• Sunday, May 19, 2024
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Real estate operators worry as data drought dampens investment

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Real estate operators have expressed concerns that the dearth of credible data in the sector is hampering investments in a country where the housing deficit is huge.

The sector has seen a considerable amount of capital coming from individual, institutional and private equity investors over the years.

But given the size of and value of the country’s market, operators in the market worry that investment in the sector remains largely sub-optimal. As at 2023, the Nigerian housing deficit was estimated at 28 million units while the market value is estimated at N21 trillion.

The country is said to be on steady population growth of about 2.4 percent annually, meaning that the market will continue to grow, yet the market is not seeing the kind of investment that will be enough to march the potential.

According to operators, of the many problems confronting investment in the sector, lack of credible data stands out and it has a lot of implications for both the sector and those with strong appetite for good yield.

They lament that the size of the country’s housing deficit, which is estimated at between 17 and 28 million units, remains a matter of conjecture, just as the level of homeownership estimated at 25 percent of the country’s population is also a product of guesswork.

“It is necessary we have credible data to enable us to know how real the deficit we are talking about is; it may be that we are over-building or have not even scratched the surface,” an architect who did not want to be named told BusinessDay.

According to the architect, houses are being built every year in Nigeria and at the same time, houses are being destroyed by fire, flooding or the burning of houses by bandits and insurgents in some parts of the country, and there are no records of these incidents.

For Paul Onwuanibe, Group CEO of Landmark Africa, whatever is not being counted does not count. He said people can set many goals but the moment they start measuring and tracking them, there is a different level of attention and priority given to that goal.

He disclosed that his company knows how important data is, which is why they count everything. “At any point in time, we know how many people have come to our ecosystem, our daily revenue, the number of Landmark Citizen App downloads, and our power consumption because we count it all,” he said.

Continuing, Onwuanibe, whose company is doing a 28-floor residential development known as Landmark Waterview Apartments, noted that Nigeria has a data problem, recalling that “in 2022, Nigeria ranked 60th in the Global Real Estate Transparency Index which is an index released by JLL and Lasalle Investment Management that tracks the availability, accessibility, and quality of different real estate metrics”.

“For developers, this is a problem as the gap in data makes it difficult to track and identify market trends and properly cater for market demand which will reduce project profitability,” he said.

For investors, he added, the same data is used to predict project viability while lack of data erodes investor confidence in the market. According to him, developers and investors alike are left susceptible to fraudulent transactions from the buyer and seller side which reduces overall trust in the market.

He hoped that with new players who are coming up to fill the data gap, more should be done to amplify their efforts.

Onwuanibe noted that, by its nature, real estate is a capital-intensive industry, which means that developers need a lot of funding to do their development. “But we have been fortunate to have debt and equity financiers who have supported the Landmark journey and supplemented our business to further develop the Landmark Lagos vision,” he said.

“We have many proud moments over the years of being able to raise over $60 million of funding to achieve a PwC-endorsed book valuation of $250 million. The best part is that our stakeholders don’t only benefit financially, but they get to enjoy the benefits of the ecosystem they helped create,” he added.

He said that the beauty of developing the N1 billion Landmark Lagos, which is a business, leisure and lifestyle destination in West Africa, is that you get to relax and unwind all in one location.

“However, we are now at a critical point in our journey as we are working to restructure a $30 million dollar loan into Naira so that we can pay back our obligation and continue to create shareholder value for our investors. As mentioned earlier, the reforms have made navigating this period challenging, but we are fortunate to have grown our business substantially since we took out the loan six years ago,” he said.