Olufemi Adegoke Osibona is the Chief Executive Officer Fourscore Homes Limited. He spoke to CHINEDUM UWAEGBULAM on the best ways to fund real estate, constraints in digital technology and how to boost the confidence of Nigerians in Diaspora on housing.
A significant number of United Kingdom, the United States and South African builders, brokers, consulting firms, real estate finance firms and investors have extended their areas of operation beyond local markets to a worldwide base. What are the attractions for private developers and investors, especially in Nigeria?
THE driving force is the fact that Nigeria’s economy is still developing. What is happening here, happened in England where they used buying agents to invest in whatever sector of the economy they chose and their preferred area is usually real estate. Foreign investors see a bright future in Nigeria; they see a boom in Nigeria when there is steady electricity that will, in turn, attract 24/7 high security. The issue is we’ve not started using our senses yet because of oil money. Look at Dubai and compare it to what we are doing here. Lagos State government is doing a lot to change the environment; the investment mindset is getting better, but we still need to use our human resources. We have cheap labour that can be put to productive use. There are lots of jobs and a bright future. People are always frightened, particularly investors because it is difficult to transfer money for the purchase of production materials. You’ll be surprised if I tell you; it is difficult to carry as low as $10,000 outside the country. But thank God for the Buhari/Osibajo government, as well as Lagos, and Ogun states government, the future is brighter. Nigeria is a virgin land; the future is bright and people are coming to take a position to invest. I can confirm to you that Nigeria is safe for investment and that the benefits outweigh the drawbacks.
For private developers in Nigeria, funding has remained a major challenge, as the interest rates are high. But, across global real estate markets, property yields are offering a significant spread over government bonds to absorb some of the impacts of future rate increases. What are the best ways to fund real estate in Nigeria?
The best way to get funding is to know your investment environment. Wherever you want to invest, be sure you have information in that field. There are different ways of raising funds, bank and offshore funds; or sell off-plan. Another way to go is a joint venture with landowners, but be sure you’re dealing with the real owners of the land and that the partner has done a project before as well as has the capacity.
The partners in the joint venture must have the money before seeing the landowner and not that they will be collecting money from subscribers to pay for the land. A developer must have his own money to enable him plan. Be sure the developer has done it before. There are benefits in off-plan investments. Everybody that bought from us has witnessed over 100 per cent rise in value. Some people buy off-plan in various developments; they keep buying, put money in developments that are coming up and as sell as soon as the value goes up. Again, people who buy off-plan, most times have a say in the development. Likewise, off-takers who are part of the developments at the beginning of the projects often make money. Risk-taking and benefits come together.
In many countries, technology disruptions have led to the digital revolution; do you think that Nigeria is ripe to embrace digital apps. What do you see as the major constraints?
Yes, Nigeria is ripe to join the digital revolution. In fact, some developers use modern technology in all their projects. Other investors in real estate in the country also apply these recent technologies. The only constraint is poor electricity but, as I said, once this challenge is solved, the future is bright. We can have all the technology we want.
Over 30 countries that currently trade with the UK via EU free trade agreements have agreed to Brexit. What do see as the benefits for Nigeria under the Brexit? How will it impact on Nigerians who plan to invest in UK real estate?
The future is bright for Nigerians that have invested in the UK property market, and for those planning to invest there. But the ultimate investment destination in the property should be at home in Nigeria.
Fire disaster happens to be one of the world’s most common and destructive disasters, especially in high-rise structures. What should be the safety standards to be adopted in the design and construction of such buildings?
Fire engineer/specialist dry and wet riser exit fire continence because of door smoke alarm in every room or hallway should be made mandatory in Nigeria smoke detector or alarm.
Several countries have banned selling property off-plan, forbid advertising and any other promotion of such properties. Do we need such regulation in Nigeria? If yes, why? What are the benefits of off-plan sales?
We have different investment environment and culture. The advantage of buying off-plan is that you’re buying at a discounted price and it always appreciates. You have to understand something about Nigeria; people say the market is not moving but if you do something that is interesting and unique, then people will buy.
Nigerians in Diaspora sent an estimated $25 billion in remittance to the country in 2018, representing 6.1per cent of the nation’s Gross Domestic Product (GDP), what percentage of this could be for housing? Why the attraction for people to build houses in Nigeria? How can they prevent falling in the hands of fraudsters?
Practically, every Nigerian abroad wants to have a house in Nigeria. So, the reason for sending money home is only for two reasons, to take care of your family and to build your house. It will be possible but you will be spending more money to build the house. It’s a fact; I just calculated it now, every Nigerian in London, for instance, wants to own a home in Nigeria. I want to believe that they spend 85 per cent of the money they send for the purpose of owning a home back in Nigeria, but the remaining 15 per cent is just what they give to their families as allowance.
Let’s face it, how many foreigners are doing business in Nigeria and want to build here. And that is why we talk about Nigerians wanting to buy land because by buying land, you don’t have to stress yourself, you only need to worry about your contractor using inferior materials on your project. You know these days; many houses are collapsing because people do not use the right materials. People will just send anybody to build, but with the good developer, you are sure that nobody is stealing your money and that you are not giving money to your brother and your brother is just taking pictures of someone else’s house and sending it to you.
Personally, I know of someone this happened to. The man was living in Germany and thought he had a house in Ghana, which he built through his uncle. He later had a problem in Germany and had to go back home. On getting back home, he called his uncle, and he did not even answer. So, he decided to visit him and his uncle was thanking God for his safe arrival and started giving him stories.
Finally, when the worst came to the worst, his uncle opens up to him that the house was snatched. He decided to go to court and his uncle threatened. He couldn’t run back to Germany because he was deported. So he went to church and that was how he got delivered. Unfortunately today, he still regrets it.”
So, if we look at it, I think it is 90 per cent guaranteed that money sent by Nigerians abroad back home is for only one type of investment that they love to do in Nigeria, which is property. It is certain that every Nigerian abroad knows that someday they would come back to Nigeria. They are just waiting for government’s accredited developers to support them with genuine housing because all they hear from people around is negative news
Nigeria is seeking investments to diversify its economy away from oil, which currently accounts for about two-thirds of government revenue. Do you think there is a conducive environment to attract and secure private investments in the country’s real estate sector? What are the challenges for investors?
In fact, Nigerians in diaspora sent a total of $25 billion in the year 2018 into Nigeria and what percentage do you think building a house would take? I still think I would stand on that 90 per cent. People in the diaspora don’t really care about their families per se, it depends. The ones not building houses seek to get their families to come live with them and those that are building houses are taken care of through money sent for the building process.