Can you tell us about your mix-use development in Lekki?
It is extremely unique. It is a mid-market development for us, though many people would still call it luxury because it is 60% of the price of what we are selling here, if not less. That is also exciting because it is a new concept altogether. It is a residential development on top of an entertainment area. We have a swimming pool, tennis courts, gardens, basement parking for cars, and 20,000sqm of shopping mall. It will be amazing.
What makes the Lekki development a better investment compared to your luxury tower on Bourdillon in Ikoyi?
The apartments in the Bourdillon tower are 510sqm; they are huge. They are meant for owners and occupiers. To rent, the yields would be extremely low. When people rent homes in Nigeria, it is based on the number of bedrooms. The Lekki development is based on European sizes, and we have one-, two-, and three-bedroom apartments and significantly smaller sizes, which is great for investment. The profiles of our buyers are people buying it for their children or investing in apartments that they can later rent out. Once that development is complete, it will command the rental rate of the entire area. It is a great target for the diaspora, which has a great problem investing here because when they send money back for investment, the money just disappears. This development provides a safer channel for them to invest their money. Our partner in this project is Africa Capital Alliance, one of the biggest private equity funds in Nigeria.
How do you plan to target the diaspora?
We have several ideas; we are reaching out to professional associations, Nigerian doctors associations in the US and the UK, architects, churches, and others.
What should be done to fill the housing gap in Nigeria, and should the government cover part of the cost?
Anything the government provides for free does not really work, which is the case globally. It should instead facilitate. The government could provide tax breaks for people who want to set up industries; it does not have to be outright grants. It can create tax breaks for the concrete industry, for example, to produce bricks.
What is your assessment of the progress made in the timing for construction permits, taxes, and land registration periods?
Consent fees are still 6 or 7%, so they have not fallen. Moreover, the government has just increased land use charges and multiplied the land use cost by 10. Taxes are on the rise as well. There is a huge disconnect between what the government wants to do and how plans are being implemented. The failure has always been in the implementation.
What is your outlook on the industry?
This is currently the best time to come in and invest. We hit rock bottom in 2017, and the only way now is up. There is demand and greater stability in the forex market, which was a huge problem before. Now, there is more visibility and stability, and demand has increased.
Some believe oversupply in the luxury market is due to the fact that such developments are not actually luxury. What is your opinion?
I disagree; the market contracted and many companies reviewed their housing policies. For example, some companies used to house their staff in Ikoyi and Victoria Island and now they give them allowances. Demand has fallen, which is why we are looking at the middle end, and it is strategic because it is with the private equity fund. This is our first venture with a private equity fund.
What is your outlook for 2019?
With the elections behind us, things will start moving quickly. 2019 looks good for us; we have a fairly great pipeline of work. We will complete our fourth project and are looking at something else in the luxury end as well.