How Real Estate Can Wake Up The Economy

• JIDE OGUNLEYE, MD, DENARO Properties Ltd.

Otunba Jide Ogunleye is the GMD of Denaro Properties in Lagos.

City People recently spoke to him about what he thinks the government can do to help Real Estate players perform better.

If he was to advice the government at both the state and federal level on what they can put in place that would help real estate players, what are the major key points he would highlight? “If Nigeria is going to experience rapid development, there are some sectors that the government needs to invest in and enable a working environment for Nigeria to grow,” he said.

“Real Estate is one of them, especially the Housing Market, the Construction Market, the Commercial Real Estate Market, and Public Real Estate.

Recently, we were doing an audit of staff of Denaro, an average project that Denaro does, we discovered they live on site. We have an average of 150 workers working on that site from inception to conclusion. So they may come and go in batches but you see that project has impacted their lives, and of there are some of them that are with the project from the start to the finish. For example, plumbering contractors, electricity contractors and they are feeding their families from that project.”

“So you will discover that real estate is one sector that can provide employment opportunities for the Youths and reduce unemployment  in any country and you discover that the country is much more stable”.

“The government should create a more enabling environment for the Real Estate sector to thrive. And we will see it impacting the country in general”.

“The Entertainment sector, even though without the government support you will discover that the Content creators are taking advantage of the internet generating income, but you will discover that the number of peope they can employ per time is not as huge as what an average real estate company can deploy on construction site”.

“The government needs to pay attention to some of these critical sectors and real estate I think should be number 1”.

Is he saying all these can result in a turn around?

“Oh yes, in fact, pick a few industries, not even Petroleum. The challenge is that we are so focused on the Petroleum and Gas sector because the prices are not stable, but there are some sectors that the country is being built on. There are examples; of countries that are built and well based on real estate. UAE is one of them. This countries don’t joke with the real estate. You will discover that from the mortgage. If you look at the number of mortgage companies in the US and how many people they are employing, in fact the companies that are training institutes, conducting trade test, doing certification  for you to be a broker in the US now, you have to seek for certification. So you can imagine the contribution to the GDP of the US. So the same thing can be applicable to Nigeria.”

“Real Estate is not only about Housing, it’s about Hospitality, Public Utilities like people building Parks. We don’t have that in Nigeria yet. In the US we have Disney World, I was in Orlando a year ago, I think the people who go to Orlando every year are almost 1 million, so you can imagine Orlando, just a small town . They are taking millions of people in every year, so you can imagine, the life span of that country can never go down, but what is bringing them is called tourism, but it’s actually real estate”.

Has he taken a look at the Renewed Hope Agenda? If yes, how does he think the policies will help real estate in Nigeria?

“Well, they said they wanted to do some  housing units in some local governments. It’s always been like that. Every government that comes always does that. During Jonathan era, they wanted to do in all the 774 local governments in Nigeria. They wanted to do social housing. But the day Nigeria realized that these things are better done by the private sector the better. So just give all the incentives, give all the support, let there be good access to finance, mortgage.

For you to access any bank now to say you want to take any form of loan in Nigeria they are going to be asking for 28 and 32 percent. We wanted to buy some vehicles for the company, we were talking to our bank that we have been doing business with for years and they said the funds are there but they wanted to take 35 percent, so I asked them if I take it to buy cars and we are paying you 35 percent in another one or two years then we’ve paid double of what we’ve taken. So, no country can develop that way. So, for the federal government to tackle mortgage alone and say we are providing cheap funds for developers and home buyers, you will discover that alone will do a lot, rather than saying they want to do the construction themselves. I think they should be thinking towards that, providing incentives, rather than saying they want to be actively involved. I know there is a federal ministry of housing and if you don’t create projects for them, sometimes they feel that they are really not doing anything, yes they can do but the bulk of the support should still go to the private sector because they are the drivers of the economy. They are the ones who have the ideas that can move the country forward.

So, what are his own recommendations of how to reduce the housing deficit that the country is faced with?

“My own recommendation as a player from Lagos is that one, the government should as a matter of urgency create enabling environment for businesses to thrive”.

“This is one point that most of the speakers on this topic had not been able to tackle, why? Because if you discuss housing in Nigeria today, Lagos and Abuja will be at the top of it, then every other state will come next. So why are we choked? If you see the number of people coming to Lagos, then Lagos really will define the housing deficit by the time you go to the under bridge. You saw the video recently on the Island close to Osborn Road in Ikoyi when the ministry of environment was demolishing some shanties. People are living under the bridges. So, Lagos is a perfect example that showcases housing deficit and what causes it is this uncontrolled rural to urban migration and it is because opportunities in those states are limited, and because people are really not doing much. If you go to the U.S and you go to Dallas for example, the same infrastructure in Dallas, if you leave Dallas and go to New York, you will find it there. In fact it may be better than New York, which is the Capital. So, that is the starting point. Let’s create opportunities, electricity, all the social amenities that are needed for each state to thrive, let’s give it to them. For my state now, Ekiti state, there are some local governments in Ekiti State that have not seen electricity in about 3 to 4 months. If they should bring electricity, they will just flash it one day and they will take it, how does somebody who has gone to school, an educated person thrive in such a community? It will be difficult, so we need to go back to the basics, let’s make everywhere liveable first then we can now start working on mortgage, cheaper mortgage etc”.

How can government tackle the issue of high cost of building materials? What can the federal government do?

“You know, some of the “Cement producers now just sit together, we have few of them. They just sit together, they look at their cost. They say it is their cost anyway, their overhead, so they just jack up the price. So can we have regulated prices? Can the federal government work with them that, okay within the next 3 years, you guys are not going to go within this band?

Every country that is really thriving and making moves, some of their governments are subsidizing some of those sectors, the United Arab Emirates. The Emirates airline. They are doing good today because they have government support.

Look at the United States. During Covid-19, a friend of mine got funds to run his business during covid-19 as Palliatives. I don’t know how many Nigerian companies got loans or funds to support their businesses. So basically you just need to go to the basic things and the government still has a long way to go.