‘The best place to get the highest property yield is Nigeria’

Commercial property broking is, perhaps, an albatross in an otherwise flourishing Nigerian real estate market. However, when the chips are down, it is quite easy to separate the men from the boys and, among the men, Broll Property Services—a multi-national company—stands tall. In this interview, OLUFEMI OYINSAN, the company’s Head, Commercial Broking, takes a glimpse into Nigerian property market, highlights Broll’s exceptional service delivery, and pinpoints challenges in commercial property broking. CHUKA UROKO reports. Excerpts

A peep into the property market

I would like to separate commercial from residential property. Talking about residential property, the sales market is good because of the huge housing demand-supply gap of about 17 million units. This means there is a huge market here. The problem however is that, apart from financing and mortgage, it is difficult finding the right property at the right price to satisfy the existing demand.

The commercial market is also good but it is still growing. What we have is a situation where commercial properties are developed and owned by corporate bodies unlike developed economies where venture capitalists fund developments or develop, put them on the market and sell. This is where you see pension funds and Real Estate Investment Trusts (REITs) come out to purchase these properties. A lot of foreign investors coming into Nigeria want to key into this aspect of the market, but they don’t know how to go about it because they don’t have the time, know-how and patience to procure land which has a lot of issues around it, especially in Lagos.

In the area of leasing, activities are upbeat from the low end of one-bedroom apartment to the high end duplexes and block of apartments. This is because a lot of people don’t own houses here. Majority of businesses operate from leased office properties. Leasing is a common thing in Lagos and I think this has   the advantage of enabling companies to benchmark their annual rents and cost of accommodation.

Acquiring property in Nigeria

Nigeria is a big country and it is difficult to put the whole country in one basket. What I can say is that there is value in acquiring property in Nigeria. The major challenge however, is navigating certain bureaucracies in getting land, perfecting the title. The processes are tedious and a bit expensive.

But you still find foreign investors coming here because when you succeed in getting through these huddles, you would surely get returns on your investment. And companies like us are here to guide investors through due diligence, and point to the right direction so that they don’t come in blind and go through all these processes by themselves.

Looking at Lagos, Johannesburg and London, one can say that the best place to get the highest property yield is Lagos, Nigeria because the country is viewed as an emerging market, a green field. In spite of the huddles, there are still success stories and if all these stories were not real, you won’t find all the top hotels fully booked and high traffic at airports.   The investors are looking at the numbers and not sentiments. When they hear of 160-170 million people and high urbanization rate, all they see is money.

Commercial property broking

We are doing very well here and many people look at us as market leaders. But let me do some basic explanations here. As brokers or agents, people hire us in contractual capacity. They approach us and ask us to help them dispose of their interest in a property or help them acquire interest in a property. There are a lot of intricacies in doing this.

The way we have structured our work here, all properties except retail come under commercial broking. There are a lot of activities going on in industrial and commercial office properties. We have done decent business here which is why we are seen as market leaders. We deal with top end clients who we assure of international best practices and transparency which is very important in the kind of big ticket transaction that we do.

What we do in industrial property broking is about warehousing and here you talk about industrial goods and logistics. The basic thing however, is about getting bare land for stacking or circulation purposes and what we do here depends on what the client wants. However, when we get a brief from a client who wants 800 square metres office space, for instance, we wouldn’t just run to find the desired property; we first of all try to understand the client’s requirements, staff strength, growth strategy, the people he deals with, and in providing him options, we also try to understand his needs and advise him.

Broll’s clientele base

We have a huge and growing clientele base because of our strategic partnership with CBRE which is easily the biggest real estate service company in the world. This partnership gives us advantage of international clients and exposure. If you look at our people today, you see that their desires and needs are becoming more sophisticated by the day and so, they are looking for people who can give them value and periodic reports.

As a multi-national company, we have gone far ahead of others. Our local base has also spread because people have seen what we have been able to do. Our service delivery cuts across persons who own high rise buildings, those who own 10,000-15,000 square metres of office space, and others who own three-bedroom apartments. People know that when they give us a property to lease and manage, we will do it properly and professionally. We have actually moved in terms of local and international clients and we are still making strides.

Challenges

We are really faced with a number of challenges, especially with many non-professionals in this industry. The good news however, is that the Nigerian Institution of Estate Surveyors and Valuers  (NIESV) is making effort to ensure that only professionals practice estate agency. What we have now is a situation where everybody is a broker or an agent just with letter-headed papers in his car.

Paucity of data is a problem and where there is no information, you can’t study past trends or forecast the future. Integrity of people in terms of transaction is yet another problem particularly when it is a big ticket transaction. Exorbitant and arbitrary fees are also part of the problems of this business and this rubs off on what people are able to offer.