Though a critical sector with great potential to bring a positive turnaround in the economy, real estate is not growing in Nigeria for reasons that are as nebulous as they are mundane. In this interview, EREJUWA GBADEBO, CEO, International Real Estate Partners (IREP), links the sector’s slow growth to land laws in the country. She also speaks what IREP as a foreign service provider is in Nigeria to do differently, plus other issues relating to real estate transactions. She speaks with CHUKA UROKO. Excerpts:
Yours is a foreign firm offering real estate services in Nigeria’s crowded market. How are you doing it differently?
In a nutshell, IREP, which stands for International Real Estate Partnership, is essentially a real estate services company. What we are doing is providing real estate services that are of the same quality with what you find anywhere else in the world.
We are trying to do it differently because we are a member of a consortium of partnering companies which are all around the world with different specialties. The idea is that an investor who wants the services of any of these partnering firms will come to us and we will fish around for our partners and that will add value to the investor. We want to bring a plethora of specialties around the world that can add value to what the investors offer. We serve as a one-stop shop for clients.
For reference purposes by potential investors, who are those your foreign partner?
Our partners, as I said earlier, are all over the world. We have a leading financial services partner in China whose specialty is in real estate. They are in Beijing, Shanghai, Hong Kong, Moscow, etc. If, for instance, you have an investment in any of these countries and you need financial services, we can link you up to this partner to provide you with the services.
We have another company in America called Global Expansion Associate and their specialty is in providing turn-key developments across financial services. So, if you have need for any turnkey financial solutions, they are the ones to go to, but you will be dealing with IREP.
We also have a multi-disciplinary interior architectural services company who are in South East Asia. If you have land to do office development or you want to do feasibility studies here in Nigeria, or you need funding, you just meet us and we help you access their services.
We have got another interesting partner specialized in verification, testing and certification. So, any one that has a building and wants it tested or certified, they can help him to get certified to ISO. We also have what I can call real estate transnational service company. If you want to bring in foreign investors and you don’t understand their language, this is where you bring in this company to help you out. They understand the language of real estate and can put together your contract in such a way that you are not short-changed.
In providing advisory services, to what extent do you influence client’s design and decision?
All that we do are geared towards helping the real estate industry. You can work hard on a building that has nothing to offer the industry and so nobody wants to touch it. There is a typical example of such building in Victoria Island. It is a commercial building and nobody has event stepped into it. A little bit of market research before the building was started could have helped the developers to create a better solution.
On the contrary, everybody would like to work on skyline buildings like Heritage Place and The Wings Towers which have been completed, and the Desiderata Tower on Banana Island which is still ongoing. There is another one we are involved in and we have influenced a lot of things in the building. It is a naira-lease project and this means there are no worries about fluctuation in exchange rate.
The point I am trying to make is that upfront information is very vital and people generally ignore them to their own detriment in the long run. If you put up a gigantic building that is difficult to maintain, nobody will go there. And when the mistakes are made, it is difficult to correct them in the long run.
After some months in Nigerian market, what has been your experience; what impression of the market do you have?
IREP is new in Nigeria but all of us who work here have been around a long while. The market is difficult, and my challenge is the assumption that because the oil price has gone up, everything in Nigeria is appearing to be out of recession. Actually, the recession in real estate is different. The sector has been in negative growth for eight consecutive quarters and in this last quarter of 2017, the growth was -5.09 percent. This was lower by -1.8 percent than the previous quarter. That quarter was less traumatic but it was that bad. Year-on-year, the sector’s growth was -3. 25 percent lower. All these impact on pipeline projects. As a result of this too, construction cost has gone up and so has real estate services.
What, in your view, is wrong in the real estate sector that is limiting its growth?
I think there is something we are not telling ourselves and that is annoying for me. There is a huge gap between where we are and where we are supposed to be. In my view, real estate is not growing because we have the most difficult transactional laws in the real estate market. You cannot tell me that someone who owns a property cannot sell to whomsoever he likes at whatever price he wants. Here, you have to go back to the government that did not help you to build the house for permission to sell the property. This is why our land is expensive and registration is difficult and takes so long such that transactions cannot happen at the kind of speed they are need to.
Which of the land laws are you referring to—the Land Use Act or the Lagos State Land Use Charge? What do you say is wrong with the laws?
When I talk of the land laws I mean everything whether it is federal or state government laws. Let us look at the Lagos Land Use Charge, for instance. Lagos State government has made matters worse by changing the land use act which had started making life easier for Lagosians. Before now, we had rates which the landlord and the tenants had their respective responsibilities to pay. Now, they have made it punitive and it is coming at a time when people are running away from real estate sector and the market.
What they have done has the capacity to scare people away from Lagos to neighbouring Ogun State. Recall that during the time of the crisis in the Niger Delta, foreign workers or investors who had business in Nigeria chose to stay in Ghana and flew from there to Nigeria and back after transacting their business. We did not learn from that and it means those who have property in Ogun should start thinking of moving to such areas and have their peace.
I believe there won’t be a reduction in the population of Lagos, but there is certainly going to be a reduction in the number of those who would pay the tax, leading to millions of citizens that would be out of job.
Source: Chuka Uroko