Invest in Nigeria!
Erejuwa Gbadebo, CEO of Broll Property Services Nigeria, discusses the "huge potential" of the country's property industry..
Writer Ian Armitage
Project manager James Mitchell
According to Erejuwa Gbadebo, CEO of Broll Property Services Nigeria, the country's real estate industry is one of the most virile and profitable sectors, despite the challenges facing the industry. It is expected to grow. And fast.
"Nigeria has one of the fastest growing economies in the world with great prospects for investors especially in the real estate sector," she says.
Foreign investors continue to eye the Nigerian market.
"Nigeria is very important for Broll. The country is among those leading the charge in Africa's economic revolution. Its large market, growing middle class and rapidly transforming economy continues to attract international investors who find the opportunities irresistible."
Broll is headquartered in South Africa and is heavily invested in Africa, believing it is on a "potentially unbeatable" growth and development path for the next two decades, and will increasingly attract global investment.
"There's been a positive shift in investors' attitudes to the fortunes of the African continent," says Gbadebo. "Nigeria is the most populous black nation in the world, the most populous nation in Africa, and there is a huge, huge amount of potential within the real estate market.
"When we entered in 2004, there were many people doing many things but nobody doing what Broll does. There was a need for us.
"The Nigerian economy is tipped to exceed that of South Africa by the year 2020. So, really it made sense that Nigeria be on the cards for Broll if they wanted market dominance on the continent of Africa."
Broll Nigeria is involved in almost everything to do with buildings, apart from the design, construction, or demolition of them. And the firm is benefiting from Nigeria's retail boom.
"The Nigerian market is a very interesting one and tends to go through trends," says Gbadebo. "What Broll tries to do is focus on the trends of the time and set up a core competence in that. At the moment the Nigerian retail environment is achieving considerable growth and it had positive ramifications for us. We offer the full bouquet of property related services, including property management, facilities management and shopping centre retail consulting, all utilising our Broll-Online™ property management software solution.
"Retail is where we are achieving the most growth at present and the penetration of South African-owned retailers, for example, like Shoprite, Game Stores, PEP and Mr Price into major Nigerian cities has been attributed to the favourable investment climate and the big market in Nigeria.
"It was only in 2006 that The Palms Mall opened in Nigeria and the industry has boomed since.
"The government is trying to make Nigeria investment friendly, with the lifting of bans on some areas of foreign trade, aiding the rise in the number of shopping malls in the country. So it is clear there is a need for this space and Broll is positioning itself as a market leader in retail leasing, research and management. That is where we are focused.
"Our biggest portfolio in terms of revenue is retail. We manage six shopping centres and are involved in letting at least 10 more."
Despite obvious challenges – Nigeria suffers a lack of sufficient infrastructure, lack of adequate electricity and there are tax and policy issues, among others – foreign brands and investors haven't been put off.
Access to land, high cost of finance alongside high cost of construction, a dearth of qualified/skilled professionals, lack of innovative and appropriate building techniques, up-to-date market data and the unclear legal framework are some of the challenges facing the real estate sector in the country.
"What challenges are there?" asks Gbadebo. "For one, there are issues in the legal regime governing land administration in Nigeria and I think there needs to be a review the Land Use Act to correct the challenges associated with land purchase in the country. "I don't see there being a quick fix and I would encourage real estate buyers to make sure they follow the proper procedure, irrespective of the challenge of delays in the process of land acquisition.
"That is where we come in. We can obviously help in this respect as the situation can be complicated."
Nigerian-born, Gbadebo is keen to promote the country.
"One of the big challenges is Nigeria's image abroad," she says.
"Some people still view Nigerians with the lens of yesterday. That can be problematic.
"But people are still coming and one of the biggest challenges is actually servicing the number of people who want to be here.
"Nigerians are optimistic people," she adds. "Nigerians are people who "can do," whether or not they can or can't. Nigerians will say 'we'll make it work' and they have a desire to make it work. Nigerians are competitive. Nigerians are entrepreneurial. They are the pioneers.
"Nigeria has a lot of to offer."
Gbadebo says real estate is the "place to be".
"I would say to any global real estate person that Nigeria is the place to go. I am a realist; I'm not an optimist. I believe in Nigeria. I look at it with all its problems and, yes there is work to do, but there is an advantage to being here so come and invest. Capitalism is a very pure motive. There is good honest money to be made in Nigeria."
Broll has helped revolutionise the Nigerian real estate sector by providing platforms that have created investable real estate and elevated standards in the industry.
"We are often the first choice for multinationals looking to establish themselves in this fast growing economy and we can boast of a number of Nigeria's and the world's best-known brands like Pfizer, IBM, Siemens, Nokia and Standard Chartered, among our clients list.
"In retail, where we have a huge influence, we advise mall owners that we will look for tenants in three broad categories: multinationals; the nationals, i.e., local players, some of whom we have helped to grow; and locals, those businesses that are local to the neighbourhood. We then focus on helping to grow those local businesses to becoming nationals. We have done it successfully with five or six Nigerian brands that are now becoming national names. One of them has moved into Ghana and is becoming a regional name. That is what we are doing on retail.
"In residential, if people come and ask our honest opinion, we advise them to ignore high end luxury as it is expensive and most people here can't afford it. And when you say middle income, do not look at it in terms of European middle income. Please make sure you provide housing that middle income people here can aspire to buy. We are also talking to and are involved in REITs as well as talking to some of the banks to say "set up credible mortgage schemes because the vast majority of your middle classes abroad don't buy houses outright cash down". It is a different mindset. In Nigeria when buying a home, people won't approach the bank; they'll put the cash down. That means that many rent and few can afford their own homes. So our advice to developers is to find land they can afford, come with their own money, set up REITs and build affordable accommodation; people can then pay monthly with interest and in 15 years own the home. We aren't the biggest player in the market; I have to be honest as we are still young. But we are innovators. We have helped to set a trend in retail that we will try to push into the residential and commercial sectors. "Cashflow is important," she adds. "In the malls we manage, we collect rental quarterly in advance. Tenants know they don't have to find a year or two or three years rental upfront and this helps with financial management.
"This is now the norm in formal retail and hopefully we will be able to push it down to monthly rentals and then push it into the commercial sector. We would tell clients who are renting out a building to charge monthly to fill their space and charge an escalation. If tenants don't want that, they can then pay the whole year upfront. But offer choice as it helps with cash flow. Currently there are a lot of people and businesses here that are not moving out of aging buildings because of cash flow. If you want to move, you have to pay two to three years in advance so people don't move."
To learn more visit www.broll.com.ng.