• THE REAL ESTATE MARKET, AN OVERVIEW OF THE CURRENT GLOBAL CHANGES – KEY NOTE ADDRESS DELIVERED BY SENATOR GBENGA B. ASHAFA MD/CE FEDERAL HOUSING AUTHORITY AT THE REAL ESTATE DISCUSSIONS AND AWARDS ORGANIZED BY THINKMINT NIGERIA IN PARTNERSHIP WITH BUSINESSDAY ON 21ST SEPTEMBER, 2020.

    Protocols.

    Introduction

    I would like to start by commending the organizers of this program, Thinkmint Nigeria and Business Day Newspapers, for putting together a timely and well-thought-out symposium like this. Their ability to aggregate the high quality of panellists lends credence to their wide network and professional expertise.

    I have been saddled with the responsibility of setting the tone for this 2-day program by delivering the keynote address on the theme: “The Real Estate Market: An Overview of the Current Global Changes.”

    As stakeholders in real estate industry, the theme of this program not only requires us to outline the changes that are taking place in our industry, it also requires us to rethink our strategy and retool in order to meet the daily evolving needs of the consumers in line with global realities.

    Like every other industry, the real estate sector is grappling with a painful uncertainty in the global economy. Added to this uncertainty are other factors such as rapid technological advancements, a growing appetite for homeownership by a retiring generation of baby boomers, a sharp deviation in living style and design by a maturing generation of millennials, the impact of an unforeseen pandemic, amongst other realities and trends.

    Key Considerations

    Now that we have to come to terms with changing realities and new trends in the real estate industry, we must answer this important question: how do we manage the change in consumer preference, as well as other emerging trends going forward?

    In attempting to answer this question, I would break this address into Three sections: Building, Financing and documentation while factoring in the disruptions caused by the use of technology.

    BUILDING FOR A DIFFERENT GENERATION:

    1. CO-WORKING SPACES: The incursion of technology into our personal and work lives and need for overhead cost reduction have birthed new business realities. Suddenly, businesses realize that not many people as before need to have their private offices; not everyone wants a corner office, not everyone wants their private printer, copier, and so on and so forth. Co-working / co-living / co-shared spaces have transformed the way we live and work.

    Real estate practitioners have had to adjust to this reality. No one should have property for commercial use without adequate market intelligence as to the needs of consumers. Unlike what obtained in the past where businesses took pride in owning multi-storey structures, small and medium enterprises are switching focus to cost-cutting measures like subscribing to co-working spaces – a smart move that keeps their staff nimble and work schedule flexible.

    2. CHANGE IN STRUCTURAL PREFERENCES: Years ago, the older generation had the luxury of owning their own accommodation, with all the space and preferences they wanted. Today, the story has changed. Developers have manifested a response to the need of the younger generation whereby they now focus more on building 1, 2 or 3-bedroom units. Also due to constraints of space, urban areas globally have shifted focus to building Eco-friendly horizontally oriented structures containing more apartments that can either be leased or bought off, with flexible payment plans as an added bonus. With the trend of urbanization and over-population, there is now a preference for the type of accommodation befitting smaller family units and sole-occupier types.

    3. MASS HOUSING AND COST OF BUILDING: Considering the global economic challenges, developers must be open minded enough to considering cheaper yet safe building options. While the Federal Government under the leadership of President Muhamadu Buhari, is committed to drastically reducing the housing deficit in the country it is also conscious of ensuring that housing units provided are delivered at the most cost-friendly prices so that these houses are affordable by a large demographic of Nigerians. In the Federal Housing Authority, we are open to your proposals on the deployment of Prefabrication, hydraform or even containerized housing models but most importantly we committed to bringing the unit cost of future models down.

    FINANCING OPTIONS FOR A DIFFERENT GENERATION:

    4. POPULARISING MORTGAGE OPTIONS IN NIGERIA: While the idea of home financing has gained more popularity in the urban areas, It is important that we sensitize the younger generation on the options provided by the National Housing Fund through the Federal Mortgage Bank as well as Primary Mortgage Banks. The earlier younger Nigerians key into the scheme the better in view of the working years factored into re-payment. It is also important to de-emphasize one-off payments and refocus on making homeownership more achievable.

    5. SHORT-LETS: In some cases, job flexibility has led to the emergence of a group of people who are the modern day nomads – changing cities and locations in constant pursuit of more fulfilling job roles. Real estate developers have cashed in on this by responding accordingly. Since these white-collar nomads have no need to commit to long-term leases or the inconveniences that come with maintaining a home, short-let apartments are now dotting the real estate market.

    6. RENT-SHARE: It has been said that Necessity is the mother of Invention. When you have a cocktail of over-population, a changing economy, high rural-urban migration, what you get is Rent-Share. In this niche, organizations like Muster.Africa are setting the pace by actively onboarding young working professionals who simply desire a comfortable space that they can live in and pay for with ease. Now, homeowners are willing to sub-let their empty rooms to those seeking “flexible, uniquely designed, fit for purpose, plug & play spaces where they can pay monthly, quarterly or however they want.”

    7. MONTHLY RENTALS: While the concept is largely un-adopted in Nigeria, I dare say, with a pinch of foresight, that it is time for property owners to give this the earnest consideration it deserves. We cannot wish the impact of COVID-19 away. The reality is that it has dealt a huge blow on the earning power of most people.

    There are people who have been placed on leave without pay, there are those who have been sacked, while others have had salary cuts. What do we say to these people? Should they be asked to leave or do we design a system that empathetically lets them pay their rent on a monthly basis or pay-as-you-go rate? Again, I exercise caution by saying that in lieu of this special arrangement, landlords and property management companies may just have to cope with relief requests and delayed payments.

    TITLE DOCUMENTATION FOR A DIFFERENT GENERATION:

    8. One of the challenges that we have observed since taking responsibility at the Federal Housing Authority has been the dependency on the analogue documentation of titles. While I served as the Executive Secretary of the Lands State Lands Bureau, we had begun a migration to an Electronic Documentation Management System (EDMS) which made the process of Title documentation and administration simpler, more accessible and faster. We are convinced that going forward, this is the minimum that must be deployed in Title administration in the Federal Housing Authority as well. This will ultimately ensure transparency and accountability in the process while ensuring that each Allottee can track the process of their title documentation on-line in real time.

    These are some of the changes that stakeholders have to think and work around going forward.

    In its 2020 real estate market “expectations and market realities” report, Deloitte says that stakeholders have to forge ahead this year and that forging ahead can either mean “moving slowly and steadily” or “moving with a sudden burst of speed.” In view of the aforementioned realities, I shall have to agree with the slow and steady type of forging ahead.

    The summary of my message to all stakeholders in the real estate sector is to forge ahead, in spite of the global changes we are witnessing. The advantage of the slow and steady type of forging ahead is that it affords us ample time to plan, design and think critically before execution. Surely, in uncertain times as these, we have to execute plans only after they have been well thought through.

    I will not fail to touch on the government’s role as an enabler of progress. For stakeholders in any industry to thrive, the government must be seen to actively create the environment for such, largely through policymaking. In my newly-assumed role as the Managing Director of Nigeria’s Federal Housing Authority, I would like to restate our optimism and readiness to partner with forward-thinking developers share our focus in the provision of essentially affordable housing and job creation for millions of Nigerians. This is the vision of President Buhari and the Commitment of the Honourable Minister for Works and Housing, Mr. Babatunde Raji Fashola SAN.

    In conclusion, I, therefore, request our colleagues in the private sector to continue to see yourselves as active partners in progress and endeavor to play such roles as best as possible. We need each other if any intervention or policy is to have a significant impact in the real estate sector.

    Thank you for listening, I wish you successful deliberations throughout the period of this.