What has been your strategy for success in Nigeria?
A.J.C. ORIZU The strategy is rendering professional services that are impeccable, based on professionalism, integrity, and client satisfaction. We were able to establish relationships with clients that valued our input for their growth and became loyal to Knight Frank. We benefited greatly from being a member of the Knight Frank Global family. This helped in growing the profession locally. Many local surveyors now operating their own firms worked at Knight Frank. In Nigeria, Knight Frank assisted many establishments in acquiring assets by helping them to source land, serving as project managers for their projects, and assisting in letting and management of their real estate assets. Nigeria was the first office outside of London, and now Knight Frank is all over the world with 411 offices in 59 countries.
BOLAJI EDU In Nigeria and in emerging economies, diversification of services—especially on the real estate side—is crucial. People prefer a single-service provider, especially those that are able to provide end-to-end solutions. The corporations that we advise like the fact that we are able to assist them with research on finding the right premises, transaction management, project management of their tenant installations and outfitting, and facility management services. Our investor clients like that we provide development advisory services at the front end to provide leasing services for them and manage the services on completion. We are able to work with our clients through the whole real estate cycle.
How vibrant is the property market in Nigeria?
AJCO While previously the real estate sector had been making good contributions to GDP, recent events in Nigeria caused by the recession have led to a decrease in activities. There are now quite a lot of vacant offices here and a number of unoccupied houses looking for tenants. The economy dropped in terms of performance, and occupancy rates in hotels have declined, which does not encourage construction work. The projects that had already started had to be completed; otherwise, they will not yield any income. As prices are relatively low now, this is the best time to buy prime properties and get positioned to benefit from them as soon as the sector recovers. In Nigeria, the places that are good to invest in are Lagos, Port Harcourt, and Abuja, which are all differently driven.
BE We see upticks in activity in a number of sectors. The federal government's strategic goal is to rebalance the economy to make it less reliant on imports. As a result, we see greater activity in the industrial sector, which has seen limited investment over the last few decades. The skyline of Lagos is testament to the investment that has been made in the commercial office, hospitality, and retail sectors, whereas the industrial sector has seen limited investment because of lower returns compared to other sectors. With the government pivoting away from oil and gas to other sectors including, industry, manufacturing, and the pharmaceutical sectors, these will all present attractive opportunities. Therefore, manufacturing and warehousing space is something that is on most investors' watch list.
What are your expectations for 2018?
AJCO I foresee a bright future, especially in asset valuations. Of course, we must do our research to see what is happening in the various sectors, especially the financial sector, which has been somewhat volatile. Interest rates are high; we have a foreign exchange situation that we are trying to normalize; we have issues of non-performing loans for various financial institutions, and this is causing concern everywhere. Most banks are paying special attention to loan repayments. Apart from this, the government has policies that put investors in a position to be able to assess their investments on a periodic basis. Banks no longer offer loans without doing appropriate due diligence and having a proper valuation of assets. In terms of real estate brokerage, we do see growth there, though it is not as promising as we would like it to be. We have a population of 170-180 million with a significant housing deficit.
BE We are cautiously optimistic about the year ahead; however, there are still a number of challenges. We are positive the economy will turn a corner in the next 12 months, though from experience it would suggest that real estate tends to lag behind the economy in general. From a corporate perspective, companies look for an increase in demand and orders before they make the move to hiring new staff and growing properties. From an investor's perspective, they want to see actual corporate and retail demand first. We are thus optimistic that at the end of the 12-month period, we will see this starting to filter into the real estate sector.