An expert in real estate has said that for the industry to grow and contribute more to national development there is an urgent need for restructuring, not by the government but by practitioners themselves.
He added that the industry was plagued with a structural problem that stakeholders could deal with, without the government.
This was the view of the Group Managing Director and Chief Executive Officer, Global Property & Facilities International Limited, Dr MKO Balogun, who equally noted that stakeholders must take the lead in revolutionizing the real estate industry, before engaging the government on infrastructure.
“Those of us in the industry need to think beyond just building. We need to allow the economy grow normally. Developing places without people to take them up is like forcing the economy to grow. Our sector has not grown in the last three years, it has been negative but with the money that has been invested, we expect it to contribute more to the economy but we are not seeing that,” he said.
Balogun explained that for a long time, developers had placed emphasis on supply-led housing development which had continued to cripple the economy by tying down investments in the industry while the country’s housing deficit continued to rise.
Stakeholders had constantly decried the glut in the property market while the number of those who really need accommodation continues to rise.
According to Balogun, in the last two years, there has been an oversupply of properties in major cities of the country, especially luxury development without a commensurate disposable income to take them up.
He stated that according to findings, more than 60 per cent of those who need housing, do not need luxury homes but require compact and functional homes such as one and two bedroom apartments.
He said, “We have more houses in Lagos than is required, there are more offices than people need. We have had an oversupply of three and four bedrooms. One thing we have not learnt as a people is that we need to create a pipeline, create one and two bedroom apartments so that these will graduate to two and three bedrooms and another set will move into the one and two.
“For instance, a young person who has just got a job can move into one, when he gets married he moves into two and when his family begins to grow, he goes to three. We have 90 per cent of residential as three and four bedroom houses, whereas the demand on residential for one and two bedrooms is more than 60 per cent. If we don’t address that, we will just continue to invest in property that will lie fallow.”
“We are all complaining about gridlock in Lagos. One of the things I have noticed around the Lekki/Epe Express way is that all the major developments are around the traffic point, because developers are not paying attention to growing population and government plans. When you develop a place, you think of projected users but that was not factored in on the Lekki/Epe corridor so we have a lot of residential developments creating traffic bottleneck in the area which impacts the economy because of lost man hour,” he said.
On the retail side, Balogun said there had been massive development but with less focus on functionality.
“The retail market started aggressively but what we are doing is copy and paste, unfortunately most of the people we copy from do community malls. You can’t build big malls in the middle of nowhere and expect to have full occupancy. The challenge with the industry is there are a lot of vacant properties and funds are being tied down, so there is no way the economy can feel the impact,” he said.
He added that office development had also not fared as high grade office buildings in major cities had remained vacant while others had low occupancy.
He said, “We have not learnt our lessons, we continue to do the same thing and continue to get the same results. What we need to do is to have a rethink, we should build to fulfil demand not just build because the money is available, the economy will not reflect the investment in the real estate industry if we don’t change these things.