Our CEO, Uzo Oshogwe, spoke with Silvia Lambiase and Diana Rus from The Business Year magazine, to discuss our growth strategy and the new realities in real estate industry.
Read interview below:
What was the driver behind your 230% increase in profits in 2017?
Our consistent execution of a well-defined go-to-market strategy has never been in doubt. Consequently, we increased our profits by 230% in 2017. However, considering this was the period when Nigeria experienced five quarters of economic retraction, laden by forex instability and other constraints, we had to re-strategize to achieve significant progress against our strategic targets. Real Estate and foreign exchange rates share a mutual relationship due to the sector’s dependence on imported construction materials. Some of our projects had commenced within a stable economy, so we had to be smart with them while we delivered on other services such as facilities management, property management and project development. For instance, many doubted the sellout of our fully detached, twin-duplex in Lekki, because a lot of residential properties are currently empty. However, this depends on the type and quality of product. We sold out in a few weeks. Developers must carve out a niche for themselves considering their target market and building to meet their needs.
What is your growth strategy going forward?
We are very excited and optimistic about our growth in the coming years. Though markets will continue to change due to political, economic and technological forces, our plan is to leverage new technologies in order to improve product development, enhance customer relations, streamline operations and market effectively. We currently manage several residential and commercial facilities and will deepen our market penetration in this area. We hope to kick off some of our projects in 2019:
- We are the project directorate for Transcorp Hilton in rebranding of Abuja hotel and the development of the proposed hotel on Glover Road in Ikoyi soon.
- Development of our residential projects in locations outside Lagos, such as Port Harcourt.
- Afriland has also developed low end products such as Afri-shops, our ultra-modern lock up shops to help small scale businesses achieve their goals and sell more.
What makes Afriland Properties stand out over its peers?
Our tagline: “Execution perfected, Excellence Delivered” says it all. Strategy without execution becomes a futile effort. We focus on quality and perfect execution. Though there are several development companies and facilities development firms, perfection is hard to find. We have a track record for excellence and our clients trust that we will always deliver on our promises.
What policies from the government would be of assistance?
The process of title perfection is cumbersome and worrisome. There is an urgent need to review the Land Use Actto make it relevant in addressing the contemporary housing issues in Nigeria. Sadly, the last constitutional amendment fell below expectations for many in that regard. The current structure enervates the growth of the housing sector.
Another challenge is the cost of funds: there is no other country where developers build with interest rates of over 20%. Many projects become unprofitable at such rates, making affordable housing almost impossible. The government needs to support the private sector in ensuring we have single digit interest rates for our projects.
What are the new realities in real estate that we need to look out for when considering properties?
An example of new realities is Lekki, where everyone is building but no one has thought about the infrastructure around this area. All around the world, infrastructure drives urban development. It plays a vital role in stimulating urban land development and economic activities. This means transportation, power, provision of water etc. must be top priority. Unfortunately, this is not the case in most African cities. The government needs to pay more attention to infrastructure. People are beginning to realize that they are better off staying on the mainland as long as they can commute to work because of the gridlock and swampy areas.
What will happen now with the need for more affordable housing?
As mentioned earlier, some polices need be reviewed to meet housing needs in Nigeria. I believe the government understands the urgency of reducing this deficit drastically and is taking steps towards meeting these needs. The last government introduced Lagos Homes and developed structures in areas like Lekki and Osborne, though it has slowed down. The interesting thing is that with a fertility rate of 5.53 births per woman and a yearly growth rate of 2.60%, the housing deficit is bound to increase.
What do you expect from 2019?
We will continue to fulfill our purpose of improving lives by investing in the development, management and maintenance of world-class Real Estate offerings across Africa. We hope to build upon our revenue streams and strengthen our capabilities.
Owing to the forthcoming elections, there should be more liquidity in the market due to anticipated huge fiscal spending. Though buying decision might not be stable at the moment because there is a lot of uncertainty. This is why we will remain flexible.
Long-term projects need long-term funds. Our research in the past years has led to significant discoveries and so we will also be very innovative sourcing funds for our projects this year.