Owolabi Jaiyesimi is one of the Lagos developers who plays big in that sector. In this interview, Owolabi, who is the CEO of Legacy Properties tells City People Publisher, SEYE KEHINDE, his company’s plan for 2021. Below are excerpts of the interview.
2021 has begun, what are your plans for the year? What is your focus this year in real estate?
Our focus has changed at Legacy Properties Limited. Having delivered countless luxurious homes in the country in the past years. Our focus this year is to help drive an aggressive reduction in housing deficits through massive/conscious investments in cheap and affordable housing units in the average income neighbourhood.
What is the state of the Real Estate business right now?
It’s good. We are back in business after the lockdown of last year. Before now things had been slow. But gradually the sector is coming back. The major problem facing the real estate sector before now is the fact that banks don’t lend to real estate or put differently, they do, but the way the loans are structured makes it unattractive. It doesn’t really support the real estate business.
What do you mean?
You are giving me money for real estate and you want me to start paying back immediately. There is no moratorium building time. That is the major challenge to real estate in Nigeria. Real Estate all over the world, is always the highest employer of labour, and that is also the sector that gets everybody moving. Because everybody wants a piece of cake. Everybody wants to own a home. When you start making money, the first thing that comes to mind is how do I build my own house or how do I acquire a house, shelter, are the first thing that comes to mind. But we are not able to give back to people the way we should in the sense that the funding has come so expensively, under very, very unfriendly conditions. So, it makes it difficult for you to pass it on to the use.
Bye and large, the CBN is beginning to mandate the commercial banks to lend to real estate under a better condition. We are beginning to see that, though not fully in shape.
How did the pandemic and lockdown affect the industry last year?
It has affected every industry. Every sector. Real Estate is not excluded. Truth be told, I think the sector that is most affected is Real Estate. Yes. This is because a lot of people suffered losses.
Those who have invested in Real Estate are affected. Tenants are also affected. In most developed countries, outside Nigeria, the government gave people MORATORIUM on their mortgages. It is not so in Nigeria. In Canada people were given a MORATORIUM of 3 months to 4 months you won’t pay your mortgages for those months. It doesn’t mean that you will not pay. You will pay. But for those months of the pandemic, we know you were not making money, employers were sending people home, salaries were not fully paid, so we would expect that you do not pay fully. Nigeria is not so, nobody supported anybody, especially in the Real Estate sector.
And the banks, for some of their commercial loans they were able to give a moratorium for 90 days. That does not really help anybody because you are not making money, you were not constructing.
Nothing was happening in those months, so to say. The pandemic affected everybody generally.
So things are beginning to improve now…?
Yes. Things have picked up. People have gone back to the site. We are talking to the banks again. The sector has started again.
Some people say that Covid-19 has changed the kind of houses people are demanding. Is it true there is demand more for 2 to 3 bedroom apartments?
You are right. People now build functional homes. People are now asking for functional homes. Gone are those days that you will build houses with 5 to 10 rooms. Now, people just want their masters’ bedroom big, and they want their kitchen. That is what people now look out for in real estate. People look out for their bedrooms and kitchens. People are not looking for visitors rooms, and extra rooms.
People now just want functional homes. That is what is happening in the UK. It’s because of the cost. The Developer wants to reduce cost. It’s is easier for you to sell cheaper homes. The Buyer wants cheaper houses, so he is not looking for any luxury as such. It is better also for investors. There is no space for any luxury as such. I just want to come home, I just want a compound, I will park 2 or 3 cars. I don’t want a big compound. This is because people no longer want to gather unnecessary luxury any more. We are getting there.
How many years is your real estate company?
We have been at it now since 2005. We have built so many properties. The focus from day one has been to impact the housing sector in such a way that everybody, every adult in Nigeria will have access to housing. I have been a Housing enthusiast. I have delivered papers on Housing and I feel like it’s done everywhere, everybody should be able to access Mortgages, no matter the sector you are in. We should be able to access Mortgages. That is what we want to make possible in Legacy Properties.
We want to build functional homes in conjunction with the Mortgage Institutions & Banks and see how we can deliver to end-users at the cheapest cost and under a very favourable condition to the end-users.
It is a tough battle. We are not there yet. If you say 100%, the Mortgage sector has not even done 20%. We still have a long way to go. One is the Availability of Funds. Secondly is Trust. Nigerians are bad borrowers. Once you give them money and say pay the mortgage over 20 years they won’t come back. They will pay one, two, three, four months, they won’t come back and it becomes a challenge to the banks. So you can’t blame the banks as such, because Mortgages is basically about Trust. I give you the house, you have access to the house and I expect you to pay overtime, 20 years, 30 years. But many defaults.
The 3rd challenge is the fact that banks don’t give long term loans to builders. Tenure of Mortage is a challenge. Most banks can’t afford to give you a loan for 20 years. There is no way a bank will give you a Mortgage now and you will be able to pay back in 5 years. The loan will be too much on you as a User.
You can’t blame the banks. They also don’t get long term funds, they can’t give out long term funds. Nigerians should be encouraged to save for long term. Our institutions should place money in Nigeria banks for years so that the banks can plan with such monies. How can anybody who works be able to pay back N40 million in 5 years? That is another challenge about Mortgage in Nigeria.