Real estate experts at the December edition of Bamigbola Consulting (BC) Real Estate Roundtable Series have highlighted the critical importance of data, mortgage and proptech to drive the next era of the property market.
The virtual event which held on Friday, was themed, “Real Estate Market Evolution in Nigeria: Assessing the Past; Projecting into the Future,” and featured the Principal Partner, Ubosi, Eleh & Co., Chudi Ubosi and Chief Executive Officer of Castles, Dipo Davies, who joined the Senior Partner, Bamigbola Consulting, Dotun Bamigbola to asses the Nigerian real estate market past, present as well project into the future of property market in Nigeria.
Dotun Bamigbola, Senior Partner, Bamigbola Consulting and host of the BC Real Estate Roundtable Series.
Davies explained the inevitability of a strong mortgage system for growth, transparency and proper regulation of the real estate sector.
He said: “The critical thing we require is the introduction of a mortgage system. A mortgage system is not just for financing. It’s not just assisting to finance housing projects, but it also allows a very wide range of people to own property. When you own property, you are invested in the community. You are interested in the way the community evolves.
“If you buy property today, you don’t need to register it immediately. You don’t need to show your source of funds. You don’t need to show how you know, you acquired the funds. But all these are different when it comes to having a proper mortgage system. The cash and carry system we are operating now is worrisome. We all heard the story of somebody who had 735 duplexes in in Abuja. This happens where the mortgage is not involved and this kind of system is not sustainable. Everything seems rosy now, but you could have problems in the future when you have such one person holding on to so much property, especially when you don’t know the source of the funds.”
He explained that involvement of mortgage institutions in real estate market will enhance compliance with regulations and ensure proper planning.
“So for me, there are obvious issues in Lagos, for instance. We heard that 80% of houses don’t have approved plans. So obviously that means that whether they can fall down on your head, or they are blocking canals or whatever it is, it’s not ideal for the built environment. And don’t forget, Lagos is estimated to triple in population in the next few decades. You need to get a handle on that, and the government has done amnesty, and I think there’s a new building code, but you see, if it’s still a cash and carry economy, it will be difficult for professionals to be involved and for due diligence and checks,” he said.
Davies continued: “It makes sense for you to build properly if you’re going to use a Mortgage to sell it to the person. So for me, I think invariably, instead of using regulation, you should use the market to drive the behavior of people. that the market then drives we can see how private capital has blown up real estate in in Lagos, if you are going to use mortgages, or people with mortgages to buy your properties, then you will build according to plan that that will be the first one on on regulation.
Chudi Ubosi, Principal Partner, Ubosi, Eleh & Co.
“The other thing in terms of government intervention is transportation. I’m sorry if we keep on referring to Lagos, but I think 75% of all real estate transactions happen in Lagos. So it is difficult to to escape Lagos. But these are lessons for states who also want to develop their real estate markets like Lagos. So transportation, being able to move from one part of the other, live in one part, work in another, send your child to school, another, very critical, and can open up. I saw something about ferry services and ferry port. So hopefully that will join with the metro transport. They only need to look at New York, London, Paris, all their modes of transport are linked. So you have trains going into ports, going into bus stations. You cannot see a major building center in Europe without a transport hub as part of the infrastructure. So you are trying to do too much by building these malls, and people cannot easily get there and get out.”
Also projecting the future of real estate, Ubosi said generous data on the property market remained important for growth.
He said: “Real estate market data is one critical area we must all work on currently and for the future of real estate sector. For long, we have had to struggle with data in the real estate market. We realized that there was just none each time we needed information. We had to go out and start asking afresh and then I think at some point in time, some organizations wanted some information about values and the trend, and I will track them, and so on. And we could only guess, and eventually we said, look, let’s even begin to track these values. And that’s what we’re saying about data.
Dipo Davies, Chief Executive Officer, Castles
We began to track data for the past 10 years. We got to track rental value, track capital values, and the whole idea is that we want to be able to be that firm that people can come to and if you want to know what the rent of a house in Ikoyi was 25 years ago, you can go to our website and pick it up. Data is what moves the world around.
“So everyone of us in our business are selling information, and that’s it, but you need to now look at your business and see how it is, and make sure that you are selling that information. We we are not just doing rental values, capital values. We track even building material costs. We track construction costs. We can tell you what it would have cost you to build a house 10 years ago, and we tell you what it cost to build it today. We are tracking building materials. We can tell you what the bag of cement was in March, 2020, 20. We can tell you what it is today. So we also have units in within the organization that that’s just their business. They focus on tracking and collecting real estate information, and that information is important for all of us. It’s important for planning, it’s important for anything that you want to concern in real estate.”
