‘Lack of transparency in market transactions is a big issue in real estate sector’
Land cost, long and cumbersome documentation processes are frequently cited as major challenges in real estate transactions, but there are other underlying challenges. These include lack of transparency in market transactions and insufficient supply of credible data which have continued to drawback the sector. However, the emergence of specialised research firms is believed to be the dawn of a new era in the sector. Rotimi Akinlose, managing director, Residential Auctions Company (RAC), a new but authoritative research firm, in this interview with ODINAKA MBONU reaffirms the crucial role data can play in driving the sector’s growth. Excerpts;
Can you give us a brief overview of Residential Auctions Company (RAC)?
RAC is a specialist and niche firm that provides integrated real estate research services to its clients, our coverage of the real estate sector spans across the residential and commercial property market segments. We provide consulting and advisory services to our various clients which include property services firms, real estate developers, financial institutions, private capital firms and government agencies. We regularly produce annual in-house reports on the residential sector with our flagship report being the “Spotlight on Lagos Housing Development Market” which is published bi-annually. Our reports have received both local and international coverage on various media and news platforms.
In a nutshell, I will say, at RAC we pride ourselves as a pioneering firm with a clear vision in the area of promoting real estate research and the company is committed to championing this course to satisfy its clients.
A major limitation to the growth of the real estate sector is lack of credible data. However, some new firms such as RAC are beginning to delve into this segment of the market. What has your experience and challenges been so far?
For me, the biggest motivation establishing RAC was the need to bridge the gap in the housing market by providing credible data and information on the real estate market in Lagos.
After my experience of studying and having the privilege to work abroad in one of the UK’s top leading real estate Services Company, I was exposed to a world where data on the real estate market was readily available by just a click of the button.
Upon returning to Nigeria, it was clearly evident that we lack the culture of keeping records or data and as a result the local housing market grossly suffered as it was impossible for investors looking to enter the market where struggling to obtain the required information on the market to assist in their choice of market segments to invest in or even for just an ordinary observer to get any useful information on the local real estate sector.
Since starting RAC, it has been a very challenging experience in getting data as there is still a negative perception of the true importance or relevance of research in the real estate industry.
We have a lot of issues with the real estate sector and one is the lack of transparency in the market. It is sad to admit but it is true that many real estate practitioners especially agents or estate surveyors are reluctant to share information on the market especially on real transaction prices.
This is one of the biggest challenges RAC has had to contend with but only little success has recorded in surmounting it.
The RAC Lagos house price index which is the first index of its kind on the real estate market to monitor house price movements across Lagos is based on asking prices as it is virtually impossible to get data on real transaction prices which would have given a clear and better picture of transaction prices in the market.
Nigeria’s housing deficit has been pegged at 17 million. As a real estate research and data collection firm, how realistic is this figure to you?
In my personal opinion, I think the 17 million housing deficit figure stated by the World Bank a few years has become obsolete due to the simple reason that Nigeria’s population has grown significantly since the last census was held in 2006. Currently, the country’s population is estimated at 178 million according to data the Central Intelligence Agency (CIA) World Factbook as against 140 million in 2006.
This easily represents a growth of 27 percent over 9 years and an annual population growth rate of 2.5 percent.
Recently, we calculated the current housing deficit in the country with some data and we discovered that Nigeria’s housing deficit is way above the assumed 17 million. Precisely, our calculation showed the country has a housing deficit of 40 million.
You will agree with me that one of the major reasons for this major deficit is the simple reason that the astronomical rise in the country’s population has not been met with a corresponding increase in the nation’s housing stock which is estimated at 13.7 million units.
Can you be more detailed on how your firm arrived at this figure?
Actually in 2006, Nigeria had a population of about 140 million and assuming 15 percent of population figure are households or families, then we will have 21 million families living in Nigeria.
On the assumption that just 10 percent of these households actually have their own properties, it means just 2.1 million households own the properties which they live in, while an estimated 18.9 million households live in either rented accommodation or some other forms of accommodation which translates to the housing deficit.
Now let’s fast forward to the present, 2015. Currently our population is now estimated to be 178 million which represents a growth of 27 percent since 2006.