases of people leaving their shores to invest in other places. For instance, many Nigerians have invested in Ghana. From your experience, is this actually a case?
International trade is not a bad thing; it actually shows signs of growth. So the fact that Nigerians are investing abroad doesn’t make it a negative thing; it’s been happening since the 60s. Our grandparents owned houses in America. People have been doing this a long time ago. So, it is not new.
Sometimes, people don’t look at the numbers properly because if you look at the numbers, you see tax and other things you have to pay. By the time you calculate it, you find out that it is not always good buying offshore.
It is not a bad thing though that people are investing in other countries. It just shows that Nigerians are rowing. We will try and give them what they want also in Nigeria so that they don’t have to go abroad. We also have to show them the numbers.
