KUYEBI AYOLARENWAJU, managing director and chief executive officer of God Made Homes (GMD) Luxury, is a man very enthusiastic about real estate and its potential. His is one of the very ambitious new generation real estate firms. In this interview, he goes down memory lane to his time of little beginning from where he grew GMH Luxury into a major player in the luxury segment of the real estate market. He also speaks about the economy and how it affects the developer, the off-taker and the market as a whole. He speaks with CHUKA UROKO, Property Editor. Excerpts:
Let us look at the name of your company, ‘God Made Homes’. Once that name is mentioned, it sends a message that God is continuing His creation here. Why that choice of name?
For me, name is everything. Before the birth of anything, I am very particular about the name. The whole essence of it is that I am God-made. When I look back to where I am coming from, I would say, it can only be God. I started this business with N570,000 in 2009 and, by 2014, I had over N500 million. That is definitely God at work. The business we are talking about is a construction business. My core competence is foundation work; I major in piling work. We created a company called Joshua Construction Limited to solve the problem of piling foundation. Now, we are doing real estate which is our passion and we are conversant with what people have done using the name of God.
That’s great, but is God Made Homes religion-inclined?
No, we are not religion-inclined. We are a family-oriented company; we believe that the employer and employee need to maintain a certain level of cordiality, which has become a culture in the company. This is why you cannot tell the difference between the CEO and the rest of the employees. We believe that there is a level of respect we need to accord one another. The ideology here is very simple, we have discussions and share ideas, and the best idea is taken regardless of whose it is. We are God-made; not religious, but very spiritual.
With the way things are in Nigeria today, a lot of developers are adopting wait-and-see attitude to the market and investment. What works for God Made Homes?
It is a very trying time for Nigerians today, but the potentials for real estate are still there. At GMH, we are value-driven. What is actually working for us is that we give more value for less. Our investors at the end of their investment are always making more than the projected profits we normally forecast. This particular project where we are seated, the off-plan price was N60 million per flat. The secondary market sale of this property today is N120-140 million.
The project came into the market immediately after COVID in 2020. Majority of the people that invested in the project did so early 2021.
In Lekki, rental income is about N5-6 million, but the 3-bedroom flat in this property is going for N8 million. We put human face into the business. When you subscribe with us and you cannot, for some reasons, continue, we refund the money.
You have God Made Homes Courts Connect up to Phase 3. Where are you at the moment? What other phases is the market expecting from you?
We have two names that we normally give to our projects. God Made Homes Connect and Elizabeth Grace Court. On God Made Homes Connect, we’re currently working on the fifth phase while, on Elizabeth Grace Court, we’re on the sixth phase.
How many units do you have in each phase?
In the Elizabeth Grace Court, there are 15 units on one block while on the God Made Connect block we have 58 units that we are currently set to deliver. For God Made Homes Connect Court, we have 3/4 terraces and 2-bedroom with boys’ quarters. In Connect Court 5, we have 84 units.
Another thing you will notice in our projects is that as we progress, the projects get better in terms of functionality. Whenever any project is completed, we look back to check for mistakes made and ensure that they are never repeated on our next project. After two years of delivering, we go back to do what we call ‘occupancy evaluation.’ We enquire from the occupants their likes, dislikes and improvements suggestion. This has been of great help in terms of moving forward.
Nigeria’s problems today revolve around macro economy, particularly inflation, high interest rate and exchange rate. Inflation and interest rate seem to worry developers more. Construction cost is said to have gone up by 30 percent as a result; how true is this?
Basically, the construction cost at the moment is very high. If you look at it from the standpoint of inflation, subsidy removal and lending rate, you see that costs have gone up. The major issues with construction are finance and availability of semi-skilled labour. Availability of skill is more of an issue.
For inflation, we expected it. We also expected naira devaluation. So, we have all of these projections infused in our project cost. For the increase in cost of construction that is revolving around 30-40 percent is very correct and that is why we have been constantly engaging our stakeholders, telling them of things we will do differently to ensure their interest is protected.
We are not taking the approach of sitting and watching; we keep pushing and trying to solve the problem we are facing because it is a problem we have actually anticipated, just to ensure it does not have an adverse impact on our projects.
Do we see GMH repricing its projects and re-evaluating costs?
As construction cost goes up, house prices also goes up. So, definitely, new investors and buyers cannot get the same price as old buyers. Whenever we set out to do a project, there are phases of sales we put in place. We allot a number of units we want to sell at each stage with targeted sale revenue that can cover cost and still leave us with a decent profit margin. There are discounts given to early birds and those that buy while the project is on-going but once the targeted revenue is met, the discount is off and those buying at this time buy at premium sale price. The premium sale is a reflection of the market upon completion.
Inflation has reduced consumer purchasing power and for you as a developer, it has reduced your capacity to supply more products. It has also increased production cost. How are you coping in the midst of all these?
Demand is low because the purchasing power has gone down drastically. There is inflation and you are looking at naira devaluation. For you to be able to retain value now, you have to be a trusted and tested brand. We have to have very strong value proposition which is actually our core strength. Our flats can retain value because of how big they are. We can say we have the most functional flats in Lekki.
The project we are doing now is for 58 occupants where we dedicate about 500square metres of land space for recreation. That is going to be on two levels and includes the gym, lounge and swimming pool. It is a communal facility where people can gather and have interesting time. Those additional value is what is making us not discount our property value at this moment and we have not dropped the prices of our property in spite of the prevailing condition. That is why, despite the glut in the market, we are still able to stay afloat.
Specifically, what segment of the market do you address?
We address the middle class upwards to the elites. We are looking at going into mass housing very soon. I didn’t start real estate for profit making alone, but to solve a need. We are in the real estate space to change the narrative and, at the end of the day, we want to build a brand that would be an alternative name for real estate. What GMH Luxury is doing is to be able to build a formidable reputation overtime whereby we will become another name where real estate is being considered.
‘We are here to change the narrative’ is a sing-song among developers. But, in spite of the number of developers in Nigeria, housing deficit is rather increasing. What can you say is the size and value of that deficit?
We are looking at between 20-23 million housing units deficit and that is because of our population. Nigeria is over 200 million people but, sadly, out of every one thousand Nigerians, only 23 own a decent accommodation. When compared with Kenya and South Africa, you see figures that are a lot better at 790 and 650 respectively. And these are countries with lower GDP figures. The biggest worry for me is that the government is not doing enough. Buhari promised us eight million housing units in eight years but ended up delivering 23,000 units.
The value of the deficit as of 2018 was N2.1 trillion. Today, it is over N8 trillion and FMBN which is supposed to champion it is capitalised at N500 billion. So, when you look at the indices, you see that we cannot come out of this current reality unless government comes in to do something fast.
President Tinubu has appointed the immediate past MD of FMBN as the minister of housing and urban development. What does this mean for housing and mortgage in Nigeria?
I see the appointment as something very positive because that means having a round peg in a round hole. With his wealth of experience as the MD of FMBN, he will do well because, during his tenure, he did very well. He created some sort of insurance around mortgage. He laid the foundation for moving the NFH loan from N15 million to N50 million.
I believe that, as a minister, he will do well having moved to a higher pedestal. He understands the limitations and the current capacity of FNBN. I am sure the first thing we are going to witness is the recapitalization of FNBN and that will be a plus for the housing sector.
As a company, you have your projections. If you look at what lies ahead of you, where do you see God Made Homes in the next five years?
We have passion for development. At our first project in Gbagada, we were the first company to do an apartment building there which we were able to sell out. It is our expectation that between now and 2025, GMH will deliver another 401 houses in three locations – Gbagada, Lekki and Ikoyi.
Also, between now and 2030, we want to aggressively do, at least, a thousand units in Lagos, Abuja and Port Harcourt. We have a very firm commitment to be able to deliver a minimum of 4,000 housing units from now to 2030 as far as mass housing is concerned. All these projects are already in the works, but our strength is in developing multi-storey buildings and these take time which is evident in the number of buildings we have been able to deliver over the years.