‘Our vision as a company is to develop at least 20percent of Eko Atlantic City’
In this interview with CHUKA UROKO, the management of the Arkland Group International Limited speaks on how their company has fared as real estate developers faced with the impact of COVID in the industry. They also speak on their developments, investment in Eko Atlantic City and the prospects for the Group.
The Coronavirus pandemic crept into the global economy in 2020 and many businesses including real estate were swept aside. Many are still smarting from the impact of that pandemic. What is your story; what kept you going?
We will say a number of factors, but one is our vision as a company we are not here for the short-term but for a very long time, for instance we are in Eko Atlantic city, our vision as a company is to develop at least 20% of that space. And 20% of Eko Atlantic cannot be developed in 5/10 years, it is long term so we are bound by our vision, that gives us the tenacity to move on.
Secondly, it’s our planning; we had concretized plans on our projects before COVID. Resources such as finance, machineries and personnel had been put in place, we were simply following the plans to weather the storm.
Also, we leveraged on technology to reach out to clients and close deals. Even though there was a lock down, we engaged our clients online, phone calls, telemarketing, email broadcast, filling KYC forms online, online virtual tours, payments & receipts were generated online. We even had a lot of clients coming that period.
So, it didn’t impair sales so much but construction activities on site and immediately the lock down was lifted, we resumed construction activities, so we were able to pull through.
But were you able to close deals during that period?
Yes, deals were closed, for instance; if you want to buy a property, you can do it on our website, fill the forms, we have people at the back end to engage you, we have virtual tours, if possible, online and payments are made online. Transactions basically, were going on, with the pandemic, we found new ways of doing business, it’s the new normal, and we had to adjust to it.
The resilience of real estate investors like you and the sector itself was demonstrated recently with a 3.85% growth recorded by the sector in the second quarter of 2021. Besides this resilience, what other factors made this growth possible?
There is a saying that tough times do not last, but tough people do. So, as we always say, resilience. But also, if you look at the situation in Nigeria, where else can value be stored and money kept with the constant inflation? Real Estate has proven, over time, not just to store value, but also an opportunity grows it.
Before now, if you look at the treasury bills, everything was on a low, although recently there have been improvement, FDI’s were on a low, for instance; if you bought a property of N10,000,000.00 (Ten Million Naira) and the bank were giving you 1% (one percent) as interest, if you have N12,000,000.00 (Twelve Million Naira), how much wealth will you generate? Rental income was beginning to show better returns than treasury bill. This gave room for more investors to look in the direction of real estate industry as opposed to their naturally playing on the side lines.
Some analysts still see the growth in this sector as fragile. Their explanation is that there are serious threats to this growth, coming especially from macro-economic issues. Do you share this view? What other threats are there for the sector growth?
You already mentioned some, however, the most critical issues we are faced with is the currency devaluation, increase in raw materials and the pandemic; all these have posed massive shortages across board.
Also, the mortgage industry is an untapped opportunity. If we can get the mortgage industry right, the sector will see far more growth than what is being recorded.
The huge deficit in the housing sector translates into opportunities for investors, yet the sector is not among the top three performers in the economy. What would be your suggestions to make the sector contribute significantly to GDP and, by extension, economic growth?
The market is deep. We take the view that we have 17,000,000 (Seventeen Million) deficits in the country. In Lagos, we have 4,000,000 (Four Million) deficits. But one major thing that will move people is mortgage. Once the mortgage sector is developed properly, it will drive growth in the industry and across other industries.
Over the years, the Housing sector has faced policy inconsistencies that have not only slowed growth, but also impeded home ownership opportunities and compounded the deficit. What do you expect the government to do in the sector to change this narrative?
First of all, we think developers need to come together and form a pressure group that will lobby government and make them understand the impact of their policy to the industry.
Government has a lot to offer, but they never really have the political will to implement. So, if the government will make the currency stable, that will encourage investors to come in, knowing that they can easily trade with their money. When the currency is stable, people and investors can plan well.
Thirdly, government should channel a lot of efforts towards decongesting the ports as the incessant delays incurred on demurrage on goods wipes out profit margins.
Are you a member of REDAN and how active is it in achieving its purpose as a pressure group?
Yes, we are members of REDAN, but we believe there is more to be done in using REDAN as a voice to enforce change.
Now, tell us; what preoccupies the minds of Arkland Group and its management at the moment with reference to your quality and affordable luxury products offering?
Arkland Group has been around for a while. We have done developments in Abuja and tried our hands in the Abuja market, we have developed across Lagos Island and we needed something more challenging. As developers, we want availability of land, quality infrastructure and Eko Atlantic City presents all of that; it is a world class city.
We wanted to up our game as a development company by beginning to develop world class offering to our clients and we asked ourselves where the best place is. It was so obvious; the choice was clear to us and we decided to go there.
That is why we moved in and started our first project, the A&A Tower. It is a tower of over 22 floors comprising basement parking, car parking over 5 floors, office spaces, shops, residential apartments comprising 2 and 3 bedrooms.
We are doing it to showcase what is possible with the Nigerian spirit; what anyone can achieve when determined. We wanted people to see the kind of properties we see when we travel and to have something like that here. It’s that drive that took us there, but one of the things we do is to come into the market and give value to our clients. So, we try to make it as affordable as possible. Our prices are way below the market and we are offering the best in class. That development has been an amazing success. The acceptance of it by Nigerian is quite commendable.
What has been the level of interest since 2019 when you started?
We are the first purely indigenous company doing development in Eko Atlantic City. When we started that project, a lot of people thought we were crazy because it was such an audacious project. I can tell you that the project has opened doors for us; it has led us to start our second one and even more Nigerian developers are now coming into the city. They are beginning to see that there is an opportunity for everyone there, and we have shown that there is growth in that city.
Can we measure this level of interest we have there, say in percentages?
Before now, it was a virgin environment. Before we came in, there were two developers in the city that had done Eko Pearl and Azuri Towers. These are spectacular developments in their own rights.
The first development was accepted so much that there was a demand for the second development. So, we are on our second development in that city. Three more Nigerian developers are following our footstep because we have shown the way.
How affordable are the apartments because you said you are targeting middle class Nigerians?
Our vision is long term so we are not here to make profit on our very first project, we started with A&A and our price ranges are 40% (forty percent) below what the market price is in the City. So that afforded a lot of people who were looking at the city but thought that it was beyond reach, an opportunity to buy.
We have consultants from all over the world. The construction company handling the job is top notch. I implore people to come into the city to see infrastructure and the quality of what we are doing. We also offer people the chance to spread their payment over time within the construction period, we call it our Arkland advantage, with 0% interest.
How can a commoner own a property with Arkland Group being that some persons will consider your price expensive?
In Arkland Group, there are several ways to own a property without money, one of which is by bringing value. We believe everything is not about money, we can convert your value to property ownership. For example, you can bring several buyers to buy or invest in our property, and such value can be converted to property ownership.
In Nigeria, the slowdown in economy has affected income across board, leading to a significant drop in consumer purchasing power. What gives you confidence to continue to play at the luxury segment of the market where demand and consumer behavior are elastic?
Our projects are doing very well, because people are patronizing us. People first of all see it as a store of value; they see it as an avenue to get value for their money and interest. It is always a way to build equity. We encourage people to come in when we start, and as construction progresses, the value keeps appreciating.
In time of low demand such as we are in, products suppliers like you seek and adopt strategies that stimulate demand and attract buyer-interest. What strategies have you adopted in this circumstance?
What potential investors will want to see is trust and security of their investment, and we have demonstrated this overtime in delivering our projects. So, that has endeared some clients to come and keep passing the good news around; they become our marketers.
Secondly, our prices are below the market, so they know that it’s a competing investment vehicle; that once you put money in our project, you will make money by the time the development is finished, so this has endeared people to come.
Technology, notably Proptech and Blockchain, are increasingly gaining traction in the real estate industry. How much of this do you leverage in your operations? What benefits have you seen?
Anyone who doesn’t embrace technology is backward. The new normal is technology. Someone who is not technologically aware can’t do business. So, we have tried to bring our products to various people and beyond the shores of the country by marketing online, doing virtual tours online, managing the office online and we are still exploring ways to expand it further.
Like human beings, businesses are also organic. Talking in terms of growth, what are your projections for Arkland Group in the next decade of delivering luxury in the market?
We have positioned the company to outlive us and, to do that, our plan is to come to the stock market and list within the next five years. We used to be in one segment of the market. Now we are beginning to go along the value chain; we are beginning to handle even far more affordable housing. We want to go into that market and open up that space, provide the same Arkland qualities that we have in other places, because we believe that the bottom pyramid is saddled with a lot of opportunities and we want to play in that space.