Tuesday, March 18, 2014

Nigeria: Experts Highlight Importance of Social Media in Property Transactions

Over 70 percent of sales made by ARM Properties in respect of the Lakowe Lakes Golf and Country Estate, came from those who accessed the company's website. This was disclosed by Tunji Osinulu in his presentation at the 2nd edition of Property Buyers' Forum hosted by real estate consulting and advocacy company, Messrs 3Invest as part of the Social Media Week 2014. Osinulu who attested to the use of online platform in the sale of the award winning estate, declared: "Over 70 percent of the sales we have made on Lakowe lakes have come from our website."

Affirming the views expressed by Mr. Osinulu, Mr Femi Akintunde of AM Facilities who delivered a paper on "Online benchmarking tools in facility management" , stated that real estate, being a wealth creation asset, is essential to benchmark what your peers are doing.
In his own contribution, Mr. Tayo Sonuga highlighted the importance of social media in property marketing and sales. "When Haven Homes first got on social media, we were educated by 3Invest on the like mechanism used to direct traffic to our site," he said.

The event, which had "Building your property ladder through social media" as its theme, hosted a real estate job creation clinic which confirmed that the built sector offers the largest creation in any continent.
The host, Ms Ruth Obih, delivered a presentation on how to employ social media as a business tool. She explained that a successful social media requires a plan and one must narrow their focus and determine what platform their target audience are on.

The event as featured a mortgage clinic by officials of Diamond Bank and a wealth creation clinic anchored by Mr Raphael of ARM Investment.
Property Buyers' Forum is an annual event that is designed by 3INVEST to connect home sellers and buyers.

WEF on Africa 2014: Positioning Nigeria for infrastructure investment

In 2008, when Kingsley Eze, a Nigerian entrepreneur, met with Norman Markgraaff in South Africa to explore partnerships in real estate projects in Nigeria, it was clear to both parties that he was swimming against the tide. Corruption and 419 fraud letters hung like a halo over Nigeria. Boko Haram was yet to join the mix. As Chief Executive of Private Estates International, Norman had been in the real estate business for over 35 years, built thousands of housing units, expanded the business into other parts of Africa but had never considered the Nigeria market.

 Kingsley had a simple strategy for the meeting. He would acknowledge the gory stories of fraud but would show that they were not endemic to Nigeria. He would recount how Vodacom passed up an opportunity to acquire a GSM license in Nigeria, and how MTN, which at the time was the number 3 operator in South Africa, took the leap of faith with Nigeria and became the biggest phone operator in Africa. When Norman asked for another example, Kingsley discussed the performance of Shoprite, a South African retailer that had recently entered the Nigeria’s retail space. If that meeting was held today, Kingsley would have proudly informed Norman that Shoprite has become so successful that it plans to build 44 retail outlets within the next three to four years. According to the Economist magazine, the seven Shoprite outlets in Nigeria sold more bottles of Moet & Chandon champagne than all the Shoprite outlets in all of Johannesburg combined.

 That is the quantum of return on investment Nigeria delivers. According to Jim O’Neill, an economist, Mexico, Indonesia, Nigeria and Turkey (MINT economies) are expected to produce the highest return on investment in the next 10 years. In fact, Nigeria is poised to become one of the world’s largest economies in the 21st century overtaking economies such as Italy, France and the United Kingdom.

 This goal is realisable. Between 1999 and 2012, Nigeria’s GDP grew at an average of 7.9 percent. This is remarkable when compared with a GDP growth rate of 2.2 percent in the United States, 1.8 percent in the United Kingdom and 0.4 percent in the Euro zone, notwithstanding that Nigeria is starting from a much lower economic base. In this same period, Nigeria became the second largest economy in Africa (behind South Africa) with a GDP per capita that grew from US$700 to US$2,600.

 In this same period, Nigeria has become an attractive destination for Foreign Direct Investments (FDI). Between 2010 and 2013, Nigeria attracted over US$20 billion in FDI, equivalent to 10 percent of the total FDI to Africa. This reversal of fortune has been attributed to Nigeria’s current political, economic and demographic realities. Nigeria has had 14 years of uninterrupted democratic rule. The external debt portfolio decreased from US$36 billion (in 2006) to US$4.5 billion (in 2010) resulting in a debt to GDP ratio of 19 percent, one of the lowest in the world. Inflation has remained in the single digits. With 170 million people, Nigeria is one of the ten largest populations in the world. With over 60 percent of the population below the age of 25 years, Nigeria has more people eligible to work than otherwise.

 Despite the phenomenal economic growth, unemployment is still a major challenge. Poor infrastructure is a key driver of the unemployment profile. Nigeria’s economic growth is more remarkable given its low infrastructure stock. According to the National Planning Commission (NPC), Nigeria’s infrastructure stock is about 35 percent of its GDP compared to 87 percent for South Africa. This situation offers significant opportunities for the savvy infrastructure investor. For instance, Nigeria generates about 3,600MW of power, which is about 13 percent of its projected electricity demand by the year 2015 (28,360 MW). There are not many countries in the world that provide this level of suppressed effective demand: people willing and able to pay for as long as the service is provided.

 The NPC estimates that Nigeria needs over US$2 trillion in infrastructure investments over the next 30 years (2013-2043). To meet this investment need, Nigeria needs to ramp up its spending on infrastructure from the current 3-5 percent of GDP to an average of 9 percent over the next 30 years. Given Nigeria’s high GDP growth projection for the period, such a ramp-up would be particularly challenging for the government. Therefore, private sector investment is critical to meet this need. The government has shown commitment to private sector-led growth. In September 2013, government privatised 15 power companies. Another 10 power plants are in the process of being privatised providing further proof of government’s commitment.

 Despite these opportunities, there is no doubt that investing in Nigeria is not for the faint of heart. The country still presents significant challenges for business development. The 2014 Doing Business report places Nigeria as 147 out of 189 countries, this is a 9-step drop from 2013. The 2014 Economic Freedom report placed Nigeria as 129 out of 175 countries, also a 9-step drop from its 2013 position. In terms of corruption, Nigeria is ranked 144 out of 177 countries on the Transparency International’s 2013 Corruption Perception Index. Although the anti-corruption institutions still exist, there has not been any high profile case to communicate government’s commitment to fighting corruption. However, continued commitment to privatisation of major government enterprises may be a way to reduce the size of government bureaucracy and stem the resultant leakages.

 There is no doubt that Nigeria presents a compelling case for the infrastructure investors, like Norman, who are able to move beyond the gory “single story”. Private Estates International set up office in Nigeria in 2010 and is currently developing a track of land measuring 1,100 hectares into the new Enugu Lifestyle & Golf City. The city, which is built around an 18-hole golf course, has a residential, commercial and industrial layout. This investment happened because an entrepreneur was willing to tell a compelling investment story and the investor was willing to listen with objectivity.

Lagos Property: 4 Bedroom Town Houses Content from Nigeria Property

Type: House
Bedrooms: 4

Property Description

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‘We are bullish in tracking opportunities in the market’

The retail and office space markets are, understandably, flourishing in sub-Saharan Africa, particularly in Nigeria, and as demand in this market continues to come from increasingly sophisticated consumers and international retailers, the need for products of international standards becomes imperative. FUNKE OKUBADEJO, a director in Real Estate at Actis – a private equity manager that prides itself with ‘power of capital’ – speaks with CHUKA UROKO on how her firm is pioneering the development of these products, among other issues. Excerpts:

Actis’ real estate portfolio in sub-Saharan Africa (SSA)
As a matter of introduction, Actis is a private equity manager focused on emerging markets, including sub-Saharan Africa (SSA) and Africa in general. It has about $5 billion funds under management and $1.8 billion of this has been committed to Africa. In real estate, we are primarily focused on SSA. We have investment in Nigeria, Ghana, East Africa, Tanzania, Kenya, Mauritius and Zambia.
We have pioneered the transitioning of the traditional shopping culture to more modern shopping malls with our initial investment in The Palms in Lagos. We have done the same with the Accra Mall in Ghana. We also invested in Ikeja City Mall which is still the largest retail mall in Lagos. We are also looking at office space. We want to pioneer this segment as well. Our office space project in Accra is the first green-certified office building coming to the market in SSA. We followed it up with The Heritage Place in Lagos which is still under construction and is expected to be delivered in the fourth quarter of 2015. It promises to be the first green commercial building in Nigeria. Heritage Place is bringing a total redefinition in office building in terms of what an office will be. It is unique in terms of specification and design; it is a modern eco-friendly product coming to the market.

Investment plan for 2014
Our main focus is on growing consumer asset classes. We will also be investing in infrastructure in the emerging markets where we are present. Looking at Nigeria which is a key market with a projected GDP growth of 6-7 percent, we see significant opportunity for us to make additional investment in the key areas such as commercial developments in retail and office segment. We see what we are doing as a great enabler of the growth of retail because we don’t want to see the retailers bothering about making investment in real estate space.
We are looking at big retail centres where people can do their shopping and also relax. From the real estate point of view, this is an area we have seen significant demand from consumers. We are also looking at opportunities in industrial business where we can provide facilities for big industrialists to warehouse their products. Moving out of Lagos, we also have investment in Abuja which is the Jabi Lake Mall. We are looking at other key cities in the country.

Challenges of investment
The major challenge here is being able to execute the project in time and on budget. We have the benefit of having done projects in other markets in Africa and so, we  leverage on our experience to execute our projects. We develop on an existing execution platform; we have a dedicated team that works on our key markets. This has helped to manage the challenges of execution in this market. We have been able to deliver in time and on budget and this has created a level of credibility for us in the market. In all we do, we don’t get any kind of incentive from government. For us, it is important that businesses are sustainable in their own right and not dependent on anything from the government.

Investment in retail outside the city centres
We are considering this quite alright, but location is very important in real estate investment. Location has to do with visibility and accessibility. To the extent that land is out there where people can see and get there easily, I think we will consider that. Certain projects are not carried out here because of the cost of land. Most times, it is difficult to get a sizeable piece of land that can accommodate a mall in the middle of a city centre or a highbrow area. This is not peculiar to Nigeria; it is all over the world. We don’t have any issue moving out of the city centre as long as there is a good transport link that can connect consumers to the mall.

The next five years of investment
We have done The Palms and Ikeja City Mall; we have The Heritage Place and Abuja Jabi Lake Mall under construction; we have appetite to do more. We are very bullish in tracking the opportunities in the market by continuing to replicate what we have done before in the primary cities of Nigeria. We expect to see more activity; we have developed capacity much more than we had before, giving us a lot more ability to roll out more projects.

Investment in residential projects
This is an area we are considering to look at, but our key focus is on commercial real estate and that is where we have developed capacity to deal with. The residential area is where more people have capacity to address. We involve ourselves in the commercial segment where there is less capacity locally, an area where a significant amount of equity capital is required and where there is ability to raise debt. We basically focus on areas where we see there is a significant capacity gap, and not just anywhere we see opportunity that is compelling.

Heritage Place as a green office building
When we talk about a green building, we are looking at sustainability which has to do with impact on environment. It also has to do with the use of energy and how this relates with the resources in the environment. The key issue about Heritage Place is the design and how much energy it is going to consume. It has been certified by Leadership in Energy and Environmental Design (LEED) that the design would achieve at least 20 percent more energy savings than a comparable building anywhere in the world. When we look at our own environment, we see that that number would be higher up to 30 percent or more.

Nigeria: Part of Elephant Building, 22 Rooms Burn in Lagos

Property worth millions of Naira were destroyed in Lagos last weekend during different fire outbreaks across the state.
The fire outbreaks affected over 22 rooms, a two‑ bedroom apartment in Osoba Street, Iyana‑ Ipaja axis and a section of Elephant cement building at secretariat, Alausa.
Of the 22 rooms, 10 rooms were razed in the fire outbreak at Badia, Yaba Local Council Development Area, LCDA, 12 in Idimu axis of the state.
Sources said that the fire outbreak in Badia started around 04:00 am on Saturday, while the two‑ bedroom apartment in Osoba Street started at about 02:06 am.
Vanguard gathered that these fire outbreaks were due to electric surge which apparently started in one of the rooms before spreading to others.
In Alausa, Vanguard gathered that the fire which razed a section of the Elephant cement building, ASSBIFI road, Alausa, Ikeja occurred at about 8:00 am on Sunday.
Though, no casualty was recorded but eyewitnesses said that all they saw was the building enveloped by smoke.
Confirming the incidents, Director of Lagos State Fire Service, Mr. Rasak Fadipe said; "For the fire outbreak on Saturday, these were among the seven distressed calls the fire officials in the state responded to."
On the Elephant house inferno, Fadipe blamed the cause of the fire on electric surge from one of the split air conditioner in the section. According to him, "we received the distress call at 8:10 am this morning (yesterday) from one of the officers who ran to our Alausa fire station."
He said that the fire affected a department on the fifth floor of the building, adding "it was due to our timely response that helped reduce the effect, if not the damage would have been more ."