Real estate developers in the country are responding to the shrinking of bank credit to the sector by embracing joint venture initiatives, BusinessDay has learnt.
“A lot more people are now doing joint ventures. People have started realising that since credit facilities from banks are drying up, you don’t need to find all the cash to develop your property,” Gbenga Olaniyan, CEO, Estate Links Limited, told BusinessDay.
Industry experts say this shrinking of bank credit, which is undermining housing delivery and supply to the market, is part of the lasting impact of the 2008/2009 global economic meltdown on the real estate market in Nigeria. In some cases, banks have demanded that developers provide off-takers ahead of project completion as a pre-condition for accessing credit, which some developers find difficult.
The Lofts, a 28-unit estate located in Lekki, Lagos, is one of these joint venture projects. It was recently delivered as a joint project between Estate Links and Capital Corp, an investment manager, which brought some of the funding. The Lofts sits on one acre of land in the Sangotedo area of Lekki.
The estate, which is a response to an identified gap, comprises five-bedroom detached and four-bedroom semi-detached houses with boys’ quarters. It is targeted at middle-income earners for whom the developers reason that the N25 million price tag is “realistic”.
The Mansard Place, a N5 billion iconic office complex in the heart of Victoria Island, is also a joint venture project between African Capital Alliance and Mansard Insurance (formerly GTAssur). The office complex is a five-storey double-tower building sitting on 11,000 square metres of land on Bishop Aboyade Cole Street, Victoria Island Central Business District (CBD), Lagos, and according to Tosin Runsewe, Mansard’s CEO, the building boasts of a simple yet functional, iconic design, with keen focus on the aesthetics and practicality of its high quality interior.
Jabi Lake Mall, Abuja, touted as the largest in Nigeria, with an estimated construction cost of $100 million, is yet another joint venture project between Actis Nigeria and Duval Properties.
Whereas Actis is a foremost investor in retail centres in Nigeria, Duval Properties is an indigenous real estate investment and development firm owned by Hakeem and Myma Belo-Osagie, with Isabella Okagbue and Bello Garba as directors.
Chudi Ejekam, a real estate director at Actis, told BusinessDay that they found Abuja a strong market, observing that the city’s 2.2 million people underpin its potential buying power.
“In Abuja, there are over 68,000 households with annual expenditure of over $150,000 per household, which is quite fantastic. For a retailer and investor, these statistics are quite compelling and emboldening,” he added.
Analysts are of the view that investor confidence in the Nigerian economy is also a major driver of joint venture initiatives, explaining that this cuts across private and public sectors.
The analysts recall that the Nigerian real estate market was a major investment destination for $652 million raised by private equity firms, including Actis, FirstRand Limited (the investment banking arm of FirstRand Bank), the International Finance Corporation (IFC), and others.
Currently, a Gambian property developer is in Port Harcourt, Rivers State, developing an estate that promises to be one of the largest mixed-use estates in that oil-rich region.
The project is a joint venture between the company – Rivtaf Homes Limited – and the River State government, for which MoU was signed by the two parties for the development.
“We see demand in this market and are therefore making strategic investment in order to tap into the opportunities which the market offers,” Mustapha Njie, Rivtaf CEO, disclosed to our correspondent in an interview.
Njie added that investors are putting their money into the Nigerian market because “Nigeria has a large market with its over 160 million people who need homes, office spaces and shops for their businesses”.
Adebayo Adeleke, CEO, Lancelot Ventures Limited, agrees, adding that investors see commercial real estate as the area where the economy is actually going to boom.
“As it is now, the level of development we have in the economy actually justifies the demand we have seen in this segment of the market,” Adeleke says.
Chuka Uroko
