‘Our objective as an organization is to make our products affordable to buyers’

As affordability continues to be a big issue in the Nigerian housing market, developers are, increasingly, coming up with creative and innovative ways of making their products affordable to home buyers. In this interview with CHUKA UROKO, the MD/CEO of Dradrock Real Estate, OLADIPO IDOWU AGIDA, offers insights on how his company  has used creative ways to make their products affordable to over 500 Nigerians who have bought  property from their housing schemes.  He also speaks on other salient real estate issues. Excerpts:

Since you opened for business a decade ago, you must have impacted on the lives of many families and also contributed to the growth of the national economy. Tell us how

Over this period, it has been a fulfilling experience because we have been able to help people achieve one of their major dreams of owning  homes. One of our major roles as a company is advisory. We advise clients on how best to buy their homes or holding property for investment purposes. We segment the market, look at buyers based on their type of job and income level. We structure payments for people according to their cash flow and they are always excited to see that we are able to do.

In terms of numbers, we have been able to help about 500 people to own property. These are mainly those in high income class, the mid-income earners and not many low income earners. But we have started offering something for the low income. In terms of percentage, what we have is 10 percent for low income, 40 for the high income and 50 for mid-income earners.  We have also contributed to the growth of the economy by providing jobs for people. We have all classes of workers on our employ—skilled and unskilled labour, professionals, artisans and others.

You have a number of on-going and completed projects;  what kind of products do you have on offer, especially from the Annapolis schemes?

Annapolis is a brand of our products. We have Annapolis Garden at Lakowe where we have serviced plots and 30 units of 2-bedroom apartments. We have another Annapolis Residence  at Sangotedo where also we have serviced plots, 2-bedroom, 3-bedroom and terraces of 4-bedroom.We also have Annapolis Court at Ibeju Lekki where we have about 1000 service plots and developments for low income earners.

The objective of the Annapolis brand is to create a place for people where they can live and have the kind of lifestyle they desire. It is for all classes of people—the upper class, middle class and the lower class. For the Snagotedo scheme, our serviced plots are going for N10million -N20 million per plot. This caters for the upper middle class.

Finance is a critical issue for both buyers and suppliers of housing products. What do you do to help buyers to enable them to afford your products?

The problem of finance is on both parties. It is unfortunate that government is not doing enough in terms of infrastructure provision. In all our projects, we are the ones providing the infrastructure and that affects the cost of construction and the capacity of those who want to buy.

We are in partnership with mortgage banks. We also offer structured payments to our buyers and support that with mortgage. We believe that anybody who earns $200 can own a home in Lagos in a place where there are basic amenities like water, power, good roads and security.

What  interest rate can a prospective buyer get from your partnering mortgage banks?

We are looking at a rate that is much better than what is on offer in the market at the moment.  But we have a problem in this country which is cultural. People borrow from micro-finance banks and don’t pay. This also happens in mortgage banks and that is why operators complain of huge non-performing loans in their books.  This is why we need a good credit system in this country. If we have a good credit system that  capture people’s credit history, that will help a lot. We are hoping that with the work that is being done at both government and individual level like the Nigerian mortgage refinance company (NMRC), housing finance issue will be resolved. It may take time but there is hope.

The real estate sector has been recording negative growth in the last 10 quarters. How is this affecting you as an organization?

Negative growth in the real estate sector is usually not steady. Back in the first quarter of 2014, there was a decline in the growth of the sector but after sometime, it started rising again up to 2016 when it declined again with the onset of recession. We saw another major decline in the first quarter of 2018, but improved a little in the second quarter of 2018.

What explains this improvement is the inflow of foreign investment into Nigerian market. This may not be structured or captured but a whole lot of foreign capital is coming into the market mostly from Nigerians outside. The market has been slowing but, for us as an organization, we are doing a lot, planning ahead of time.

We know that some people buy property to build their homes as first time buyers, others buy in order to hedge their funds against inflation while yet others buy for investment. Because of that, no matter the level of economic decline, people still put money in real estate because it is safer there. So, essentially, we are just being strategic.

Some people say  the economic  recession in Nigeria had its positive side because it brought creativity and innovation into the property market. What were your survival strategies?

One of the things that keeps us going here is the strength of our team and our ability to project into the future. As we speak, we are already looking into next year, thinking of what is going to happen during and after election; how  the result of that election will impact on business and  what will happen to the naira. We factor all these into our product costing and delivery time. These also help us to take position and absorb any shocks coming from the swings in the economy.

Most companies are now reviewing their project size to respond to market realities, leading to small size products coming to the market. What is Dradrock doing in this direction?

We are also responding to  market realities  our own way. In our scheme at Sangotedo, we are building one-bedroom apartments because  there are young people who need this size of apartments. These are not expensive. If you are able to do what is affordable to people, they will  go for it.

Our objective as an organization is to make our products affordable to buyers.  When we speak to the middle or premium class of people, the question is, how can we make it affordable for them? In the Sangotedo scheme too, our one-bedroom apartment with toilet and bathroom is not more than N8 million.  We are considering developing mass housing where a two-bedroom apartment will not be more than N5 million.  So, it is all about being creative on how you can make it accessible to the low income earners. They need structured payment and that is why we are trying to work on a mortgage system that will help accessibility.

What are the challenges you face operating in an unfriendly business environment like Nigeria?

One of the major challenges is funding. But funding as a challenge also makes developers to be creative. The other challenge is infrastructure deficit. There are no infrastructure like roads, bridges and rail tracks which would have encouraged many people to live outside the city centre. All these are limitations that make it difficult for us to develop our own cities. What we do as developers in the face of all these is to be creative and manage our cost.

To take us out of this, government should come up with policies like tax incentives for estate developers. It  can also provide a kind of material prices that will make houses more affordable. Developers  on their part  should  take steps towards solving these problems on their own. There should be collaboration between the government and developers to bring about solution.