Until a few weeks back, ESV Rogba Orimalade was the Chairman of the Lagos branch of NIESV. He recently spoke to City People Magazine about what President Mohammadu Buhari can do about the housing situation in the country.
He says Pres. Buhari can fine tune his Housing policy to create more jobs and reflate the economy. He also wants the next Housing Minister to be a professional real estate practitioner.
How would you assess the performance of the real estate industry under Buhari’s watch?
Let’s call a spade a spade. If I’m going to score the administration on the performance of real estate in the past four years using the scale of 1 to 10. I will score it 3. I would have scored it 1, but I will score it 3.
You see, every government has to determine the key focus that they want to drive the economy with. Yes. There a lot of challenges encountered, even following the united nations, there is a percentage you allocate to education for instance, although, we haven’t been following duly.
I agree that when the former governor came in as minister, there were issues of Boko Haram, which whether we like it or not it requires a lot of attention, but I feel strongly that as long as we don’t accept the real estate sector as a way to stimulate the economy, we will keep on having this interview, and you will keep on asking the same question.
First mistake, there is no reason why the Ministry of Housing should have been under one man, no matter how great the man is, and the man his handling 3 ministries. I feel that was a disaster from day one. And whoever advised the President on that, should have been guided against it.
Number 2, I can only use track record. First question people should have asked, what’s the track record of former governor of the Lagos State in housing delivery and the real estate sector. The former Governor did very well in Lagos State for 8-years. He’s someone I respect a lot, but my personal opinion, not the institution’s opinion, he did poorly when he was the governor of Lagos state. Some of us tried to reach out to give advice on so many areas pertaining to housing. I may be sounding very critical, but I feel on the basis of his performance in the real estate sector in Lagos State, he shouldn’t have been given the portfolio.
So, issues of dissecting that can be discussed later, but to answer your question straight up, his performance was poor, plus a lot of changes that affected the dollar, the foreign exchange and other things had a spiral effect on the housing sector. Now, the sector is huge, so let’s not merge it together. In terms of international direct investment, a large fund of investment came in through heavy investors who invested in the real estate market in the country. And that fell into the category of commercial retail and commercial office. Now a commercial retail and a commercial office, big companies, private equity firms were financing these developments in dollars in very high amount and was financing this investment. This is development. And by virtue of that investment, we had a multiplying effect. Now, the sector was very sensitive and when you now have a government policy that impacted the dollar, it’s natural for you to put some of these assets into trouble, especially the assets that required foreign loans.
So in terms of the Commercial rating or Office segments I can assure you that if you ask anyone that lives in that space, they will tell you that the four years past was miserable. Some companies actually relocated. Some other companies just managed their losses and then find a way to take the hits and just flow along. If you look at the skylines. how many of those developments are now coming up? The only development that they completed are developments that are already on stream before the last four years. They couldn’t stop it. If a lot of them have their way and they knew the economy they were coming in, they won’t have even started doing those kinds of development.
So, in terms of Commercial Office and Retail especially, Development that derive from foreign direct investments, heavy direct investments that costs millions of dollars, it was terrible, and these were the kinds of monies that we need to stimulate the economy
In the sector that has to do with General housing, I have said this repeatedly, whether economic changes are positive or negative, the average man and woman have to have a roof over his head. The issue is that have there been enough housing units coming up to be able to satisfy the need of the majority of Nigerians? No. And it boils down to the same question. What is the government focus on? Government is creating special loans through the CBN, Special loan through the bank of industry. Special loans through all the banks targeting agriculture.
Is that good? Oh’, fantastic. However, as I said again how has government identify housing? And the real estate sector? You want someone to wake up tomorrow and build a set of bungalows. He is going to buy the land. As he is buying the land, taxes left and right. State-federal is hitting you. After that the same land you want to build a bungalow for affordable housing, you have to go and get building approval. You pay through your teeth for approval for a bungalow. You have to get than money from the bank. But at what percentage? Double-digit.
How can you build even bungalows at a reasonable amount for a common Nigerian? To make it worse, there is no infrastructure. The same government that are collecting taxes from you are not putting in the infrastructure to support your development so you have to even build your borehole, you have to build your internal roads. You have to build your external road. You have to possibly buy a vehicle for the police division to be put around the whole place. Even when the police come at times you will have to give them money. So at the end of the day, what incentive is there for the investors if really it’s the private sector you want to run that economy to come in.
Housing is being taken with a pinch of salt until we take housing and recognize that there is a multiplying effect of housing. Once you are building one unit, the man that is supplying roof is employed. This means he is paying his kids’ school fees. As he is doing that roof, he is eating. The ladies carrying bread and beans are coming to the site to give food, the carpenter is working. The engineer is busy. The mason is working, the land surveyor is working, the estate surveyor is already doing analysis. Already trying to see who he is going to sell it to. The Q/S is costing. The insurance companies are busy packaging premiums. The bankers are happy, money has to go somewhere. You have a whole chain, from the ground to up.
So if not for anything, the government should ask itself, what can give you instant impact in an economy? Housing can do that. I say it clearly, but until we can get the round peg in the round hole as a minister or an adviser in that area, we are not going to change, and we are not going forward. That’s the truth. You cannot give what you don’t have.
What I’m saying is that, start by getting a round peg in a round hole first. Lets start with that. Once the people that are under you or around you, if they don’t know better than you, you are not going anywhere. That’s just what I’m saying. But you need somebody that is modelled. A real professional that understands his onions. He will be able to guide you on how things should be done. But once you don’t have that…
Even in the last government, there are some people that fit the hole they operated in its capacity. They might not be exceptional, but to a large extent, there were certain thing they were able to do. So I say it anyday and anytime, wait for the professionals to fail. But appoint us. That’s my own issue.
In Lagos State, they have been blessed that they have been able to put a round peg in round hole to a large extent, not everywhere, I must say, but to some key positions. And the successes that you see gave rise to a lot of those things. You can think of a situation in Lagos where if you get the round peg in round holes in every area, how will Lagos state look like?
So, that’s why I’m just stressing that it takes a professional to sell the best ideas, so let them get the right hand to do the job.
Now that we are having a fresh government settling down at the State and Federal level, what will you advise that they do?
At the state, we’ve already sent the governor a message, a very strong message. And we said, round pegs in round hole, from down to top. We told him as an institution we are ready to partner with him. Fortunately, he is a key professional in the system, he is a Land Surveyor by training.
So, in terms of the language, he has the understanding of what it entails and who should do what. He has a rough idea and he ran LSDPC for a number of years. We heard of the great things he did there. So we are excited that he is coming in. but we have also given him a quick guide. We are hopeful that things will go right in Lagos. How would you assess the performance of real estate industry under Buharis watch?
Let’s call a spade a spade. If I’m going to score the administration on the performance of real estate in the past four years using the scale of 1 to 10. I will score it 3. I would have scored it 1, but I will score it 3.
You see, every government has to determine the key focus that they want to drive the economy with. Yes. There a lot of challenges encountered, even following the united nations, there is a percentage you allocate to education for instance, although, we haven’t been following duly.
I agree that when the former governor came in as minister, there were issues of Boko Haram, which whether we like it or not it requires lot of attention, but I feel strongly that as long as we don’t accept the real estate sector as a way to stimulate the economy, we will keep on having this interview, and you will keep on asking the same question.
First mistake, there is no reason why the Ministry of Housing should have been under one man, no matter how great the man is, and the man his handling 3 ministries. I feel that was a disaster from day one. And whoever advised the President on that, should have been guided against it.
Number 2, I can only use track record. First question people should have asked, what’s the track record of former governor of the Lagos State in housing delivery and the real estate sector. The former Governor did very well in Lagos State for 8-years. He’s someone I respect a lot, but my personal opinion, not the institution’s opinion, he did poorly when he was the governor of Lagos state. Some of us tried to reach out to give advice on so many areas pertaining to housing. I may be sounding very critical, but I feel on the basis of his performance in real estate sector in Lagos State, he shouldn’t have been given the portfolio.
So, issues of dissecting that can be discussed later, but to answer your question straight up, his performance was poor, plus a lot of changes that affected the dollar, the foreign exchange and other things had a spiral effect on housing sector. Now, the sector is huge, so lets not merge it together. In terms of international direct investment, a large fund of investment came in through heavy investors who invested in the real estate market in the country. And that fell into the category of commercial retail and commercial office. Now a commercial retail and a commercial office, big companies, private equity firms were financing this developments in dollars in very high amount, and was financing this investment. This is a development. And by virtue of that investment, we had a multiplying effect. Now, the sector was very sensitive and when you now have a government policy that impacted the dollar, its natural for you to put some of these assets into trouble, especially the assets that required foreign loans.
So in terms of the Commercial rating, or Office segments I can assure you that if you ask anyone that lives in that space, they will tell you that the four years past was miserable. Some companies actually relocated. Some other companies just managed their losses and then find a way to take the hits and just flow along. If you look at the skylines.how many of those developments are now coming up? The only development that they completed are developments that are already on stream before the last four years. They couldn’t stop it. If a lot of them have their way and they knew the economy they were coming in, they won’t have even started doing those kinds of development.
So, in terms of Commercial Office and Retail especially, Development that derive from foreign direct investments, heavy direct investments that costs millions of dollars, it was terrible, and this were the kinds of monies that we need to stimulate the economy
In the sector that has to do with General housing, I have said this repeatedly, whether economic changes are positive or negative, the average man and woman has to have a roof over his head. The issue is that have there been enough housing units coming up to be able to satisfy the need of the majority of Nigerians? No. And it boils down to the same question. What is government focus on? Government is creating special loans through the Cbn, Special loan through the bank of industry. Special loans through all the banks targeting agriculture.
Is that good? Oh’, fantastic. However, as I said again how has government identify housing? And the real estate sector? You want someone to wake up tomorrow and build a set of bungalows. He is going to buy the land. As he is buying the land, taxes left and right. State federal is hitting you. After that the same land you want to build a bungalow for affordable housing, you have to go and get building approval. You pay through your teeth for approval for bungalow. You have to get than money from the bank. But at what percentage? Double digit.
How can you build even bungalows at a reasonable amount for a common Nigerian? To make it worse, there is no infrastructure. The same government that are collecting taxes from you are not putting in infrastructure to support your development so you have to even build your borehole, you have to build your internal roads. You have to build your external road. You have to possibly buy a vehicle for the police division to be put around the whole place. Even when the police come at times you will have to give them money. So at the end of the day, what incentive is there for the investors if really it’s the private sector you want to run that economy to come in.
Housing is being taken with a pinch of salt, until we take housing and recognize that there is a multiplying effect of housing. Once you are building one unit, the man that is supplying roof is employed. This means he is paying his kids’ school fees. As he is doing that roof, he is eating. The ladies carrying bread and beans are coming to site to give food, the carpenter is working. The engineer is busy. The mason is working, the land surveyor is working, the estate surveyor is already doing analysis. Already trying to see who he is going to sell it to. The Q/S is costing. The insurance companies are busy packaging premiums. The bankers are happy, money has to go somewhere. You have a whole chain, from ground to up.
So if not for anything, government should ask itself, what can give you instant impact in an economy? Housing can do that. I say it clearly, but until we can get the round peg in the round hole as a minister or an adviser in that area, we are not going to change, and we are not going forward. That’s the truth. You cannot give what you don’t have.
What I’m saying is that, start by getting a round peg in a round hole first. Lets start with that. Once the people that are under you or around you, if they don’t know better than you, you are not going anywhere. That’s just what I’m saying. But you need somebody that is modelled. A real professional that understands his onions. He will be able to guide you on how things should be done. But once you don’t have that…
Even in the last government, there are some people that fit the hole they operated in its capacity. They might not be exceptional, but to a large extent, there were certain thing they were able to do. So I say it anyday and anytime, wait for the professionals to fail. But appoint us. That’s my own issue.
In Lagos State, they have been blessed that they have been able to put a round peg in round hole to a large extent, not everywhere, I must say, but to some key positions. And the successes that you see gave rise to a lot of those things. You can think of a situation in Lagos where if you get the round peg in round holes in every area, how will Lagos state look like?
So, that’s why I’m just stressing that it takes a professional to sell the best ideas, so let them get the right hand to do the job.
Now that we are having a fresh government settling down at the State and Federal level, what will you advise that they do?
At the state, we’ve already sent the governor a message, a very strong message. And we said, round pegs in round hole, from down to top. We told him as an institution we are ready to partner with him. Fortunately, he is a key professional in the system, he is a Land Surveyor by training.
So, in terms of the language, he has an understanding of what it entails and who should do what. He has a rough idea and he ran LSDPC for a number of years. We heard of the great things he did there. So we are excited that he is coming in. but we have also given him a quick guide. We are hopeful that things will go right in Lagos.
