Investors need background check before buying properties – Akintoye The Managing Director of Forthright Properties Limited, Mr. Isaac Akintoye, says the real estate sector needs better regulation. He spoke with MAUREEN IHUA-MADUENYI How has it been doing business as a real estate developer? Real estate development in Nigeria has been challenging; the environment is not too conducive because of the players in the market. A lot of people go into the same business and fail to deliver on their promises. That is a challenge. It’s actually been very challenging and energy sapping but it is also rewarding. We have been in it since 2005. And because we are coming from a background of finance, the calculation we had when we set out was different from what we got when we started. We found out that it is more demanding and takes so much in terms of funding; and it takes a long time to begin to get the reward. What peculiar challenges are facing the industry? One of the major challenges is coming from government. For instance, land in Nigeria by the Land Use Act is owned by the government. But government has inconsistent policies. There is no continuity. You may have a governor today and tomorrow when he leaves, the new person may come up with other things. It is a big challenge to us. Funding is another problem. The banks are not there to support what we are doing; the interest rate is high. There are so many fraudsters too in the business. Do you think the amendment of the Land Use Act will take away some of the problems you talked about? There are two ways to it. Everything is regulated by the government in terms of land. Even if they leave it the way it is and people like us in the business are made to partner the government. We may not have any problem. But of course, the overbearing influence of the government is making people to call for the amendment of the Act. It is because the government takes all the decisions, gives the Certificate of Occupancy. But tomorrow, they can change any of the existing policies. That’s why people are calling for the amendment. People who are going to carry out the amendment also matter a lot. A lot of people think that real estate is now a means of defrauding people. What is your reaction to this? Actually, I will want to say that some Nigerians are very gullible. Any investment you want to do and you are not skilled in that area, you have to carry out due diligence before you go into it. We are not also comfortable with what we see as stakeholders. People just jump into the business; others are getting out of school to join the business without having the muscle and integrity to back it up. As developers, we are working on something to reduce that to the barest minimum and sanitise the sector even though it cuts across sectors of the economy not just real estate development. But investors need to always carry out background checks. Do you think a new body to regulate the activities of the sector should be established? Yes, presently, we have the Real Estate Developers Association of Nigeria recognised by the government. In February, we travelled to Las Vegas where we had a meeting with the Association of House Builders in the United States and we tried to get them to partner with us in Nigeria to take care of some of these things. I think it will be better if it is properly regulated. REDAN is trying to do something now where it will register members and have the background of the organisation that is coming to join. Again, there has also been a meeting held with the regulatory body in charge of money laundering in order to regulate the activity of REDAN. Some stakeholders believe that real estate development is a business and people should be free to practise it the way they want it. Do you share this sentiment? No, I don’t. All over the world, the industry is properly regulated and controlled. This is because there is tendency for people to misbehave, considering the fact that as human beings, we still have this nature of trying to get rich quick. It must be properly regulated. How do you think people can identify fraudulent real estate developers? It is actually simple. When you want to invest in property, do background check on the property and the company involved. A lot of people want to transact business; they just see the website and go ahead to do the transaction. It goes beyond that. In 2005 and 2006, a lot of people started going into real estate business; opening bank accounts and asking people to pay, making promises which they were not able to keep. So, it is always good for people to carry out background check behind the organisation. Before you take decision on any form of investment, you must carry out a search on the document of the property and the company. You can visit the Corporate Affairs Commission even though anyone can register any company in Nigeria. You need to know where the company’s office is. The other document is in terms of the titles of any property you wish to invest in. You must check the background of the people behind the development too. Developers must ensure consumer satisfaction by delivering what they promise. In the past, people design fantastic websites and when you get to the construction site, there is nothing on the ground. For instance, if I am an investor and someone says he will pave the way to an estate for me, and he delivers, the customers will be happy. In the long run, he will enjoy referrals without doing so much marketing. Despite these challenges, people are still rushing into this business; why do you think this is so? Nigerians are money mongers; we want a place where we will put money today and tomorrow, it becomes very big. That is why people are rushing into the business. But it is actually capital intensive. It takes so much and my advice for people coming into the sector is to think twice and carry out feasibility studies; know the challenges and the opportunities. They must also think of how to fund the business because if they want to start by borrowing money, it is actually going to be disastrous. This is because interest rates are very high. They need to do a lot of homework before coming into the business. What is the future of the sector? Of course, the future is very bright. I am sure that in next few years, the sector would have been properly sanitised. Secondly, we hope that the banking sector will help out in terms of funding and in the area of interest rate. Again, when you look at the growing population in Nigeria, when the demand outweighs supply, prices will go up. Real estate prices in Nigeria will continue to go up because there is so much to cover in terms of shelter. As people desire to have food and clothing, they also desire to have shelter. Many people also desire to have their private buildings. This is different from other parts of the world where people build high rise buildings that can house over 500 people. To have that large number in a particular place in Nigeria, you would have covered maybe 30 acres of land. We are sure that the sector will be better and the tenancy issue would have been better regulated and stable. 9japroperty.ng/main/category/news/investors-need-background-check-buying-properties-%E2%80%93-akintoye
Posted on: Mon, 01 Dec 2014 11:00:01 +0000
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