Pastor Ayo Jagun is the former Chairman of the Nigerian Institution of Estate Surveyors and Valuers, Lagos Chapter. He’s one of the brilliant Estate Surveyors in Nigeria.
He’s one of the most qualified and most respected members of the institution, and highly regarded when it comes to real estate matters.
He is a Certified Facility Manager (CFM) of the International Facility Management Association (IFMA) based in America, a Certified Facility Manager of Japan (CFMJ); member of the Project Management Institute (PMI) of America; Fellow of the Royal Institution of Chartered Surveyors (RICS) of United Kingdom (UK) and fellow of the International Facility Management Association (IFMA).
He is the Chairman of the Property and Facility Management Faculty of NIESV and a past President of the Nigerian Chapter of the International Facility Management Association (IFMA). Pastor Jagun is an award-winning professional, who has several awards in Nigeria and abroad to his credit.
A few days ago, City People Senior Reporter, ISAAC ABIMBADE, engaged him on the boiling issues in the real estate sector. As usual, ESV Pastor Jagun gave his own view of how government can use real estate to cushion the effect of the recession on Nigeria’s economy. He also spoke about the landlords and tenants and how they can cope with the tough times. Below are excerpts of the interview.
How will the economic recession affect the real estate sector?
It’s going to affect real estate in many ways because people need fund to transact business. And seriously it has affected developers because there’s no fund to back up demands; the effective demand is not there. Even in the real estate sector, rents are in arrears now because people are struggling. People have lost their jobs and it has a rippling effect on the economy.
The government should come out plain to tell us how the economy is and not try to window dress it. If we are sick, they should tell us we are sick so that we can look for medication and we should also look inward. The real estate sector is one sector that can transform the economy. There’s nothing we do that is not done on land.
The government should seek how they can also make the sector become attractive because if they make it attractive it will boost the economy somehow. The real estate sector is affected by the recession. That’s the truth!
Sometimes we’ve had issues with landlord telling us that this person hasn’t paid his house rent. You have someone who has been paying his rent constantly for the last 10 years and suddenly you find out that person is owing but some of them won’t open up that they don’t have it. Uusally, they should try to open up to us and see how we can cushion it between the two parties. So, what we do now is to ask one of the parties, especially tenants that, what can you afford? And we say ok, bring it and tell the landlord that he shouldn’t expect all the money at the same time. It puts the professionals and practitioners on their toes because it’s a very trying time.
What is your advice for those who are selling houses, selling land and other related practice in the sector?
Sometimes, some of the agreement in the contracts with the subscribers should be looked into. At this time, the real estate should show empathy for them. For example, some agreement has it that, if they fail to pay up their money for land within a stipulated period they may lose the land. The real estate firms should extend the grace so that it will show to your subscribers that you understand what they are going through. It may affect your own cash flow, it may affect your own projection because you too are owning the bank in some cases. You too can approach the bank and ask them what they can do for you. It’s a win-win thing.
And for those who are developing and have their structures on the ground, nobody is buying. They can look at what they can do temporarily. Is it to lease out the place for the credible people who won’t destroy the place and in the next one or two years you can put it back in the market again, instead of it staying in the market empty without generating any revenue for you. Those who have land and they don’t have subscribers yet, what can they do? Can you convert it to an agric land temporarily? The agric people won’t take the land away! You can also encourage people to come and farm. You can ask them to pay some certain money a month. You can also encourage them by providing security so that those places won’t be vandalised. And with that, you gain a lot from the land because, No1, the land is giving you money, the land is productive. No2, nobody will encroach on it because it’s not empty, and at the end of the day some of these people may end up buying the place from you. So it’s for practitioners to sit down and engage professionals for them to be able to take good decision in this hard time.
Before the recession, the real estate has been struggling just like other sectors sir. What is your advice to landlords who will be asking for another money from their tenants considering the bad economy and how people have been struggling to pay their rents even before now?
The battle is harder than before. We should learn from what has happened before and be more proactive. No1, The expectations of landlords shouldn’t be too high. No2, as professionals we should let people know the reality on the ground. For example, I was meeting with one of my clients a few weeks ago, and he was angry that tenants haven’t paid their rents and I said excuse me, sir, things have not been fair to them down there and by the time I told him all that has been happening and I transferred some of the payment I got from them, he didn’t even expect them to make such payment because he’s realised that the business sector of that person is facing some crisis. And in some cases I have had cause to talk to some of our clients to reduce rent, at least for this year. And I also suggest to give one month off or some amount of money off, to show the person that you also care and understand he’s facing some challenges. With that, most tenants will run around for the money and pay. So it’s a win-win thing. I’m giving free advice here. People should pay me good money for this! For example, if somebody’s rent is 10 million per year, and you say, see I’m giving you 200 thousand off but pay your rent within the next one month or the next 2 months, the man would go and look for the money. We need to show some empathy for this period. That will also save you a lot in terms of litigation, and will also help you cement some relationships.
Sir, you have been saying that real estate is a major sector for the government to turn things around. How can this be done to positively turn our economy around?
Government is looking at how to reduce taxes, it’s good. The government must also look at how to reduce land-related taxes. They must also encourage those who are looking to go into the real estate business to make it easier and pump money there. With that, practitioners will know that the government is thinking and encouraging us to survive. The government can say we are ready to pump money into agric to encourage the youths with no job. The government can say if you bring land as collateral we are also ready to assist youth in that local government. The government will also encourage them by saying they would buy their produce off them. And also support them with all the seedling they are going to plant because you can’t just tell the youth to just go into farming without adequate support.
Isaac Abimbade
