REAL VALUE

Nigeria 2017 | CONSTRUCTION & REAL ESTATE | INTERVIEW

TBY talks to Vinay B. Mahtani, GMD & CEO of Churchgate, on the status of the WTC luxury residential and commercial towers, challenges facing investors, the potential held by the capital city, and where that will lead Churchgate in 2017.

Vinay B. Mahtani
BIOGRAPHY
Vinay B. Mahtani is the GMD & CEO of Churchgate, a Nigerian conglomerate with a focus on high-end real estate. He has taken the lead on several major projects, most notably the World Trade Center in Abuja, a 6 million sqft mixed-use development located in the heart of the capital. He has also been involved in sourcing and evaluating new opportunities, conducting due diligence, creating and leading cross-functional teams, and executing projects. He holds a BA from Tufts University and an MBA from the Wharton School, University of Pennsylvania.

What is the status of the WTC project?

We are finally at the completion stage of Phase I of the project—our luxury residential and commercial towers. Delays have been largely due to the uncertainty in the Nigerian market; access to FX has been somewhat challenging in the new economic environment and this has caused large infrastructure projects like ours to slow down. Nevertheless, we are almost there now. Interest has been positive; we have had a good response from the market to both our residential and commercial facilities and we are looking for the macroeconomics to normalize so we can take advantage of this. For the retail component, we are in the midst of discussions with some major players that are keen on joint venturing with us on Capital Mall, and we are confident a deal will come to fruition in the very near future. We remain optimistic here at the World Trade Center regardless of the setbacks that Nigeria has encountered.

How has the devaluation affected the timeline of your projects?

With real estate projects like ours, the majority of the construction material is imported; however, in order to import, a company needs consistent access to foreign exchange. Without this, there are bound to be delays. In addition, from the consumers' perspective, the end price of the real estate has become more expensive.

What are the distinguishing features of Capital Mall?

One of the major highlights is that we are bringing a different shopping experience to Nigeria. At present, for formal retail, the South African players largely dominate the industry; however, we are trying to diverge from this by bringing a more European shopping experience to the end user. Nigerians have many affinities with different parts of Europe and are able to identify with European brands. The challenge is that as these brands establish themselves here, they are doing so for the first time, and there are plenty of challenges that they face.

How can investors navigate these challenging macroeconomic times when scouting for good investment opportunities?

Given the economic climate, there are plenty of “distressed” opportunities out there that may look excellent on paper. However, investors need to be smart about what they get involved in; they need to make sure that they partner with credible organizations with track records. There are a number of factors that are not in our control right now, such as the obvious FX issues as well as uncertainty in underlying policy. Therefore, investors should not rush into any investment but rather wait until there is more transparency so that they have a better understanding of where the economy is and where it is going.

Why should international real estate developers consider Abuja?

It is a demand and supply game. As a developer going to invest in Lagos there are a host of properties currently on the ground; we have already seen downward pressure on pricing and therefore returns on investment may not be as attractive. In Abuja we are building something that does not exist. Also, one must not forget that Abuja is on a serious growth trajectory and there are fundamentals that make investment attractive right now.

What are your expectations for 2017?

Churchgate is very much committed to the Nigerian growth story; we have been here for 49 years and we see ourselves here in the long-term. The last 18 months have been tough for us all; we have all learnt to become more resilient and focus on our core business. We are optimistic that the macroeconomics will turn in our favor and when they do, for Nigeria, the sky is the limit. With our population and with this emerging middle class, there will be plenty of opportunities for us as a reputable developer in Nigeria. We plan to get more involved in the sector.