Lawal: Drop in Purchasing Power Affecting Real Estate Sector

Saheed Yemi Lawal

A fellow of Chartered Institute of Accountants and Managing Director, Seagul Properties Limited, Mr. Saheed Yemi Lawal, in this interview with Raheem Akingbolu, speaks on the country’s dwindling economic fortune and the need for the government and stakeholders in the real estate sector to harness the opportunities therein. Excerpts:

2019 was projected to be positive for the real estate sector, but we ended the first quarter with sluggish growth. Do you think the forecast can be achieved?

Yes, it will, but only if the government puts in more money on infrastructure and other related projects; and by extension, this will embrace other allied industries in the sector who will also tap into the accompanying benefits of the more money pumped in by the government. Aside that, like you said that 2019 will be windfall on the real estate. Yes, it will because the CBN is working hand-in-hand with the real sector to institute a long-term enabling loan for people to enable them to purchase houses with ease of repayment and this idea will surely make the industry to boom and vice versa, the economy. It’s a two-way mutually beneficial thing and is readily welcomed.

The agricultural sector seems to be taking the shine off the real sector, what is your take on this?

I can’t give an accurate submission to that, because I’m not in that sector. But like I said, in every other business, the purchasing power is low and the government is not spending as much as they should be spending. In any economy, the highest spender is government, and it is only when the government spends money that money can multiply and spread into other businesses. Banks are no longer lending, just as the government is not spending. So, there’s no serious activity going on in the economy. But it is not only the real estate sector that is affected. Generally, businesses have fallen abysmally low in the last four years. We are only hoping that, with this new dispensation coming on the way, things will improve, because with the government’s plan, we saw what they tried to do in the last part of this administration, spending so much money on infrastructure, roads, railways and all that, and I also know that they plan to do a lot of that in their second coming. It is only when they do that and the economy is opened up, that money will flow in again, foreign investors will also come in because they were scared of the election. Now that we’ve had a good transition, we can expect the foreign investors to come back in. And by the time there’s optimum activity in the economy, the banks are lending and all of that, it will positively affect the real estate sector, because people will now be able to buy houses with ease and without any apprehension.

Does this really have to do with the economic policies?

I’m not a politician, but I know for one that most of the policies embarked on by the government were only for a short term, in an attempt to recapitulate the humongous money that was siphoned and expended unwisely by the previous politicians. These policies were only put in place to put some fiscal sanity back into the system. Furthermore, because of the high level of corruption, what this government did when they came in was to introduce the use of BVN, the control of the parastatals, the government account and all that. There was serious liquidity in the economy and banks too were affected because most of them were relying on government funds and when the funds were withdrawn they were really affected. They could no longer give out credit to this sector, like any other sector, and that greatly affected the industry. But as we move into the new regime, it is expected that the government will start spending more money on infrastructure, opening up new roads, renewing all the things that have damaged and all that. Politicians that were spending big money before are not doing so any longer because they are afraid of EFCC, that’s in the short term, anyway, because it cannot continue for long, and it can’t be sustained. The government has to re-inflate the economy, spend more money, and once money is spent, it will directly and positively affect the real estate.

It is believed in many quarters that the number of people buying houses have reduced, what in your view responsible for this?


People are not buying houses like before because there’s no money in circulation, and if there’s no money what do we do? The first thing anybody wants to do is to eat, second is accommodation, and most people are buying from investors because money is not flowing; a lot of people don’t have readily available money and that really affected the real estate business.

As a player in the industry what can you say about the recent incidence of collapsed building in Lagos Island and what do you think the government should do about its recurrence?

Like I said, at a stakeholders’ meeting with the government, there are lots of quack developers and operators in the sector and again over 95 per cent of buildings on the Lagos-Island are weak; over 190 or more buildings have for years been marked for demolition by the government and they have started demolishing them, with the recent mishap as the catalyst. If they carry out feasibility and structural test on most of these houses in the core Lagos Island, over 95 per cent of them will fail, because of the location. I’m also aware that they have their peculiar challenges and all that. Part of the responsibility of the government is to protect the lives and properties of the citizens, but as far as I’m concerned, they have not. Look at the number of people that died in that singular incident, all of them wasted away because of the negligence and unprofessional Shylock attitude of some quack developers, whose main interest is to make quick money not minding the safety of tenants of the building they put up hurriedly with substandard materials. I’ve been to that area before, some of these places are not even motorable, and if you ask me, more than 95 per cent of the buildings in the area are structurally weak and need to be reconstructed to be in line with modern building facilities and technology. I sympathise with the owners of the building but human lives are far more important than landed properties. Some of the buildings were built without approval, and not only that, the qualities of materials are substandard. We will continue to have this as long as professionals are not contacted or used in the construction of these buildings. How come we are not having a distressed or collapsed building in Ikoyi, Victoria Island, Lekki, Ajah, where even the topography and soil quality are not as favourable as that of the Lagos Island comparatively.

Are the sector stakeholders doing any other thing to address the matter?

First, the government needs to be more pro-active in issues that have to do with shelter for human beings, especially the poor masses. The ministry and specific agencies that handle issues of approvals for buildings, licenses for construction and real estate development practitioners must be people with professionals who will never cut corners or can be baited with perks by quacks to have their way, which at the end of the day could have a tragic effect on innocent lives and hard-earned properties. Real estate is not synonymous with the usual buy and sells mode of business, it is a specialised industry that a peasant or street-like businessman can just dabble into. Strict rules, regulations with stiff penalties must be promulgated for any erring developer, and no offender must go unpunished to serve as deterrents.

Can you speak on the Unique Selling Point of Seagle over other players in the industry?

It is the quality and we have been consistent, there is no project we started that we didn’t finish, which is key. We may have one or two delays, which are also normal, but the fact that we deliver what we promise, and the quality of the property we also deliver to our clients; all these jointly and severally give us an edge in the industry.