The Managing Director/Chief Ex.ecutive Officer of Pelican Valley Nigeria, Dr Babatunde Adeyemo, speaks to Josephine Ogundeji on sundry issues concerning the real estate sector in Nigeria and some policies the government needs to adopt
The real estate sector recently posted a 12.81 per cent growth in the second quarter of this year, according to the National Bureau of Statistics. Would you say the industry has fully recovered from the effect of the COVID-19 pandemic?
After dropping sharply in the early phases of the COVID-19 pandemic, commercial real estate prices are on the mend. It is appropriate to note that the initial price decline, as well as the pace of recovery, varies widely across regions and different segments of the commercial real estate market. However, real estate still remains one of the safest sectors and investment to guide against inflation eating deep into personal funds and investments.
There have been calls for real estate practitioners to prioritise renewable sources of energy due to the global shift towards the reduction of carbon emissions. How can real estate practitioners align with this global shift, considering the cost?
The need for eco-friendly developments cannot be overemphasised at this time. It is established that Pelican Valley Nigeria Limited makes landscaping one of its objectives to deliver an ecologically sustainable environment within its estates. We are doing this to set the pace in Abeokuta in particular and also change the narrative in Nigeria generally. Green energy is cost-effective in the long run and it is also cheaper to maintain when it’s done and executed on purpose. Having a solid foundation and planning is key to achieving this project in an estate.
According to a recent report, over 70 per cent of the global population will migrate to urban centres by 2050. Do you think the Nigerian real estate sector is prepared for this imminent surge?
With the current rate of housing deficit and supply, I would say we are not prepared, as we know that real estate development is capital intensive. The synergy between the government, financial institutions, and real estate entrepreneurs will limit bottlenecks and speed up the delivery of housing. Government should make land available and accessible, financial institutions should make funds available at a very low-interest rate.
Many people have tied this rural-urban migration to the poor development in the rural areas, what do you think is fuelling that surge?
This is due to the lack of socio-economic activities and infrastructure in our rural areas. The gradual decrease in the interdependence of our settlements has been instrumental to the surge. Urban sprawl and uncontrolled growth have been caused by the absence of revised urban plans and the effective execution of existing plans in many Nigerian cities. For example, we sited one of our estates in Masa, Kobape area of Ogun State, where it took us two years to identify that spot, searching for available lands with key development indices such as fair road, high tension trunk line and absence of all known government acquisitions. Out of all the three indices we discovered on the ground, only the high-tension trunk line was done by Chief Olusegun Osoba’s administration over three decades ago and that was the last time the community felt government impact or development before the emergence of our estates in the area. We thank God that the incumbent governor, Dapo Abiodun, is now consciously looking toward our direction and we are glad for his great sensitivity and positive attitude. The government needs to look into linking the rural with the urban areas through adequate infrastructures like roads and housing schemes, such moves will awaken the sleeping giants in the private investors and the creative minds in the public.
The International Monetary Fund recently said that hikes in interest rates by central banks around the world have shrunk investments in the real estate sector. Do you agree with this assertion and how does the Nigerian market compare to others?
The hike in interest rates would be a turnoff to intended borrowers from getting loans, which would also affect the delivery of low-cost housing by real estate developers. Developers that key into such killer loans will eventually sink with the funds because real estate is a long-term investment that needs a long-term loan with a very low-interest rate.
The concept of land banking is getting increasing attention in recent times. How safe would you say land banking is, as a form of investment?
Land banking is the safest and easiest form of real estate investment if done properly by buying right with due diligence, and perfecting all documentation; and it is not expensive to maintain. However, in Nigeria, I think taking possession and perfection of the origin of the title is even better than just having a title document. Nigeria has a very unique real estate investment climate compared to the rest of the world. Expertise is peculiar to respective developing companies. Inadequate monitoring and bureaucracy by the appropriate ministries are instrumental to this menace, however, most developers in Nigeria believe in the word “sold out” at all costs. Hence, they make themselves vulnerable through huge commissions to realtors, lack of proper supervision, and hyperinflation in the land.
How would you describe the difficulty and bureaucracy around the acquisition of land and title documents by real estate developers and how does that affect the sector?
It is an appalling and discouraging scenario in Nigeria. It is supposed to be a seamless thing but the nettlesome bureaucratic bottlenecks are mostly a result of the backlog of things left undone, inconsistencies in government policies, poor records, and endemic corruption in most government agencies. There are some cases when an investor will do their due diligence, get a C of O from a government and that same government would acquire the same land for no just reason; then ask the same investor to revalidate or in most cases ratify by going through the same process of getting the same Certificate of Occupancy all over again. The question now is if the government could do such a thing to someone with a C or O, then what would they do to people who don’t do any documentation? Then how does the government want such investors to break even, grow or provide affordable housing to complement the same rigid government?
Where do you see the Nigerian real estate market in the coming years, and is it true that property prices usually fall ahead of election (maybe due to desperate politicians trying to raise money for electioneering)?
No, property prices do not fall but there is a reduction in the demand due to electioneering as politicians try to raise funds with distress sales with discounts. However, in the grander scheme of things, real estate price is not affected by the election.
The Ogun State Government led by Prince Dapo Abiodun has made CoO process very easy. Can you share a little insight into this and how this has helped the real estate business?
The first move that the administration of Governor Dapo Abiodun made which really amazed me and most real estate investors in Ogun State, was to formally invite all the real estate developers in the state, through the Commissioner for Urban and Physical Development, to a meeting where we were asked about our challenges, how to collaborate with the state government on regularising of buildings approvals, layout approvals and others. This is the first time in eight years of my real estate practice in Ogun State that the government would invite real estate investors without threatening us with demolition notices and orders.
You know that when a government sees you as a partner in development, a reasonable real estate entrepreneur has no choice but to reciprocate the kind gesture by regularising his or her other documents and paying all that is due to the government in terms of property gain taxes and all other dues to the government. Government cannot do it alone; government cannot provide free or totally subsidised housing, even if the government put all its annual revenue or budget into housing. This is because the government has just the land. Would government subsidise labour? Would it subsidise iron rods? What about cement, sand and granites? Would government put all her budget on housing and neglect health, education, roads and other infrastructure? So, technically, the government needs the private sector’s support to push affordable housing up on a long-term basis and create a more conducive environment for operators to grow, not intentionally putting their land on acquisition or frustrating them. I would love to use this medium to appeal to our listening governor to find time to come and see the wonders God is using Pelican-Valley to perform in Masa, Kobape, I believe he has some values to add as well. He’s a creative governor.
How is Pelican Valley Nigeria doing and can you tell us about some of your ongoing projects and products?
The Pelican Valley is a dream driven by passion and not money. It is a project realised after many years of planning. I believe an ideal entrepreneur should first be driven by passion and not money. The estate has been designed to create a scenic, serene and green environment. We do service plot allotments and build unusual homes for our clients; both Nigerians and foreigners that appreciate the aesthetics of nature and know the values of our world-class terrace, serene and green environment. It is a mini estate for the top-notch; driven by passion and vision which has been defined through our high-end creativity and innovation. It has positioned itself to provide affordable service plots of land with the best environmental consideration for its numerous clients. The estate is meant to provide affordable housing for Nigerians and other nationals in an unusual environment where they will get value for their investments. An eco-friendly apartment (Pelican’s Ecostay Apartments) and farmers’ market, Pelican’s Ecostay Smart Apartments and Pelican’s Greenish Acres Farm Estate, respectively have also been launched in Ogun State to transform an agrarian Masa community in Kobape axis of the state. While the Ecostay apartments is domiciled inside Pelican Brief Estate, where we intend to creat a smart city, the Greenish Acre is a vast expanse of arable and fertile land for farming activities with comfort in a good ambience located few meters off the estates. Citing the two projects in the area is a deliberate move to ignite the socio-economic activities of not only the estate but the Kobape community and Ogun State at large.
You are regarded as the poster boy of the real estate sector in Ogun, what brought about that?
(Smiles)..the poster boy’s statement was actually credited to the Ogun State Commissioner for Urban Planning and Physical development, Tunji Odunlami. He hailed Pelican Valley Nigeria Limited for going the whole hog to follow due process to obtain the state’s full government approval layout, adding that by virtue of the state’s new law, which will become operational soon, Pelican Valley can freely advertise its estates in Ogun State using radio stations and other electronic media without encumbrance.
According to him, the ministry can always validate that Pelican Valley “has done the due diligence … and that we are duly approved by the Ogun State government.”