Developer proposes energy bank to tackle crisis in retail real estate
• As Lagos super mall gets December completion date
FOLLOWING increased challenges in the commercial real estate, especially in the retail segment of the market, a property developer has called for the establishment of an energy bank, which will finance, and support private businesses to invest in the energy sector.
The Chairman/ Chief Executive Officer, Median Infrastructure Development Company Limited, Mr Olumide Akinsanya, who suggested this, advised commercial banks to form a consortium to bankroll ventures that will alleviate problems facing the industries and entrepreneurs.
He revealed that one of the biggest challenges bedeviling the shopping malls is energy. “We have subsidised the electricity. Over a period, we paid about N300 per kilowatt unit for the tenants. But at the end of every month, we do not recover enough to pay Discos and buy diesel. So, we end up subsidising. That is when diesel was N800. We have not increased that price despite diesel being N1,600,” he said.
According to him, investors recognise the opportunities that exist with value- add real estate and continue to chase markets with strong tenant history, while lender for retail real estate has become more conservative, and money moving into the system comes with a higher cost of capital due to cautious lending on retail assets, which is a long- term finance.
Akinsanya, whose firm is, versed in the development of prime shopping malls, such as Owerri Mall, Delta City Mall, Asaba Mall, Uyo Mall and the upcoming Super Mall with a lettable area of 5,800square metres, said the company has built over 40,000 square metres of lettable space at the different malls.
According to him, despite growth in rents and new revolution in the mall industry, the number of malls is still inadequate to meet the needs of the 200 million Nigerians. “While the return on investment is good on commercial real estate, the ticket investment required is huge,” he said.
Akinsanya stated that another major challenge crippling the sector was the exchange rate as some foreign investors exited the Nigerian market due to issues bordering on repatriating of their funds. “Even when you now earn in naira, you cannot exchange it in the official market and remit your loan back. So, you are taking dollar loan, you are earning naira, and the currency is going down, while the dollar goes up in terms of the value. So, it has been a struggle in that aspect,” he said.
He said the local investors are devising their own ways of ensuring investment in naira is sustainable, while revealing that some financial institutions have examined their model and are ready to support their initiatives. “We have devised our model to continue to be in the market and offer people quality service that they deserve. We are currently ensuring that people buy stores and deliver a debt- free asset.”
MEANWHILE, Akinsanya disclosed that Median Infrastructure Development Company agreement with Wemabod Limited for the redevelopment of over 4, 426.45 square meters of land, formerly known as Super Cinema or Super Plaza along the bustling Akerele Road, Surulere, into the proposed Super Mall is still on course.