Can you give us an update on your recent projects where you partnered with African Capital Alliance (ACA) to fill the housing gap in Nigeria?
The project that we are working on with ACA is part of our middle management “affordable luxury" development. We have nearly completed phase one and plan to hand it over by mid-March. This project has been quite successful despite the bad timing, bearing in mind that we started in the middle of an unprecedented recession; however, from an economical point of view, this project is not so profitable. The margins in the luxury sector are much higher. The difference in cost between the luxury and the middle income developments is mainly due the cost of land and the cost finishing which combined represent about 50% to 60% of the total cost of development. The remaining 40% of one's costs remain the same which represent the cost of the structure. While the costs can vary by 30% to 40 %, the sale price can vary by up to 100%. So the price of high end luxury development can be up to twice the price of a middle income one.
Why did you venture into providing affordable housing targeted at the middle-class audience?
Our decision was more of a strategic nature than anything else. The middle income market is by far the largest in terms of numbers. Our association with a private equity fund such as ACA is also strategic and aims at the long term.
What projects have you been involved in your luxury segment since 2018, and where does your main clientele stem from?
We just sold out the a top end high luxury development and still get inquiries coming in every day. We are starting another one of the same caliber so as to remain active in this sector. This luxury sector is what defines us, and this is where we have our competitive advantage. Today, we have clients who just want to buy in our developments despite the recession mainly because the value for money we provide. Our clients are mostly Nigerians with a few permanent expats or what I would call expat Nigerians, mainly Lebanese and Indians. We do not have any international buyers; most multi-nationals do not invest residential in real estate.
How would you assess the current construction sector in Nigeria?
The sector is on the rebound picking up gradually. We are quite busy in the residential, and industrial sectors. The industrial sector has actually been quite active despite the recession; in fact, it never really went into recession. All of the industrialists that we have been working with have been expanding throughout the recession.
What is your view on PPPs?
Currently it is the best way that projects can be done because the direct approach has not been quite so successful. I am a strong believer in public/private sector cooperation. Our project in Lekki is slightly delayed because we could not get our glazing in time due mainly to the port congestion. Logistics companies are buying plots with access to the lagoon to create their own terminals because they cannot get their goods through the port. The situation is really alarming. The best way to address these problems is via PPP. The same applies to the power sector, Currently unavailability of reliable power supply is the main inhibitor to the industrialization of the economy.
What is your outlook for the sector and your key priorities in 2020?
I believe in the Nigerian factor; no matter how bad it gets, Nigeria just keeps on going. Nigerians very resilient and creative. Entrepreneurship is the Nigerian DNA , they will always find a way to make things work. We have a formal economy that is sluggish according to kinds or reports, and there is an informal economy that is booming. We operate in that informal economy, so in our tiny microcosm, business is booming. Despite the gloomy national picture, we and everyone around us are expanding their capacities. The population is expanding, and we have a young, bright population that is hardworking. They are yearning for success and are ready to work hard for it, which is extremely important. So in summary our outlook for 2020 is very bullish.