Dr. Julius Oyedemi is the Managing Director and Chief Executive Officer of PWAN Plus, owners of Cedarwood luxury brand. He spoke to CHINEDUM UWAEGBULAM on the challenges of homeownership and other issues in the industry.
The real estate sector is facing challenges of dwindling consumer disposable income. How much has it affected the sector?
DWINDLING consumer disposable income, as you said, is a challenge. The question is how much is available to spare. What we are talking about here is money that one can spend after other pressing needs have been met. The question is, is there money to spare for housing? What is the average take-home of civil servants, who are fresh graduates? Newly recruited police officers earn between N45, 000 and N50, 000 and they work all the days of their service years. How much is the cost of a bag of rice, today? Is he not going to feed? Is he not going to clothe? Is he not going to pay house bills? Let us be realistic, there is nothing like disposable income in Nigeria.
People are only surviving by the grace of God and other means. But if you begin to say, what is the relationship of disposable consumer income and how it affects real estate, there is no disposable income for properties. The entry salary of a fresh graduate today, in a private establishment is N100, 000 to N150, 000. If a young man gets a job of N150, 000 in Victoria Island and he lives in Ajah, some kilometres away, the cost of transportation from Ajah to Victoria Island in one month would have taken two-third, if not 50 per cent of the salary. The young man will also feed; he is going to live under a shelter. At what point will he begin to think about investment in housing? The answer is negative, as that will not be in his budget.
Therefore, what is the way out? What strategy could be employed to reposition the real estate sector in post-COVID-19 pandemic era?
We need achievable goals, creativity and innovation. In a time of crisis, that is when the mind creates more innovations on things that can be enhanced in the environment and attract prospective buyers. For us to reposition the real estate industry, we need innovative ideas, innovative goals, ideas that can help turn things around because, without that, we remain where we are. For instance, despite the pandemic, we executed two projects. One is Cedarwood luxury apartments and terraces in Ajayi Apata estate on the Sangotedo axis; another is a Cedarwood luxury bungalow at the Lekki Free Trade Zone.
We are executing the third one now. It will amaze you that we are preaching luxury, we have promised people, beautiful architectural designs, we have built and employed the services of professionals, it shows that despite the pandemic, we still make our people enjoy affordable luxury.
What did we do? Number one, we made people see that this is luxury. Two, we ensured that subscribers have ample space, enjoyed other beautiful amenities and we also cut down on the costs. What should have cost people N45 million to own, we brought it down to N25 million, because in times of crisis, money is scarce.
We have to also think of others; if we say we are offering affordable luxury, we have to think of the common man; that’s why we brought the cost down. These are innovative ways. Whilst people are still enjoying what they want, the cost is not choking them.
Technology has changed the way we do business. How has online marketing fared in Nigeria?
Social media marketing has improved the real estate sector in Nigeria. And I can tell you, a lot of private developers are running in that direction. Social media is within the tips of the finger, and information can get to several people, and nations, simultaneously, in an instant.
Today, social media technology is driving the world. So, what we have also done is to make our business techy, improve on technological know-how, so that people can appreciate it. The social media space has helped, to reach out to a lot of prospective buyers.
People are complaining of increasing fraudulent activities in real estate practice. How can fraud be checked in the sector?
I don’t know what customers call fraud. But I cannot deny the fact that there are fraudsters in the industry. I can only speak for my brand and myself. Your question is how are we curbing fraudulent activities in our practice? Our core values explain it all. Our culture and ethical standards speak for us here. We believe that until we have given customers all they want, we won’t have a life. We have seen some developers, as soon as someone sends money to them, begin to live abnormal lives.
For us, it’s way beyond that. What we say is until every customer is happy we are not happy. So our ethical conduct and core values have helped us a lot in not falling into fraudulent activities. Our core values are accountability, responsibility, integrity, service and excellence. If you put all these together, there is no space for fraud. If you are accountable for all you do, you are responsible for all you do, combined with integrity and you serve people well to the best of your ability and you have an excellent spirit, there is no way for fraud to come in.
So, my advice for everyone is, when you’re looking for property, look for these values and virtues. That is the only way to overcome. Two, do they do what they say? Are they accessible? Are they resilient? If a brand has all of these, such a brand is devoid of fraud.
Nigeria still lags in access to performance indices or accurate information of supply, demand on property sales. Has this impacted foreign direct investment?
When there are no performance indices, how do you expect one to come and invest? I need you to understand, as an investor, how is the game being played, how is the game going. What direction is the game going? Is there value appreciation or there is depreciation? If we don’t have all these performance indices, there is no clarity for foreign investment. And that is the problem we have; it’s a big challenge.
The performance indices are not clear. If I tell you that the real estate in Nigeria is booming, at what percentage? What’s the real estate contribution to Nigerian Gross Domestic Product (GDP)? All these indices are not there. Apart from Lagos, where again in Nigeria is real estate booming? I believe what we are doing now is rehashing for a market that is yet to come. The real estate market has not come. All we are doing now is rehearsals.
We are doing trial and error. If we want to attract foreign direct investment, the policymakers and stakeholders need to come together. They have to create new policies that will foster and encourage the industry. There won’t be sharp practices. Somebody that wants to invest in real estate wants to know; if I invest how is it going to turn out? So the policymakers and stakeholders must come together at a round table, to see themselves as one. Why I said we are still rehashing is this, the policymakers are seeing the stakeholders as enemies.
Do you think that regulating the sector is ideal for the performance of the operators?
Regulation is ideal. But it should be regulations that will be reformed and reviewed from time to time. It is a dynamic sector. It’s an industry that you cannot predict what it will look like. The regulation should not be cast in stone. The regulations that had been working since 1978 should have been abolished by now.
Can we ask ourselves this question? Must the valid period of Certificate of Occupancy (C of O) be 99 years? If the policymakers can also think deeply, they will also know that they are short-changing themselves. How many C of Os have taken a turn of 99 years? So, they are also pushing revenue backwards.
Why can’t policymakers fix the tenure of C of O for 20 years; let the property owners come for renewal after expiration? That’s why I said, there has to be a round table discussion. The issuance of this C of O is even a problem. When you say that C of O is 99 years, will the person who is approving it live up to 99 years? Can he give a guarantee that he will be there? So why can’t we do business as a business? If we take these things bit by bit, Nigeria will open up and develop better.
We need all these policies. I shouldn’t be telling the government this, but I think if there is money in circulation, things will be better. Because it is this money we will use for housing development. Besides, if our mortgage banks are operational and functional, the cost of materials and the time of delivery by a developer should not be a challenge, because if you have all the necessary machinery to work with, you will know when to complete a project.
Apart from the policymakers, our financial institutions need to be looked into. Don’t forget, real estate is a capital-intensive industry. The obsolete policies need to be reviewed from time to time. Our policies are not even realistic and effective.
In Rwanda, if you want to apply for property documentation, you don’t need to meet anybody. Everything is done online. Our technological institutions need to wake up; things must not be done in an analogue way.
For me to get a C of O, I don’t need to know the governor, I don’t need to know the commissioners. If I have all my documents and pay statutory fees, why should I not be given a Cof O? But today, you and I understand that if you don’t know somebody, you won’t get those documents on time, especially in Lagos State.
The Federal Government suspended the site and service scheme some years ago. Do you think that kind of initiative that supports low-income earners to own homes should be revived?
Well, it is very complex. I’m aware that several low-income earners bought into site and service schemes that the government stopped, I rather think it is on the part of developers, of which I am one, to see how subscribers can be encouraged to develop property acquired under the scheme.
The reason is, when a parcel of land is not developed it’s like a refuse dump. But when development begins to come in, the value and return in investment begins to appreciate. I think the government wants value appreciation in all our communities. It is on the part of the developers to create such schemes and create avenues so that subscribers can commence development as soon as they buy into schemes. Of course, the site and service scheme is not a bad idea and the government should revive such schemes, create ways whereby subscribers can develop their plots.
Do you think Real Estate Developers Association (REDAN) has contributed to the development of the sector in Nigeria, especially in Lagos?
REDAN has made remarkable achievements to the best of my knowledge. The leadership of the Lagos State chapter is doing its best to synergise with the policymakers to see how the industry can be very robust.