Pastor Ola Jagun is a member and former Chairman of Nigerian Institution of Estate Surveyors and Valuers, Lagos State. He is one of the most qualified and most respected members of the institution, and highly regarded when it comes to real estate matters.
He is a Certified Facility Manager (CFM) of the International Facility Management Association (IFMA) based in America, Certified Facility Manager of Japan (CFMJ); member of the Project Management Institute (PMI) of America; fellow of the Royal Institution of Chartered Surveyors (RICS) of United Kingdom (UK) and fellow of the International Facility Management Association (IFMA).
He is the Chairman of the Property and Facility Management Faculty of NIESV and a past President of the Nigerian Chapter of the International Facility Management Association (IFMA).
Pastor Jagun is an award-winning professional, who has several awards in Nigeria and abroad to his credit.
Last week, City People’s ISAAC ABIMBADE chatted him up on the challenges faced by the real estate sector last year. He also talked about how players in the sector could make 2018 a better and more prosperous year. Enjoy the chat.
What is your assessment of real estate sector last year?
First, I will say thank God for surviving the year. The year was a bit turbulent, but somehow the economy and people are gradually coming out of recession. The truth is that, we are the major centres where activities need to take place – Lagos, Abuja, Port Harcourt in that order. The market is still a bit dull and people are struggling.
Those in the retail market are trying to make things happen. The housing rate did not really improve significantly, while the current occupants are trying to be above waters because of high cost of merchandise.
Second, in the residential sectors, there are so many defaults in rent payments. People are still struggling and trying to find their feet. Many people are still defaulting, while fewer ones are trying to get a bargain to reduce rent.
In the commercial sector, there was also a level of default, but not as much as that of the residential. Definitely, there are some few defaults there. By and large, however, people are trying to be creative and find a way to stand on their feet. One of the major challenges we have is that, from the military era, Nigerians tend to rely on government. Some years ago, if the government did not release the budget, nothing would be done till the budget was released. But gradually, particularly with Lagos as a government and as an economy, people are gradually moving away from government monetary allocations. When we talk about most of the highly developed economies, 20% of their citizens don’t really know their budgets because they don’t rely on them.
But here, we rely on government monetary allocations. In those places, they look at the direction the government wants to push their economy and then the private sector would move. So, gradually, the private sector is taking its place in Nigeria and that is why the major centres in the system are moving. During the Chrismas and Boxing Day period, I was with my friend in Lekki and the area had light all through and I concluded that the power distributing firm is now a private company, so they have to focus more on places they could get more money.
As a business person, naturally, we focus on places that would fetch us more money. Although, the government is trying to improve on some of these things, but the private people will focus on areas with more money. The government is trying to balance the social responsibility which it has towards the lower levels. But as business persons, they would ensure that the upper level people are enjoying the more electricity because they pay better.
Gradually, the economy is trying to move away from government’s strangle-hold budget. People just listen to the reading of the budget for hearing sake because it really does not affect them that much, typically in Lagos. But if you move toward Osun State or Ondo State, people would want to know how much is allocated to what scheme projects, because most of them are salary earners. They still rely on the government for their salaries. So, I believe that many people are no longer budget-dependent and are raring to earn their living independent of government budget.
I also believe that this year is going to be better because Nigerians would now realise more that they don’t need to rely on the government. They would think of what to do to be creative and be productive and that is why most schools including the NYSC programmes teach members and students entrepreneural skills and how to be productive and add more value to the system. Now bankers are leaving banking, which everybody was earlier running into, to find what they have passion for that will fetch them more money.
I believe that things would start improving in the real estate business. The real estate business is a key area in our lives because we must live in a place. We must use accommodation for whatever we are doing. Land is very important to any nation. So, if people are gradually coming up to this reality, definitely, it would have a positive effect on the real estate sector.
Last year, a lot of real estate firms recorded huge profits especially those involved in land and properties sale. How was that possible with the numerous challenges the business faced?
The thing is that, there are some segments in the business that are making impacts. One is the wholesale, not necessarily the rental segment. The reason is because like I said earlier, people are coming out of the box to be creative in delivering their services to the market.
Most of the real estate companies make it easy for people to buy land and houses by giving them a payment plan, which suits them over a period of time. Today, an average Nigerian would be so proud to have a piece of land no matter how little it might be. That is why a worker who is earning a relatively low income would be willing to make some sacrifices and drop a certain amount monthly to own a piece of land. But with his low income, it will be a drain on him if he is to pay for the land at once. Some real estates companies are giving suitable payment plans of 5-10 years. So, they are being very creative and this would continue this year.
A lot of real estates players are very optimistic that very soon, things will happen in the business. In what areas do you think their optimism would become a reality because many still depend on government’s budget?
The economy depends on governments’ budgets; what would they allocate to this ministry, what would they allocate to that one.
What is each state going to spend and how the real estate firms could get a piece of it. But now, people are trying to create activities to generate income independent of the government. Let’s look at Lagos State as an example. When other states are begging for handout from the Federal Government to pay salaries, Lagos State has realised huge amount from taxes and land levies and some other assets. They state could survive and not necessarily depend on the Federal Government. So, I can say that if there is no federal allocation to Lagos State, the state would survive on its own. Although, I know that in the tax system, there are some areas that need to be improved on because you can’t dictate people’s taxes to them. It should be based on what they earn and not dictated. I also know that many people have defaulted in tax payment and in their returns in the past.
Before now, most graduates look for jobs with their certificates to earn salaries and be gainfully employed. But now graduates are being creative and are looking for things they would do that will earn them money and would also enable them to be employers of labour.
If you were to rate Nigerian real estate business compared to that of other countries, what would be your verdict?
The real estate in Nigeria is very bouyant and versatile. Yes, we are still trying to find our feet in some areas, but the real estate in Nigeria is benefitting from our environmental and cultural activities and beliefs. Like I have mentioned before, the average Nigerian wants to own a piece of real estate.
So, that is an advantage to real estate success in Nigeria and also we have the population to our advantage. The population is huge and quite massive. We have about 150-180 million people in Nigeria. A section of that population is working. And people in the age bracket of 30-65 would want to own a part of real estate. Although a percentage of that already owns one, but still wants to own another for investments. In this part of the world, people believe more in real estate for their retirement. Although, we have a lot of pension schemes in Nigeria, but people still believe that land is one thing you can not take away from them once they own it. The pension company can collapse because they have had issues in the past. Even the insurance business, people are just starting to trust them, but people have more belief in land and housing. They believe that they could foot the bills and later leave an inheritance for their children in life. That is why the returns in the sector is so massive. That is why investors invest more in the sale sector because of the unstable government policies.
But the area I believe we should work more on is the mortgage system in Nigeria. If the mortgage sector is improved, more people would rush into the real estate business (sector) to make it bouyant.