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Only government policies can solve housing deficit
CHUKWUNONSO OBIMMA, chief executive officer (CEO), Masterbuilts Architects & Engineers, a building construction firm based in Asaba, Delta State; in this interview with Business A.M.’s Cynthia Ezekwe, the professional architect and real estate expert shares insights on the economic relevance and market opportunities in the sector. Excerpt:
What is your assessment of the real estate industry and its contribution to the Nigerian economy?
The real estate sector can be considered as another new oil boom in Nigeria due to its rich value chain and wealth creation capacity.
Looking at the employment aspect of it, a lot of young graduates are fully employed in the real estate industry, some are into housing, some are under corporate bodies, marketing, realtors, and construction proper. It helps the government to reduce the high rate of unemployment. Also, the real estate sector contributes over N20 trillion to Nigeria’s GDP.
A lot of people currently operate in the real estate sector, providing housing facilities for clients, individuals, and corporate bodies. The real estate workforce, which includes architects, engineers and other professionals, has contributed immensely in building the country, economically and politically; otherwise, and going forward, we have greater prospects in Nigeria just like the agricultural sector.
What are the unique attributes that make real estate investment a financially rewarding venture for real estate players?
I will narrate a story to explain how real estate is a financially rewarding venture. In 2019, I was part of a group that sold land for N1.9 million. In 2021, I went back to that same area to buy another piece of land there, it was sold for N16 million, so you can see the gap.
So, the industry is quite attractive; you can buy land when the land is not yet accessible and remote, for as low as N100,000 and involve other realtors to develop the area, and introduce a drainage system, access roads, power supply, and within the space of two years, the land that you bought for N100 thousand can be sold for N5 million. So it is quite an attractive scheme. It doesn’t have any fiscal risk; the only risk there is buying genuine land. It does not depreciate, it only appreciates with time.
Somebody actually bought a piece of land for N20 million, and the upper week he sold it for N80 million; so it is all about knowing a prospective and booming area, and accessing it on time, before the real clients.
You know, what realtors do is first of all identify a prospective area, securing it, then remarketing it to the real clients.
Real estate is a broad scheme, there are people that buy land, there are people that buy land, build houses and then sell houses, and there are those that buy already built houses, so it depends on the category you want to venture into.
Real estate is very attractive, very promising, so anybody that chooses to go into real estate is making a good decision. It doesn’t have any disadvantages, and the good thing about it is that you don’t need a capital to start. You can start by marketing a land that is for sale. For example a person that wants to sell a land can fix the price at N2 million, but you can market it for N3 million, automatically N1 million is yours if it goes successfully, and the agent’s 10 percent fee will be to your own advantage.
So you can start from scratch by posting on your social media handles, and over time, you will set up your office and register your company, from there you can boost the company and employ workers. It is very attractive and anybody can venture into it. It doesn’t require any major skill. The only skill that is required in real estate is being able to market a land, being able to identify marketable land and being able to convince the client to make a purchase.
In your opinion, what are the challenges hindering the development of the real estate industry in Nigeria?
The major challenge is the government policies. There are some areas where without a proper road map, a company can procure land and sell to the buyers. At the end of the day, they find out that the area is being reserved by the government. So, government policies affect real estate in Nigeria.
As I mentioned earlier, you do not require much capital to start a real estate business. But if we want to go farther, like borrowing loans from the bank to develop an estate or develop a property in the form of mortgaging it, there is no set up policy or established rule that will monitor, regulate, and guide the process.
There are lots of fraudulent activities that get involved in the system, and because it is not regulated or monitored, fraudsters have gotten into real estate, and most times they use the scheme for money laundering as well, which is quite challenging.
How do you think these challenges can be addressed by the government or stakeholders in the industry?
Well, introducing the right policies, learning from other countries that are doing it better, and implementing what they are doing in terms of mortgage housing, regulatory bodies, and policies, will prove efficient.
You know the government as a whole has a lot of work to do. It’s just that their focus is mainly the capital territories and urban areas. So it is actually a challenge for real estate experts that are going into the sub-urban, because when the environment is not favouring them, they find it difficult to market some of the properties properly, and adequately.
So, they need to start doing the right thing, introducing the right policies, and making the policies effective. You know, one thing is to make a policy, and another thing is to implement it effectively. The real estate stakeholders don’t have much to do about this. It is majorly government policies that would do the needful.
How would you describe the level of competition within the real estate industry? Would you say it is healthy, highly competitive or fragmented?
It is very healthy, there is no competition in real estate. Back in the days, my mentor always told me that one good thing about real estate is that you will never go hungry. Because there will not be a time when you will say that there is no land to build. Since time immemorial, man has been building houses, and has not covered one-fourth of the landmass of the universe, so you see that there is no time you will say that there is no land. The thing is knowing the pathway to follow. Some people know their onion in the field, some people copy others and emulate the kind of techniques they use.
For example, in Asaba here, there are lots of real estate managers, and real estate companies, and you will find out there are some that sell land for N5 million, and another company in the same area might be selling for N4 million. You will find out that the person selling N4 million is selling faster than the one selling N5 million. To you, it might look so competitive, but it is not, because overtime, by the time the person selling N4 million must have sold his own, the person selling N5 million will increase his own because the area will now be a target, and from N5 million, they can increase it to N7 million. Just knowing your onion, knowing when to go down or go up. So to me, there is no competition in the system. Just like the saying, “the sky is too wide for all the birds to fly.’’ There are so many routes to follow in real estate, it depends on what you really want.
According to the Borgen Project report, an estimate of 24.4 million homeless people live in Nigeria. This accounts for roughly 13 percent of the nation’s overall population. How do you think the real estate sector can help to address this issue?
As I have said earlier, the sector has little or nothing to do about it because it depends on the government policies. We have different specifications of housing, such as low cost housing, high cost housing, high density housing, low density housing, low population housing etc. Most of these housing specifications are basically available to government workers, because of the method of payment.
In other countries the government takes care of the housing. It can come in form of mortgages, or installmental payments by the citizens, but here in Nigeria, the citizens cater for their housing.
So the housing deficit in the country will be tackled to a great extent if the government can make policies and implement them. The policies that will take people off the street and start giving them the minimum standard of housing, will go a long way.
