How did the pandemic affect the business in the past year?
As a total real estate solutions company, with businesses and products in different real estate segments, the pandemic has various impact on our business. For example, the affordable homes sector was impacted on both the supply and demand sides. The supply side was affected by the six-month interruption of construction projects. As a result of this delay, the cost of finance increased, as interest rates kept growing but projects were on hold. Second, after the pandemic, developers suffered from even higher costs of materials. Disposable income generally reduced, and unemployment has increased further. This impacted our sales because people are now prioritizing only essentials—food, healthcare, and education—over buying a home. Funding is also a challenge. Banks are not able to provide funding to either developers or buyers. The mortgage industry was already challenged prior to the pandemic, the situation exacerbated it, so people have been more conservative with their money. Finally, uncertainty has brought a shift from buying to rental.
How does this shift from buying to renting affect your operations as a facility manager?
This is where we are unique. We are not just a facility manager but a total real estate solutions company. We did a great deal of market research and paid attention to our customers and saw where consumer behavior was tilting. As a result, we introduced two key products during that period. One is a service called Rent to Own, which allows one to rent and restructure payments so that if they can manage to make a certain level of deposit, we will give them the keys to their houses. Essentially, as a tenant they can pay part of the equity in instalments and own the home.
How does your Rent to Own program work?
We require a 75% deposit to move in, which however is not disbursed entirely by the tenant. We encourage tenants to be a part of the National Housing Fund, where they make a monthly deposit. The Federal Mortgage Bank of Nigeria will give every Nigerian up to NGN15 million at 6% interest if it is used for housing, compared to 15-20% obtained by banks. We were able to secure that for our customers. If you want to buy a property of NGN30 million, and we already have the development and the land, we ask tenants to contribute 25% over the first 24 months, which is NGN7.5 million. We will also get NGN15 million from the government, which tenants can repay over 20 years or more, depending on her age. The total amount is less than their current rental with the difference that they are now a landlord.
Have you ventured into the area of affordable housing?
We are entering into that now to support some state governments to access the National Housing Fund for their civil servants. As many civil servants earn low incomes, they cannot afford to own their own houses until they have retired at 55 or 60. The government has the land, so it should stop selling it to developers at exorbitant rates. We can play a key role here if the government provides us with land at lower rates; makes provision for general infrastructure with good access roads to the land; provides a list of people who can afford to buy the houses within a certain price range; ensures that with the land they also provide a title in order to protect our investment; and provide the assurance that those buyers people are pensionable and it will be able to guarantee the repayment of the loan. Once the government can satisfy these conditions, we will spend our own money to start construction. We will also include the facility management for the first two years, getting it ready to then be handed over. That is what I call sustainability in housing delivery.