As a sector that responds directly and quickly to the state of the economy, the slowdown in the Nigerian economy is impacting on real estate in more ways than one, leading to subdued demand for assets and a steep rise in vacancy rate especially at the high end. Adetokunbo Ajayi, MD/CEO, Propertygate Development & Investment Plc, in this interview with a select group of newsmen, sheds light on the sector and also speaks on other related issues. CHUKA UROKO was there. Excerpts
These are not the best of times for the Nigerian economy. The economy is down and this affects every sector. How would you assess the real estate sector in the light of the prevailing situation?
There were difficulties faced in both the industry and the general economic environment in the nation in 2014. The trickledown effects of these challenges translated to a slowdown in demand for real estate products and services which was felt by our organization and other industry players. In addition, the run in from the last quarter of 2014 through to the recent elections and handover of government power threw sizeable uncertainty into the general environment. However our organization has continued to progress in spite of these challenges. Our targets during the period were not fully met, but we still had notable achievements indicative of the organization’s resilience and continued growth.
Your company is well known for its investment advisory services. Could you give us insights into this segment of your business?
In Propertygate, we believe knowledge is the key to making a successful real estate decision, whether it is a personal development for use or extensive and intricate real estate ventures. Real estate entails huge capital outlay, even for supposedly minor development. We have painfully watched investors make costly decisions on real estate location, development, investment idea, implementation mode, financing structure among others. Through our advisory portfolio, we help our customers and this we do leveraging our domain expertise and wealth of experience. We help them make informed choices and develop projects best suited to their needs including investment objectives.
Our advisory services portfolio includes generating sound and viable development and investment concepts; evaluation and analysis of existing development and investment proposals; designs and construction; development monitoring to manage pitfalls between conception and delivery.
We also give advisory support to lenders and institutional investors by helping them analyze real estate proposals before they commit their funds; property rehabilitation through re-conceptualizing the investment potentials of less efficient properties and putting them on the path to value and growth; and helping public and private sector institutions in building frameworks, policies and processes to address fundamental real estate issues. We are pleased to say that our clients are reporting tremendous benefits from these services.
As a major operator, what is your forecast for this sector given the unfavourable operating environment in this country?
The well being of the general economic environment will obviously impact the real estate sector. A troubled macro-economic environment is a threat to the subsector. We are however optimistic there will be an improvement in the general economic environment if we are guided by vibes from the new government.
Regardless, we believe the huge need for real estate products and services will be an edge for the subsector. We expect to see heightened competition, innovation and rigour among players in a bid to woo consumers with purchasing capacity. Unfortunately, we may also see untoward practices from some operators who are bent to stay afloat if the inclement environment lingers.
You have always held an optimistic view on the growth potential of the real estate sector. Where is the industry going from here with the downturn in the economy?
The real estate industry in the country is still hugely untapped, and as such affords opportunity for exponential growth. Though currently hindered by a number of factors, we believe they will be resolved with commitment from government and all stakeholders.
What are those factors that can enhance growth in the sector?
Some of the factors are a functional mortgage finance for buyers; a friendly interest rate on development and investment debt capital; provision of public infrastructure, particularly roads; functional urban planning and regulations; robust enforcement; access to quality and affordable land for development; sound government policies and administration for conducive operating environment; and capacity building for players in the development chain leading to higher efficiency.