Real Estate Expert, ESV STEPHEN OLA JAGUN Explains
+The Land Issue, On LAGOS-CALABAR Coastal Road
Real estate expert ESV Stephen Ola Jagun is the Managing Partner of Jagun Associates. He is a respected figure in the real estate sector, having made significant contributions in various capacities and holding several key positions throughout his career.
Recently, Stephen spoke with City People’s ISAAC ABIMBADE (08155107955) about President Tinubu’s impact on real estate, and the implications and benefits of the Lagos-Calabar coastal road for developers. Below are excerpts. Below are excerpts
How would you assess President Tinubu’s first 2 years in office, concerning real estate?
The economy has been challenging, and the rate of inflation has significantly affected the market. While inflation is not beneficial, it has prompted some people to invest more in real estate. However, this has also rendered homes increasingly unaffordable for many due to the prevailing cash-based system. For instance, properties that previously sold for around 60 million are now approaching values of 200 million or even higher, primarily due to the soaring construction costs.
On a positive note, President Tinubu is not your typical politician. Unlike many politicians who are primarily focused on government, he seems to empower the private sector. His administration has allowed the private sector to operate more freely.
One significant issue that needs addressing is access to land, which remains challenging. For instance, the registration process with the Lagos State government can be cumbersome. In response to challenges like building collapses, the government tends to tighten regulations, yet this often leads to increased revenue generation requirements. This makes it more difficult for operators in the market to function effectively.
While enforcement of regulations is crucial—after all, every life matters, and each loss is a setback for the nation—I believe a more moderate approach to revenue generation would be beneficial. When people are required to pay substantial fees to comply, many will attempt to circumvent regulations, possibly resorting to bribery to expedite their projects.
Critically, it’s important to consider that the buildings being demolished were not constructed overnight; they typically take a minimum of three to six months to complete. Where were the regulatory supervisors during this time? It seems they may have overlooked these developments. Consequently, the government is now in a position of destroying properties that represent the last hope for their owners. It would have been far better to address these issues at the initial construction stage, rather than facing the current situation of losing billions after allowing improper constructions to proceed unchecked.
The developers will build, sell, and then move on. Unfortunately, some individuals have nowhere to go as a result. This situation leads to a misuse of the housing stock, pushing people back below the poverty line. Many of these individuals struggle to find a fresh start. They may either move to rural areas where they face abandonment or turn to criminal behavior as a means of survival.
In my view, the law’s purpose should be to deter people from wrongdoing, but in Nigeria, it often serves to trap individuals, whether by the government or industry players. For instance, the Lagos State Traffic Management Authority (LASMA) may restrict traffic patterns just to find grounds for arrest. Law enforcement should ideally warn and guide people to avoid mistakes, but here it seems they allow errors to occur so they can catch offenders. In some instances, they might even entice individuals into making mistakes.
When someone constructs a building that obstructs a drainage system, is there no inspection team monitoring the roads? There are personnel on the streets, yet who warns these builders? Sometimes, you’ll see properties marked for violation, but mysteriously, those markings can disappear.
There was a time when the government allowed developers to regularize their properties. Let me explain that process. Originally, Lekki Phase 1 was a residential estate, but I can confidently say that 80 to 90 percent of Lekki is now commercial. The authorities were aware during this conversion. Now, they intend to penalize those who seek to regularize their properties. They’ve created a window of 90 days, extended a few times, during which developers can go in and pay the fees to convert their properties from residential to commercial status without incurring immediate penalties.
For example, if someone has a four-bedroom detached house that they converted into two floors of office space, they must bring their initially approved plan along with a current plan—what we call an “as-is” plan, which reflects the current state of the property. The authorities will then charge per square meter for the changes made. Essentially, this becomes a financial transaction, as they are telling you to regularize your property before incurring penalties.
The penalties imposed can often be exorbitant—sometimes four times higher than what one should pay. These penalties are intended to deter individuals from non-compliance, but where do they derive these amounts? If someone considers the costs, they would likely refrain from acting without obtaining the necessary approvals.
This is why we sometimes observe that people in western countries quickly confess when taken into custody. The penalties for breaking the law are often harsher than those for the initial offense, serving as a deterrent. Returning to our discussion, the penalty for making changes without approval is also significant. The government advises individuals not to worry about the penalties; instead, they should simply pay for the necessary conversions. Ultimately, it’s all about generating revenue.
These issues didn’t arise overnight. As we speak, some developers are still engaging in these practices. This can be frustrating for professionals like us. For instance, if my client is interested in purchasing a house in the Lekki area, I will ask for not just the title document but also the approved building plan. Many developers know how to navigate the system, allowing them to expedite construction while overlooking the necessary regulations. They complete the buildings, sell to the buyers, and then walk away, treating it as a business.
Those who haven’t been properly advised may find themselves in trouble five or ten years down the line. Just recently, the government went to Lekki and started requiring houses to present their approved building plans. It all comes down to revenue generation. When these violations were taking place, where was the oversight? That should have been part of their responsibilities.
As you mentioned, Admiralty Road and Fola Osibo in Lekki have been converted to commercial use.
Let me give you an example. My client owns a plot in Lekki and wanted to develop it into a three-story building. However, their approval was stalled for over four years. The officials claimed that the entire area was designated as residential. I took them to the site to show that every other plot on that street had been converted to commercial use through special arrangements. The original plan submitted was for residential development.
Eventually, I advised my client to withdraw that plan because I foresaw potential issues. We waited, and now the plan has finally been approved. You can imagine the difficulties we would have faced had we proceeded with their original demands.
The same government officials will approve the site for two floors designated for residential use. Meanwhile, my client plans to build three floors for commercial purposes. They will later claim that we have violated regulations. The people in the office are primarily focused on their own financial gain and will distribute the profits among themselves.
Honestly, only someone completely unaware would argue that Lekki is not a commercial area. So, where are the individuals responsible for monitoring development? Is this a crime? Absolutely not. Anywhere in the world, changes occur constantly. There will always be a transition where commercial activities gradually push residential areas outward. As this happens, the government can adapt and find solutions.
For instance, there are certain streets where street shops are not permitted due to their narrowness. Take Oxford Street in London as an example: you cannot park in front of your house. However, the government can work on alternative solutions, like creating off-street parking options. This way, they can generate revenue by allowing those who park in front of their shops to pay a fee. If a shop has only one parking space, they would pay specifically for that. Other customers would then need to find alternative parking.
This approach is what we refer to as regeneration. It happens consistently, but here, we tend to ignore these possibilities because we are focused on immediate profits.
On the Lagos-Calabar coastal road, someone wanted to sell a house to a client of mine last year. I asked him to send me the survey plan. When I went to Alausa to Chart it, I found that half of the house was on the coastal road. Here’s the gist: the seller claimed the house was worth about 250 million, which was true—it resembled a palace—but he wanted to sell it for only 125 million. The buyer was eager and said to me, “Pastor, let me just pay.”
However, the seller realized the mistake he had made and wanted to back out. When they presented the chart to me, I explained, “See the coastal road.” The seller expressed his gratitude, saying, “Thank you, thank you.”
Do you understand the logic? Those responsible for monitoring these areas—where were they when people were encroaching on the land? Now the minister is saying they’ve realigned the road. When you realign, it means you are moving the original path away from where it was supposed to go. If you shift it to accommodate people who have proper titles, you must compensate them adequately. If I’ve built in a legitimate area that wasn’t on your original plan, and you divert the road to my location, you should restore me to my former position. That’s what compensation means.
In other countries, the cost of living in a hotel while I look for a new place is also part of the compensation I would claim. How much is that going to cost me? Considering damages, how long will it take me to find a new property? People need professionals to help them with this. You should hire a professional to package everything, write a proper report, and defend it. The government will pay since you (the government) are the ones who deviated from the original alignment. They must not offer trivial compensation.
However, if they are the ones who built on the coastal road, knowing that the road has existed for years, then that’s another story. Many of these projects were planned 20 or 30 years ago and people are aware, yet they don’t proceed with construction. How many roads have been under construction in Nigeria for the last 25 years without completion? People draw their conclusions and assume nothing will happen.
That said, the project is a good thing. I’m happy about it; it’s part of the achievements that I believe have been made. Opening new roads and creating infrastructure will enhance the real estate market.
