Real estate industry needs infrastructure revolution to spur growth, address housing deficit - Dradrock CEO
The International Human Rights Commission (IHRC), a non-political Transnational Intergovernmental Organization, says Nigeria has a growing number of homeless people with the country’s housing deficit now standing at 28 million. This, the organization reasons, is a setback to achieving affordable housing, which is a key component of the 2030 Sustainable Development Goals (SDGS). But OLADIPO IDOWU-AGIDA, Group Managing Director of Dradrock Real Estate Limited, in this interview with CHUKA UROKO & DAVID IJASEUN, says that an infrastructure revolution, including modern roads network, sustainable power supply, and a good drainage system, can change Nigeria’s housing story. He also speaks on other issues. Excerpts:
Nigeria is passing through a difficult economic situation, especially with its galloping inflation. How is this affecting the real estate sector?
This is affecting everybody, not just the real estate sector. in reality, the whole world is going through a process and Nigeria is not an exception. However, Nigeria has its own issues based on its uniqueness. it is unique for you to be a part of africa; it’s now unique for you to be a Nigerian. To run a business here in Nigeria is also quite different from running a business in some other african countries, even in our neighbouring partners.
But now talking about Nigeria with respect to the economy and its impact on the real estate industry, inflation has more than doubled and has increased costs. There are instances were cost has doubled like 100 percent and this is something heavy that we are dealing with everyday.
You start off a project and you don’t have an idea of how much it will cost you to finish it because you don’t know what it is going to cost you to go to the market the next time you need to buy some things. One of the ways to do it is to just go ahead and frontload. That means buy all you need ahead of time, and import all your finishing materials on time. For real estate, the exposure to inflation is critical because it affects cost of raw materials.
The second exposure for the real estate industry is foreign exchange. We know what we bought when dollar was within the range of NGN300. But, right now, it has doubled to over NGN 700 and you know that majority of our finishing materials are imported.
However, a lot of players in the industry are trying to navigate this. We want to see how we can be creative and innovative in our designs and also be very efficient. One of the ways to do this is just to have a better finance model. real estate is a game of finance. it requires a lot of finance to drive it.
Besides inflation, high energy cost, particularly diesel price, has put all sectors including real estate under intense pressure. What is the way forward for real estate players like you?
People should be looking at renewable forms of energy; they may be capital intensive or more expensive, but i think that should be the way forward. You can totally eliminate a lot when you have other forms of energy generation to power your house or your estate. You can even stay off the grid if it comes to that. But, of course, there are other forms of equipment on sites, maybe some of these big tractors, they have to still run on diesel.
When it comes to the home itself, you can create a smart home with lower energy saving appliances that you installed and then power the whole house with other forms of alternative energy. This also helps us to improve the quality of the environment
itself because they are renewable energy and not just emitting wastes into the atmosphere.
This industry has seen increased participation in recent times. What does this mean for the industry and how can customers distinguish between real and figurehead players?
When you do an analysis of the real estate industry, one of the threats which could also be a strength in some instances is that there is a low entry level. What does it take to be a real estate player? it takes you to gather up some money, buy a parcel of land, develop, off-plan it and start selling or just go to the ‘epes’, negotiate with some of the ‘oniles’, have a payment structure and start pushing the market.
How is this affecting the industry? it can affect the industry in bad ways also. But let me just focus on some of the positive impacts. Newer or positive ways could be the emergence of new entrepreneurs in the industry. it can also mean that it is easier for people to benefit from the opportunities in real estate. You can do something else and run a small development by the side because you are passionate about it, and you are also helping to solve the housing deficit.
Don’t forget that we have huge housing deficits. if you have more players, it means that more solutions will come to this deficit. The players we have are not even enough to solve it. if we have access to capital, access to funding for people to buy through mortgage system, the deficit we have and the players are not enough.
But looking at the other side, recently there was another building collapse at Oniru in Victoria island, Lagos. i think it was a seven-storey structure. Buildings don’t just collapse, one or two things would have gone wrong. We need professionals to be involved in this industry and there has to be a lot of things that will happen before you can set up. i am sure that with time we will be coming together to see how we can work with the government institutions to strengthen this industry.
On how people could know the difference, my advice is that you
check out anybody you want to do business with. Find out who are they, who are the people that are driving the business, where are they coming from, what experience do they have to be able to deliver what is required?
at Dradrock, we give people the opportunity to ask us a lot of questions, search about our project, see what we have done, how many years we’ve been in this industry, including when we were working somewhere else before we started; all these go a long way. So, the industry will still take better shape. at the moment, it is fragmented, but with time it will be well structured.
Dradrock is a major player in the Nigerian real estate market, offering upscale products. Bulverton Hills debuted earlier this year in Abuja. How has the market received it?
it’s been quite interesting and the market is excited about it. Part of the feedback we get from our unique design is that people love the designs and so, the reception has been quite impressive.
Smart homes and a variety of high-end amenities are available at the Bulverton Hills. How much will buyers have to pay out of pocket to buy these homes?
We are very conscious of affordability and for us this means convenience. We have flexible payment options that customers are comfortable with. That’s something that we have factored in a lot of projects. at the same time, we do not forget to focus on the importance and some of the values that the project offers. For people that seek what the value is, they will get good value for their money also at a very comfortable rate.
Asides buying properties for residential purposes, people can also invest. What level of returns can investors expect from your projects?
When people come in at the early stage and buy our properties for investment purposes and want to be able to dispose of them when it’s ready in about 15 months, in some instances, they get close to 75 percent return on some of the units we offer.
You know, the beauty of offplanning is that you are buying at a reduced rate. actually, we sell for N320-350 million per unit but by the time this unit is ready, it can be sold for nothing less than N500 million, including every facility that we have put in there and that alone is massive.
and for people that have extra cash and want to invest with us, we have a lot of investment platforms where they can bring in their funds, we put it in a project as a project partnership for example and if they want to be a part of that project with us, we are open to all of those options.
In less than two years of construction, you have sold out and fully allocated the Annapolis Courts 1 and 2 which have over 100
plots of land. How did that happen?
September 18, 2022 made it our fifth year in operation. it’s been quite challenging but god has been on our side. We also have a very strong team that’s been hard working and moving us forward.
We started more with the land options which involves people paying for the land and we were able to give them their allocations over the period. Then, we moved into construction and we delivered our first housing unit in Pacific Manor 1.
Some other units are at the point of completion right now. Some keys have been handed over already and there are many more under construction too. Yes, we have been able to go farther than where we were. a lot of things that we want to do are still coming up but gradually we are making progress.
What are the lessons startup firms can learn from your journey as an organisation?
Persistence is key because every day as you show up, you build traction and no matter how tough it is, you don’t give up. it may sound like a cliché or a common thing but tough times never last but tough people do. Operating in a country like Nigeria, you have to be really tough.
another thing is that there’s a lot experience can do. i will advise young entrepreneurs who want to start up something that it’s good to learn somewhere first. Before we started, i had over 12 years’ experience working in a real estate firm. i was involved with product development, sales and marketing, project management, business developments and all.
all of those experiences come to bear, and that’s aside all the other personal training. There’s a place for experience that you can never overemphasize and, you know, what experience gives you is speed. When people point to our achievements in five years, we are not riding on five years, we are riding on 12 years’ experience; adding it to five years, that’s what we are working with.
Don’t forget that irrespective of your learning or your experience and educational qualifications, you are still going to learn some real lessons face-to-face. The third thing that i feel everybody should do is that there should always be a need to get mentors.
You know, the beauty of off-planning is that you are buying at a reduced rate. Actually, we sell for N320-350 million per unit but by the time this unit is ready, it can be sold for nothing less than N500 million, including every facility that we have put in there and that alone is massive
How does your background as a certified counseling psychologist impact your business?
That was my first level of background. Since then, there’ve been other additional backgrounds. i have done managerial psychology, project management, construction management, MBA and i still want to take additional two degrees, one additional masters and a PHD, and that’s just preparing for the future.
Of course, that background has helped me deal better with human beings. No business organization can grow beyond the level of growth of their people.