October 25, 2019

“Unravelling the Real Estate Sector Challenges” – Notes from the 1st RICS Nigeria Group Conference

Yemisi Okunowo

Royal Institution of Chartered Surveyors (RICS) Nigeria had its first group conference at the Sheraton Hotel, Ikeja this month with the theme, “Unravelling the Real Estate Sector Challenges”. The conference had panel sessions on regulation, development, and funding with panelists contributing an intense discussion that dissected persistent issues and proffered solutions.

The notes below provide summary points from the keynote address and each of the panel sessions held during the event:

The keynote address was delivered by Adebola Ibikunle, Commissioner for Housing & Urban Development, who represented the Governor of Kaduna State, Malam Nasir El-Rufai. She spoke about the recent partnership between the Kaduna State Government and Sterling Bank to provide single-digit mortgages in the state and other measures the State and Federal Government is carrying out to address housing issues. She also cited how most government-sponsored housing projects in the past have focused mainly on the elite class and end up becoming unaffordable for those who truly need it. 

Regulation was the topic of the first-panel session. It was moderated by Sabrina Opere, a Real estate consultant at Deuxville Ltd. Panelists included:

  • Emeka Eleh, Senior Partner, Ubosi Eleh & Co.;
  • Arc. Dipe Foluso A., Permanent Secretary, Physical Planning, Lagos state;
  • Jumoke Akinwunmi, Co-founder, Alitheia Capital;
  • Hakeem Ogunniran, MD, Exima Realty.

Panelists noted that the titling procedures are of huge importance to investors and lenders so the government needs to enable stakeholders to obtain these titles seamlessly, as their strength and perfection are critical. Jumoke Akinwunmi suggested a strong technological drive industry-wide to aid standardization of processes. She also noted that collaboration between the private and public sectors should be standard practice as this would make procedures faster and more efficient.

“Unravelling the Real Estate Sector Challenges” - Notes from the 1st RICS Nigeria Group Conference
“Unravelling the Real Estate Sector Challenges” – Notes from the 1st RICS Nigeria Group Conference

Arc. Dipe Foluso who was represented by TPL. Osifuye spoke about how investors get it wrong by approaching the land bureau first to perfect their titles. He corrected that and said the right action is to initially lookout for the development plans of Lagos State which will give guidance to whether the location can be used for the plan of the project. 

Development, was the topic of the second-panel session. It was moderated by Annette Oke,  an associate partner at CEP Ltd. Panelists included:

  • John Agele Alufohai, Managing partner, Costec Consultants;
  • Sammy Adigun, Director, Echostone Ltd;
  • Tope Adegbonmire, Real estate practitioner,
  • Femi Adewole, MD Family Home Funds

In this session, panelists reiterated their complaints about the high charges from the government and the long time it takes to get approval. While discussing mortgage rates, Sammy Adigun mentioned that stakeholders are pushing for special packages for civil servants e.g Police officers with special mortgages rates. On technology, panelists pushed for standardization in construction to create a construction system that will guide other construction projects. Samuel Adigun spoke about how Echostone already uses a system in its developments to drive similar construction processes. He also mentioned how Echostone is also working on an in-house training school in a bid to systemize construction. Femi Adewole mentioned that considering the high unemployment rate in Nigeria and the vast amount of jobs created through construction sites, technology should be harnessed appropriately in a way that doesn’t see construction workers on-site become irrelevant.

Funding, was the topic of the final panel session. It was moderated by Gbenga Ismail, Principal partner, Ismail & partners. Panelists included:

  • Niyi Akinlusi, President Mortgage Banking Association of Nigeria;
  • Femi Adewole, MD Family Home Funds;
  • Andrew S. Nevin, Chief Economist, PwC;
  • Kunle Osilaja, Real Estate Consultant;
  • Hakeem Ogunniran, MD Exima Realty;
  • Jumoke Akinwunmi, Co-founder, Alitheia Capital.

Andrew Nevin cited that capital is already in Nigeria – just that it is dead. He suggested that reforms should be implemented to unlock dead capital. Hakeem Ogunniran, who has led lots of fundraising for real estate in the past mentioned that the sector has to find a way to de-risk the process of investing and make higher returns as there are other competing asset classes. Commoditizing real estate to generate liquidity is also essential for the sector.

“Unravelling the Real Estate Sector Challenges” - Notes from the 1st RICS Nigeria Group Conference
“Unravelling the Real Estate Sector Challenges” – Notes from the 1st RICS Nigeria Group Conference

Kunle Osilaja spoke about the wrong method valuers use in their valuations. He urged valuers to change their mark-to-market method of valuation which still recognizes the same value of a property from 6 years ago as the same value till now. Niyi Akinlusi also spoke about the mortgage interest drawback program by CBN which subsidizes interest for those lending mortgages.

In conclusion, the Nigerian macro-economic environment and government policies have not created a supportive environment for real estate to thrive. Stakeholders have not been impressed with the progress so far but seem ready to implement solutions and collaborate for a more valuable real estate sector.  

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