00:00From fake agents to rising house rent and also growing deficits in the real estate sector in Nigeria, we have real crises at hand.
00:10So right about now on Guardian Talks, we are going to be unpacking the issues and looking at how possible to fix them.
00:17I am joined with a real estate expert, but after the break, you get to meet him. Stick around.
00:30Welcome back. You stay tuned to Guardian Talks and I am joined with Mr. Gamaliel Tanimomo, a real estate expert.
00:41Welcome to Guardian Talks. Thank you for having me. I'm sure you're not going to sue me because I pronounced your name correctly.
00:46You are forgiven. Okay, so let's get down to the business.
00:51I mean, there's a lot that is happening already in the real estate sector in Nigeria, from growing house rent to fake agents,
00:58and also growing housing deficits. So to start with, what would you say are the key factors driving Nigeria's current real estate crisis,
01:06from affordability to regulation and also housing supply?
01:10Okay, so thank you for having me and it's a pleasure being here.
01:13You're welcome.
01:14The crisis in Nigeria's real estate is a tangled web of systemic failures, financing barriers and policy gaps.
01:22So number one is the urbanization pressure. Lagos needs a minimum of one million houses every year, but delivers less than 10%.
01:33Number one.
01:35Number two, according to the World Bank, 2023 starts.
01:41Nigeria has 28 million housing deficits.
01:44And then number three is that 68% of all land issuers have problems. That's according to PwC.
01:53Okay.
01:53So those are some of the...
01:55PwC, what's the full meaning of that?
01:56Pricewaterhouse Corporation.
01:57Okay.
01:58So those are some of the few issues and challenges in the real estate sector.
02:04Of course, and that has pushed up the demand.
02:07So supply is more than demand.
02:10Okay, so in a country like Nigeria with millions of homeless citizens, how realistic is the dream of home ownership for average Nigeria?
02:22It's going to be El Dorado, trust me.
02:24Okay.
02:25So mortgage financing options are very limited in Nigeria.
02:30In South Africa, we have our 30% mortgage options, but Nigeria is less than 5%.
02:37That's number one.
02:38Number two, affordability is critical.
02:42Interest rates shuttles between 18, 25, in extreme cases, 30%, and the bank will ask for your BVN, for your mother's head, your father's neck, etc., etc.
02:52And then the other one is construction costs, which has skyrocketed up to 2,000% since the year 2000.
03:00So it is making the real estate sector less attractive for investors and even for developers to apply their trade.
03:10Okay, so a question should actually come into my mind, but I'm going to ask that later.
03:13Now, recently, the Lakers state government declared it illegal, that it is illegal for anyone to operate in the real estate without proper registration with PASFERA.
03:24What impacts do you think this directive will have on the sector, especially on informal operators?
03:31So I feel that when there's an open market, there tends to be recklessness.
03:37When there's an open market, there tends to be a bit of wickedness.
03:43Let me use that word.
03:44So the decision by Lagos state to regularize or sanitize that industry by bringing people together, one is for control purposes.
03:56Government is the biggest spender, and in terms of policy, they influence policy.
04:02So I feel that that is a step in the right directions, and these agents or middlemen have done more havoc than good.
04:10I mean, if you want to rent a house, you have five people on the chain, and then one will take 5%.
04:16So by the time you get to the end of the chain, you are paying 25%.
04:19So I feel that you step in the right direction, number one.
04:22Number two, from the position of data, data drives decisions.
04:26So if Lagos state sees under the database of LAS RERA that they have a million agents, they're able to say, okay, what can we do?
04:33So I'm sure that the government has definitely bigger reasons for bringing everybody into that building.
04:39Because the question is, why is LAS RERA now coming up now with that development, which ought to have been in place before?
04:47It's better late than never.
04:48I'm sure that it's because of the feedback from citizens, et cetera, et cetera.
04:52And perhaps people have fallen prey to dubious agents, you know, and say, oh, I'm an agent.
05:00Fake agents.
05:00And, you know, it is going to be a case of what you ordered versus what you got.
05:05So that's about it.
05:06I was going to, you know, I said earlier that I was going to ask a question regarding something, which is what I ordered versus what I got.
05:12Because how do you make sense of maybe you go to the island?
05:16I mean, you know, there's always this, there's a way you categorize people who live on the island and then people, yes, you give them this kind of name, what have you, right?
05:27So you get to the island, you see a certain building or a certain structure, and then you hear this is 50 billion.
05:35And then when you check the whole structure, you compare it to a house in Cape Town, and you see that they are even collecting or paying lesser.
05:45Maybe the one in Cape Town is just 25,000, 25 billion compared to the one on the island, which is 50 billion.
05:53Why is it that?
05:54Okay, interesting question.
05:56So first, Lagos is one of the fastest going economies in the world.
05:59So it's not, it's a no-brainer that things would definitely be more pricey in Lagos than in any other economy.
06:08But let me cite a case in sample.
06:10This is the mainland, and this is the island.
06:13A plot of land in Ekeja will probably go for, depending on the location, maybe about 100 million, a plot of land.
06:20Okay.
06:21A plot of land in Leki will definitely go for half a billion.
06:25So there's already enough.
06:26What an unlocked area.
06:27It is what it is.
06:28But the cost of construction of a three-bedroom apartment on the mainland is almost the same thing as the cost of construction of a three-bedroom apartment on the island.
06:40So the only difference is the land.
06:42Okay.
06:43That is a variable.
06:44So you won't blame anyone for saying Leki houses cost 50 billion and mainland houses cost 10 billion.
06:52I don't know what's the big deal.
06:54It's the land.
06:55It's the land.
06:56That's number one.
06:56Number two, we also agree that a lot of developers do shoddy jobs, and this is without disrespect.
07:03And then number three is also the devil's public choice of what you deal with.
07:08There are at least a minimum of six, seven, eight, nine government agencies that you deal with as a developer.
07:16They ask for this.
07:17They ask for that.
07:18You are dealing with area boys, area girls, area children.
07:22This one is coming from Chief Tensy House.
07:25So it's, and those are cost of production.
07:27So once you are moving your trucks of cement from this end to that end, people are asking for money.
07:32As a businessman, I'll factor that into my cost.
07:35And then inflation.
07:37So you start construction with a thousand naira as cement, and then it jumps to 15,000.
07:42Who's going to account for that?
07:44Okay.
07:44So all of these variables make the cost of houses go off the roof.
07:50Right.
07:50Yeah.
07:51But you think that's not an issue at hand, overpricing?
07:56Overpricing in the real estate sector.
07:58So, so, so, so, overpricing is relative.
08:01Okay.
08:01And that is why it is an open market.
08:04Okay.
08:04So maybe you enlighten us on that.
08:05Okay.
08:06Now, like I said, variables differ.
08:09Yeah.
08:10If I start a project and the cost of cement is 8,000, and midway the cost of cement due to government policies jump to 20,000,
08:20how do I account for that differential?
08:22I need to make my money back.
08:23So the only thing I have to do is to go back to you, big woman.
08:27I'm sorry, madame, we are going to renegotiate, and I have to make money.
08:32So I need to pay my taxes, even though the government, according to the new bill, has reduced taxes, but I have to pay.
08:40Look, our government will come.
08:41Everybody will come.
08:43Maybe the only person that is not coming for me is God.
08:45And that influences how pricey the cost of buildings are.
08:50Okay.
08:51So with property scams and fraudulent agents on the rise, yeah, how can prospective buyers and tenants protect themselves in today's real estate markets?
09:01Thanks.
09:01First off, ignorance in the court of law is not an excuse.
09:05So people need to know.
09:08So when you download a software, we all gullibly just click, I understand.
09:15And in actual times, we do not read.
09:17We don't.
09:17So we just give our soul and body and mind to Apple.
09:21So when push comes to shove, Apple say you ticked it.
09:24So first there's knowledge.
09:25There's a knowledge gap.
09:26People need to read.
09:27So there's a 10-answer bill that there's going on in media.
09:31You need to.
09:31And thank God for what you're doing.
09:33People need to be aware.
09:35Number one.
09:35Number two, the last rare idea is also good.
09:38So if you want to patronize someone, question is, where's your last rare certificate?
09:43If you don't have it, run.
09:44And then number three is due diligence.
09:46It doesn't cost you anything.
09:47You want to buy a property, go to the relevant government agencies, go ask them, I want to do this.
09:52I want to do that.
09:53And maybe we finally, please, pray.
09:55Because no matter how much you do all of this, things will definitely happen.
10:01Right.
10:01Because we've seen situations whereby people say they got the right documentation, but some things still happened along the way.
10:08So again, government can be culpable in that.
10:12Because you can't issue documents without the governor's consent or the government's consent.
10:17So if you get a property that has a wrong title, there is either going to be an internal connivance or there was a lack of due diligence in the first place.
10:28Yeah.
10:29Because we've seen unscrupulous elements that change title document from you to me and vice versa.
10:34And then who bears the blood at the end is the end user.
10:38Lastly, looking forward to what policies or interventions do you believe can truly fix Nigeria's housing problem, especially at the state and federal levels?
10:46Okay, I'll take it on the short term.
10:49First is, can we have tech-driven transparency by way of blockchain to verify titles so that people are not scammed?
10:57And number two is, can we also have rent-to-own schemes?
11:00So why do I have to rent all the time?
11:03Can I rent-to-own?
11:04And in that way, I know that at the end of a particular period, I have my property.
11:09On the long term, we should enforce the national housing policy and then slash down considerably, and I am emphatic about that word, mortgage rate.
11:23And then let's look at construction costs from cement to iron.
11:28Can we liberalize it a little bit so that for developers, the cost of construction can reduce?
11:33Yeah.
11:35Okay.
11:36All right.
11:36Thank you so much, Mr. Gamaliel Tani Momo.
11:39Thank you for the insight.
11:41And then we hope that these challenges can, I mean, can get out of the way and then we have a better real estate sector in Nigeria.
11:50I hope so.
11:51We need to move from crisis to collaboration.
11:53Exactly.
11:53And fixing the problem.
11:55Yeah.
11:55And not just highlighting the problem.
11:57It's not going to be a walk in the park.
11:59It has to be intentional.
12:01It has to be successive and it has to be on the long term.
