Though joint venture (JV) agreements may not be new in the Nigerian real estate market, in the last couple of years, the market has seen growing interest and confidence in JVs now sweeping across private and public sectors of the economy.
While JVs means shared risk, guaranteed capital inflow, increased volume of production and increased expertise based on experience, to the products and services consumers, JVs mean quality assurance and timely delivery of products and services, all things being equal.
This, exactly, is what the new JV involving CEBRE and Excellerate promises to offer. Following the end of its JV agreement with Broll Property Group CBRE Group, Inc. (CBRE) formed a joint venture with Excellerate Property Services (Excellerate) to meet the growing demand for high-quality real estate services in Africa and the Middle East.
Broll, a leading African commercial property services firm, has been in an affiliate agreement with CBRE since 2004 to serve their global clients in key countries such as Nigeria, Ghana and South Africa among others. Since coming into Nigeria, Broll has been offering top notch services in the country’s real estate market.
In most cases in Nigeria, investors or developers collaborate or go into JVs for reasons of capital inadequacy, inaccessibility or unaffordability. Udo Okonjo, Fine & Country’s CEO/Vice Chair, underscored this at a recent real estate forum in Lagos where she stressed the need for collaboration in environment where credit is dry and risk is high.
“The case for collaborating in real estate cannot be stronger than now with a sluggishly recovering economy, where there’s not only massive infrastructure and protracted housing deficit, but also huge amount of underutilised and idle asset,” she said.
But for CBRE Excellerate JV, it is a case of shared expertise which is why, according to an Estate intel report, the JV will merge CBRE’s facilities management operations in Africa and the Middle East with several of Excellerate’s businesses, including corporate real estate services, facilities management, valuation and project management services.
“Our partnership with CBRE aligns with our core values and by structuring our relationship as a joint venture, rather than an alliance, we will pool our respective skills and expertise and foster intense collaboration, which will drive superior client outcomes,” Gordon Hulley, CEO, Excellerate Holdings, assured in his comment on the new JV.
The new JV will find the Nigerian market an interesting destination which is confirmed by Andrei Ugarov, partner at PricewaterhouseCoopers (PwC) who said, “Nigeria is still a viable market. Capital is a challenge but deals are happening. It means funds are available. Players in the industry are making use of other financing options to fund real estate development project ts”.
Meanwhile, Broll Group has moved on and is currently pursuing a Black Economic Empowerment (BEE) acquisition deal. The BEE programme was launched by the South African government to redress the inequalities of Apartheid by giving black South African citizens economic privileges not available to Whites.
Explaining the circumstances that led to their over a decade agreement with CEBRE, Jonathan Broll, chair of the Broll Group, said, “as South African society changed, we realised we have a responsibility to ourselves, our shareholders and the public to conclude a BEE deal as soon as possible. After a protracted period of negotiations to be acquired by CBRE, it became apparent that an agreement satisfying this condition would not be reached. I believe that events have therefore unfolded to the advantage of all parties”.
Malcolm Horne, Broll’s Group CEO, also explained, “we maintain a diversified portfolio of clients and services across 16 countries in Sub-Saharan Africa…Our success is built on relationships, high performance and service excellence, and we continue to actively seek out new business opportunities.”
It should be noted, however, that the formation of CBRE Excellerate is subject to customary closing conditions, including government approvals, and is expected to be completed in the first half of 2019.
Excellerate’s property management operations in South Africa and its soft-services business, which provides cleaning, security, and catering services across Africa, will not be part of the joint venture and CBRE will continue to operate a wholly-owned advisory services business in the Middle East and North Africa.