LUXURY DEVELOPERS

Nigeria 2019 | REAL ESTATE & CONSTRUCTION | B2B

Nigerians are expecting higher-quality luxury apartments. As the economy rebounds, investors can consider high-end homes a safe bet.

Joe Orji
JOE ORJI
Managing Partner
Brookstone
Emmanuel Atureta
EMMANUEL ATURETA
Managing Partner
Brookstone
Ashish Chaudary
ASHISH CHAUDARY
Managing Director
Kuber Developers

What do people need to know about your company?

JOE Orji We started the firm together in 2015. Emmanuel and I recognized that each of our respective strengths and weaknesses complemented the other perfectly. I had worked in the real estate business for around 14 years prior to founding the company, nine of which were spent in the US and four in Nigeria. I worked primarily in commercial real estate. Emmanuel worked predominantly in consultancy and residential real estate, building hundreds of homes in Nigeria. We pooled our international knowledge to form Brookstone, a commercial real estate development company specializing in the development of a few different asset classes, including residential, retail, commercial office, real estate technology, and hospitality, the last of which is a space we are presently working on with our largest client, Landmark.

ASHISH CHAUDHARY For structure, we source locally, and we have our steel factory. It is for our own projects but we also export, so it is a sister company under the group. Earlier, there were concerns regarding the quality of some raw materials, but Nigeria has been producing top-quality raw materials of late. As a result, steel imports have decreased considerably. Only for finishing, we need imports because the local market is not fully developed and cannot achieve the same quality as imported materials.

How do you raise capital?

JO It depends. The first approach is to bring our own capital to the table, and we do this for different projects. The next approach is third-party capital, and this could be debt or equity. Frankly, we have never raised third-party debt, but that is always an option. The reason we have not is that equity is easier and, at times, cheaper, which is unique. In developed markets, equity is a lot more expensive than debt, but in Nigeria we can raise cheap equity.

AC Initially, it was mostly investors that were buying for investing but due to the market and the quality of our project, we are seeing more end users who want to actually live in this space. We like this as they will be able to appreciate the efforts and quality we have put in the project.

What does the luxury housing market look like in Nigeria?

JO The truth of the matter is that the economics of the housing market determines which projects get built. Developers will develop whatever they need to make money. Construction expenses are equally high regardless of whether you are working on a luxury or low-end project, and land prices are high regardless. This makes luxury projects, where income is substantially higher, a much better investment.

AC Every market is different, and every country has different rules so they need to get used to it and manage it. We found it not too difficult because we have been in Nigeria for a long time. We found that doing business here is better in some ways and worse in others. In terms of actual legislation or regulations, it is not particularly clear how you should position yourself but it is getting better day by day. It is not a mature market in terms of luxury real estate, but some regulation needs to be introduced.

What does the economic rebound mean for you?

EMMANUEL ATURETA During the upward period we are in now, we also must think of the housing types we should be constructing. Lagos is a city that thrives regardless of what the government does. We see a lot of young consumers who are interested in smaller units, which are not as available in the Lagos market. We are interested in looking into this segment further. As we grow, we are also interested in creating a trend toward monthly leasing agreements, which helps more people attain accommodations.

What do customers in Nigeria want, and how can builders bring it into being?

AC The standards have been raised and what was high luxury in Nigeria is now considered medium luxury. Before, people only saw these kinds of projects abroad, but now international standards can be achieved in Nigeria.

EA Affordable housing cannot be built using the same materials and technology that we are using now. However, the Nigerian market is so sensitive to new stuff that no one is going to purchase it until it is finished. This means that investment costs are high with no guarantee of recouping the money. Government partnerships would be one valuable way of getting past this issue.