Samuel Offiong Ukpong is the Chairman, Nigerian Institution of Estate Surveyors and Valuers (NIESV), Lagos branch and Managing Director, Niger Insurance Properties Limited. In this interview with DAYO AYEYEMI, he spoke on effects of the current economic recession on real estate industry and issues surrounding vacant properties
How is the on-going recession affecting the real estate sector? Recession is affecting virtually every segment of real estate. Is it commercial property, residential or industrial properties, they have all been affected in this recession. In property development, which is an aspect of real estate, there is no fund for people to continue with development, so you see projects that are being abandoned here and there.
If property is being done on a large scale, it is being done by government that has money. State governments have abandoned their projects because they are looking for money to pay workers’ salary. If you also look at individuals, they are looking for what to eat and not to go into real estate development now. If you look at products that are completed, you see vacancies all over, you have void all over in Ikoyi, Abuja and some state capitals.
You mean houses are vacant?
The rate at which these properties are vacant is quite high. People who are even staying in property they cannot afford to pay. The cost of living is high and the cost of maintaining the property is also high. You have properties that are neglected in terms of maintenance. The recession, if you ask me is manmade.
If you listen to the Central Bank of Nigeria (CBN)’s governor, he goes about telling us when he was granting an interview that friends of Nigerians asked them to manipulate the currency. They manipulated the currency with the hope that they will bring their money and Nigeria lost her sovereignty. It is the loss of sovereignty that is causing the recession.
Some people will argue that if you bring naira down to one hundred, where are you going to get dollar to supply for them to buy their foreign goods. I disagree with this notion. What is the absence of naira or dollar that make our currency to depreciate to this level? The answer, to my mind, is no.
It is the manipulation because the people do not want you to have your sovereignty and we have lost that for a long time. Tomorrow, if those people tell Nigeria or CBN that depreciate you naira to one thousand, they will do. In other climes, you don’t tell anybody to depreciate the country’s currency.
If manufacturers want to produce and do what they are supposed to do, there won’t be recession. Also, it comes to mind that during recession, are foreigners coming? We managed a property (three-bedroom luxury flat) in Ikoyi, then we were letting it for N6 million per annum, somebody asked me if I can pay.
I said no, I can’t. By my training as a professional, I am entitled to stay there, but can I afford it? The answer is no. So, those properties in Ikoyi that are begging for occupants, are they made for Nigerians’ top management? The answer is no. Who are they meant for? They are meant for expatriates.
So, if you say your country is fantastically corrupt, everybody in the street is corrupt, will the expatriates come? The answer is no. This recession is man-made. Most of the property in Asokoro and Maitaima are not meant for Nigerians. They are meant for expatriates.
Why are they meant for expatriates?
This is because the rate at which you are going to pay for those property is higher than what Nigerians can afford. Therefore, when they bring their currency – their income oversea and translate it to naira, it could be so high. So, they can afford those properties. Most times, Nigerians cannot afford those properties. Most of the executive living in those property are been catered for by their companies and as soon as they retire as chief executive, they cannot continue to stay there.
They will just relocate to a threebedroom flat and manage their lives. So, these are the realities of this recession. It is affecting real estate industry very badly.
Now, if you want to ask me another question and say but two and three bedrooms flats in Surulere are in higher demand, I will say yes, because in that neighbourhood, you have people whose income will be able to get those properties. But the properties are not available. When people pay for two to three years’ rent, do they have the means to pay subsequence years? The answer is no.