• Thursday, March 28, 2024
businessday logo

BusinessDay

We are determined to contribute to economic development and transformation of cities in Nigeria – Apoogun

We are determined to contribute to economic development and transformation of cities in Nigeria – Apoogun

Sikiru Apologun, chief operating officer of Chapter Four Estate Limited, a development and management company, a subsidiary of Iconic City UK Limited, in this interview with REMI FEYISIPO, spoke on how the sector which connects directly or indirectly with other key sectors of the economy was hard-hit by the waves of the Coronavirus (Covid-19) pandemic, leaving costs, delivery timelines, sales projections, etc badly twisted; how to reduce the gap in housing and his company’s project in Nigeria and its determination to contribute to economic development and transformation of cities in Nigeria by creating jobs and markets for the citizens. Excerpts:

With a population of over 200 million, Nigeria is presently under-housed. What strategies do you think can pull the country out to reduce the estimated over 20 million housing deficit?

Delivering affordable housing to our teeming population has been one of the mantras of every government since independence. Different committees were set up by most regimes to draw workable plans to achieving this objective. We have had recommendations to improve basic infrastructures, reduce cost of development finance, review land use act to ease access to development lands, provide subsidy for the low income earners, create job opportunities in the rural areas to promote development and discourage urban migration, give incentives to estate developers, engage the stakeholders in housing planning, etc. All these duly implemented will help to a large extent in closing the gap in housing. Unfortunately, the problems have always been with implementation. As far as I know we cannot get it right in housing even with the best of policies in the world except we tackle the endemic corruption that has remained a barrier between policy formulation and policy implementation. To put it straight, it is not all about knowing what needs to be done to reduce the gap in housing, but being able to do what we know. This is why most of these good policies and recommendations never see the light of day in this country. That should be the priority and focus.

Covid-19 no doubt affected the sector; how do you now see the future and what do you consider major challenges of real estate in Nigeria?

The impact of Covid-19 pandemic cuts across nearly every sector of our socio economic life though with varying degrees of devastation. The real estate being a major sector that connects directly or indirectly with other key sectors of the economy was hard-hit by the waves of the pandemic leaving costs, delivery timelines, sales projections etc. badly twisted. In spite of that the future is very bright for the sector. Being a long term investment that keeps appreciating in value with time, in situations like this, investors in the real estate may have to wait only a little longer to recoup, but in the long run that waiting will worth the while. It is one sector where demands for the products are always higher than supply and we all know the business implication of that. The over 20 million units of housing gap waiting to be filled in Nigeria by current estimate, is an indication that the sector is yearning for more and more investments from both public and private developers. Given the role shelter or housing plays in an economy every government across the world keeps on fine tuning strategies of supporting the real estate sector. Again that makes investment in the sector reassuring especially in Nigeria.
There are myriads of challenges confronted by developers in this country. The ones I consider more worrisome include lack of basic infrastructures. Drawing from our personal experience I can say categorically that our company would have saved about a billion naira from infrastructure alone if our current project Westlink Iconic Villa was being delivered in the UK. To keep to our promise of stable power supply for instance, we had discussions with some power distribution companies around. The bill submitted to us just to run the line from a relatively stable source in town to the estate (excluding every other connection and distribution within the estate) was enough to jump start another estate. Even at that, it does not guaranty 24 hours supply. It is still to be supported by giant generating plants that cost fortunes as backup. In the UK and other developed economies this is given at no extra cost to the developers. The same applies to road networks in yet-to-be developed sites. This is not to talk of investment in security which developers ordinarily don’t bother much about elsewhere.
In spite of these high costs of doing business in the country that developers have to contend with, there is little or no access to long term development funds. Where available the administrative bottlenecks and high interest rate makes it unattractive. Difficulty in accessing development land with genuine and secured documents, high cost of building materials, lack of consistency in housing policies and unstable economic outlook are part of the problems confronting developers in Nigeria.

Due to the current security challenges in Nigeria, many foreign investors are scared from investing in real estate. As a player in this sector, what should be done to engender investor confidence?

Security challenge is no doubt a major concern for local and foreign investors because of the long gestation period of investments in the real estate. Yet, the multi-dimensional security crises confronting us here for the past years cannot be said to be abating. There are no two ways to restoring investors’ confidence in such crises situation than tackling them head on or showing genuine commitment to arresting the trend. Nevertheless the government can put some measures in place to mitigate the risk exposure on the part of investors. This could be in form of providing insurance cover and other incentives for intending foreign investors and their investments. The government can also undertake to enter into joint ventures with prospective foreign investors in key sectors of the economy as real estate. This also takes off some risk from the investor. The government can as well commit to specially fortifying security around foreign investors and their investments.

Read also: Delta Airlines post pre-tax loss of $9bn in 2020 as COVID-19 disrupt operations

Real estate is a capital-intensive sector, thus restraining aspiring entrepreneurs with limited resources. What measures should governments and the private sector put in place to lower the financial barricade and encourage the aspiring investors?

Access to development funds is one of the major problems in the real sector here in Nigeria and most parts of Africa. The unending quest to solve the perennial problems of hunger does not live enough room for savings or capital development. The present government like the ones before it tried to put some measures in place to tackle the problems of funding the real sector. These includes recapitalization of mortgage banks to broaden investments in housing; establishment of social housing fund for developers to access from; amendment of pensions act to ease withdrawer for investment purposes; reviewing the mortgage rates to single digits; relaxing the complex administrative procedures of accessing mortgage facility etc.

These measures are good enough on the surface to open up some channels for funds for aspiring investors. We only need to gather the will to make them realisable. Even at that, the government’s fund alone cannot meet fund requirement of the sector. There is need for collaborations with other key stakeholders in the real sectors. It is important that the government create enabling environment for private investment/development banks and relevant financial institutions to thrive. These will open up more channels for entrepreneurs to access long term funding.

2020 was a challenging year for everybody, individuals and institutions alike. Businesses have had their projections reset and, in some cases, dropped entirely. How was the year for Chapter Four Estate Management Limited and projections for the New Year?

Year 2020 really was a tough one for the business world and as expected, we had our own dose of that. This is particularly on sales and delivery targets we set for ourselves. Gloomy outlook and uncertainty in the business space kept potential buyers and investors at bay for most part of 2020. Construction works were suspended in compliance with the lockdown directives imposed by the government. This comes as an additional cost on the company as staff salaries and other rents kept running. Sudden increase in the prices of building materials was another problem we contended with in 2020.

The dreams of the founders and management of Iconic City UK Ltd is to build a business conglomerate that will someday grow to compete with other famous business empires across the globe. The emergence of Chapter Four itself is an indication we are already a step in the right direction on that journey. Our strategy in the year ahead is to consolidate on our strength and presence in both local and international markets, diversify and expand by way of vertical integration. Interestingly we have been able to attract investors’ confidence not only within the UK, but from other parts of Europe, United States and here in Nigeria. It is encouraging to note that all the funds that have been sunk into this project to date are from investors across these countries. No single loan from any institution financial and non-financial, private or public, within or outside the country. This goodwill alone puts us ahead of competition in the environment we operate and that is what we want to exploit this New Year.

As a response to the 2020 challenges, many investors are rethinking and refocusing. What is the new direction for your company?

Like most businesses we had our own share of setbacks in 2020 occasioned by Covid-19 pandemic. Nevertheless, we were able to weather the storm because of our direct involvement in the delivery of our project. Our management team is made up of a group of professionals from divergent but relevant disciplines. For instance, all departments of estate management (Engineering, Development, Financing and Marketing, etc) are fully represented in our executive team. It is a group of professionals coming together to float a company; hence, our ability to effectively monitor and deliver at a relatively reasonable cost. This is one strategy that has really paid off for us. Our direction going forward therefore is simple. That is getting more and more involved in the direct delivery of our projects.

Your company is in partnership with Odua Investment Company to develop housing estate at Alakia, Ibadan; can you expatiate on the venture?

Our company Chapter Four Estate Management Limited as a specialist end to end property development and management company is into strategic partnership with Odua Investment Company Limited to deliver housing estates in Nigeria. Our vision is to develop communities where people are happy to live, work and socialise; communities that will be benchmark for others. In the pursuit of that Odua Investment together with Chapter Four identifies and procures development lands. Chapter Four develops, sells and manages the housing estate delivered. With specific reference to Alakia project, Westlink Iconic Estate Limited was jointly floated by the two companies to act as vehicle for this delivery.

What stage is the project, delivery date and sales pattern?

The project is divided into phases one and two for ease of delivery. Currently we have got to an advanced stage in phase one comprising 67 homes and utility building. By our delivery timeline these will be fully ready for the home owners to move in by June 2021. That is about six months away. Everything required to make that a reality is already in place. Contracts for the civil works, road constructions, drainages and landscaping have just been awarded and will be commencing in a few days.
Phase two is scheduled to commence immediately after the delivery of phase one in June 2021 and to be completed by June the following year. That is 2022. As a matter of fact ground cutting in preparation for commencement of work in phase two is about halfway done. The entire estate is projected to be commissioned and handed over by August 2022

On sales I can say we are not doing badly, though it could be better. By our market survey and feasibility studies pre construction, we projected that before December 31st, 2021, all the homes would have been fully sold. However we were about sixty percent up in sales as at December 13th. This is not a mean achievement considering the impact of Covid-19 pandemic that slowed down developments, weakened purchasing power and impoverished many businesses. As for the sales pattern, we are having more demands on the home types that are more in units, an indication that we got the product mix right.

Apart from the partnership with Odua, does the company have any other one within the south west or within the country to build housing estate?

Westlink Iconic Villa is currently the only project we are developing in the Southwest. Being our maiden project in the country as well, what it represents to us is more like testing the depth of water with one foot. So far we are satisfied not minding the relatively strange and rough terrains to travel. With the plans we have in the pipeline, Westlink iconic villa is hopefully the smallest housing project we are going to develop in this country. In other words we are working on mega projects like garden cities where we will be delivering thousands of homes. This is what most of our directors in collaborations with big investment companies do in the UK. We are determined to contribute our quota to economic development and transformation of our cities in Nigeria, while also creating jobs/employments and markets for the citizens.