GRI sat down with Uzo Oshogwe, CEO of Afriland Properties, to discuss the challenges that face Nigeria’s property market, the drivers and growth and where the best opportunities lie.
How is the Nigerian Real Estate sector affected by the current economic downturn? Are people optimistic or is it doom and gloom?
Though it may be in crisis, Nigerian economy is not severely damaged. Real Estate professionals and even investors are optimistic. In the midst of the downturn, numbers are still shooting up and the future is promising. The industry still boasts of 10% annual growth, a market value of N6.5 trillion in 2015 and an anticipated $13.6 billion investment in 2016.
In any economic downturn, there is an opportunity. The opportunity here lies in the ability to revolutionize and persevere.
Where do you think the biggest opportunities lie in terms of asset class in the market right now – in terms of both cities and sectors?
Lagos, Abuja and Port Harcourt, Nigeria’s commercial, administrative and petroleum industry capitals respectively, are the top investment destinations, and they account for as high as 65 percent of all activities in this asset class
Real Estate, as well as Information and Communications Technology (ICT) have also been identified as some of the fastest growing sectors in the Nigerian economy with a lot of opportunities.
The growing population remains a driving force in both sectors. Nigeria’s middle class is growing by 7.9% per annum and these are the people with purchasing power to pay for rent, purchase houses and invest in ICT.
Rapidly growing urban population, Lagos state grows at roughly 3.2% per annum, Abuja grows by 4.3% per annum, Kano grows at 3.3% per annum. All these imply demand for houses would continue to rise.
Property development is arguably the most lucrative of all investment opportunities in Nigeria RE sector. Mixed use developments, where blending a combination of commercial, social, institutional, or industrial uses, where those functions are physically and functionally integrated. Others are residential housing estates, commercial property rental etc.
Vast investment opportunities also exist in the Agricultural sector due to the crash in global oil price and the need for Nigeria to diversify its current interest in oil only.
Many experts insist on infrastructure investment as solution to urbanization challenges in Nigeria, do you agree with this and how rapidly do you think this will occur?
As population increases, infrastructure needs expand. This includes urban housing, roads, water supply, waste collection and disposal, power, and so on.
In Nigeria, as in some other parts of the world, whilst infrastructure needs continue to increase, government revenue continues to be constrained by unstable crude oil production, significant cost of debt servicing and increasing expenditure on subsidies. This has created a huge infrastructure gap. Nigeria’s infrastructure stock stands at 35% of her Gross Domestic Product (GDP) which is below the international benchmark of 70% of GDP.
Urbanization challenges exist in both developed and developing worlds. These challenges become more worrisome when the urbanization growth rate significantly outweighs investment in infrastructure. The Federal Government of Nigeria estimates that 720,000 new houses per year are required to fill the existing gap in housing demand and cities like Lagos need to invest in infrastructure for sustainable developments especially in the areas of housing.
This also singles out Nigeria as one of the most attractive destinations for investors in infrastructure. The region’s growing population and its wealth of natural resources can be described as the foundation for sustainable economic growth.
Investment in infrastructure is a continuous process. The more investments, the less the urbanization challenges. Government can stimulate investment in infrastructure by providing funding solution by linking lenders with the capital markets and also leverage private capital through public private partnership (PPP) initiatives.
What projects are you currently working on and who are you currently partnering with?
Afriland Properties Plc is presently redeveloping the iconic Falomo Shopping Centre, a joint venture between Afriland Properties Plc and Lagos State Development Property Corporation (LSDPC). The re-development will include retail and office spaces.
Others are projects emanating from the Transcorp Hilton expansion programme which includes, the construction of 5 star hotels in Ikoyi and Port Harcourt, construction of a conference centre in Abuja with a seating capacity of 5,000 and the construction of a 200 keys luxury apartments in Abuja. We also have the construction of staff quarters at the Ughelli Power Plant, Delta State.
Where do you see your business in five years’ time?
Our vision at Afriland Properties Plc. is to be Africa’s leading Real Estate Company that creates long term value for all stakeholders. We hope to play an important role in shaping the future of Real Estate in Africa and in five years we would still be delivering world-class services and developments by leveraging global best practices, strategic partnerships, excellence and innovation.
The proposed Falomo shopping Mall and Office Complex will be fully open and operational by then and we also hope to replicate similar projects in other areas in Lagos and Nigeria as a whole.
We are also interested in developing residential apartments and estates for middle and low income classes, due to the huge housing deficiency currently experienced in the Country. In five years, we see ourselves playing significantly in that space.
Uzo Oshogwe is the managing director of Afriland Properties Plc, formerly UBA Properties. With a career spanning over two decades, mainly in Information Technology and Banking, Uzo is a seasoned professional with tremendous wealth of experience. Prior to joining UBA, she worked as an IT Specialist at Accenture UK based at several clients’ sites, including Jones LaSalle Europe, a financial and professional services firm specializing in real estate services and investment management. She holds a BSc in Chemistry (1989) from Ambrose Alli University, Edo State and an MSc Information Systems Design (1996) from the University of Westminster, London.