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LAIDE AGBOOLA: We Need Supportive Policies, Economic Laws to Resolve Shelter Deficits
Mr. Laide Agboola is the Co-founder and CEO, Purple Group, owners of purplemaryland and purplelekki. In this interview with Bennett Oghifo, Agboola speaks on how the group is redefining the real estate landscapes and the digital platforms. Highlighting the unique selling points of its offerings, he allays the concerns of prospective investors in the economy, particularly the real sector. Essentially, Agboola regales prospective investors with how the group’s daring moves have opened the pathway to creating products that could flourish even in the worst economic situations
How has 2020 been for Purple?
2020 has been a challenging year for businesses everywhere and Purple wasn’t left out.The unique challenges faced in 2020 arose from the global pandemic and lockdowns to the unrest, specifically that affected Nigeria, recently, that have left several businesses gasping for survival. This year has been a steep learning curve for many businesses as it has shown the survival instincts of businesses in the face of unexpected economic disruptions. For Purple, the aforementioned challenges have led to a continuous reconfiguration of our capital structure, quick response to market changes and customer/partner changes to the market. Therefore, we have been able to test our products in the worst of market conditions both in 2016 and now in 2020. We continue to work towards maintaining our continuous confidence amongst our domestic and international alliances. The questions have remained the same: How do we assure our investors their returns are achievable? And, how do we deliver on the proposed assets amidst lockdowns and a contracting economy? Fortunately, our mixed use development products have been designed for specifically for this market based on deep research analysis and as a response to the market both in 2016 and now validated as the appropriate product for our Nigerian market even in 2020.
How have the challenges in 2020 affected your occupancy rate for Purple Maryland?
At Purple, our relationship with our tenants/partners and the growth of their businesses remain paramount. This has made those partners remain with us despite the several economic issues. We have continuously prioritised brand awareness, our product and partner products awareness and marketing with an unusually lower priced rental regime derived from our lower priced building strategy supported by smaller fit for purpose spatial planning. This has been our strategy in maintaining our 97 per cent occupancy level. Albeit, this has not been without some sort of grant period in 2020. It has been an unusual year and has required us to deliver unusual responses tailor made across our partners to arrive at sustainable businesses within our build environment going forward. This also speaks to the resilience of the businesses within our centre. However, this year has also reinforced our belief in our mixed use retail strategy, focusing on essential services and domestic retailers, who are flexible and have shown adaptability to the peculiarities of the Nigerian Market.
What is your new direction?
Purple has been known as an investment or real estate firm depending on who you ask. However, we have taken all those competencies and asked ourselves, some questions to determine the core outcome / impact of all these business activities and how do all the business decisions and strategies translate to real world value. To this end, we decided that improving the end user’s lifestyle and experience by delivering world standard real estate assets that continue to be viable and impactful remains essential. Hence our enhanced focus on the lifestyle development of our consumers by accelerating our natural evolution from pure brick and mortar centres to include our online market place. The online market, purple.shop includes all our in-store retailers and a well curated selection of new vendors, who we have vetted and trust to deliver high quality products and services to our customers. In addition, as an improvement to customers’ lifestyles, we have also launched new products like nano apartments that tackle some of the long held issues in the residential, short and long stay space. We have commenced construction of these nano apartments in Lekki Phase 1 and would be delivering more to our mainland customer base starting in 2021.
What do you see in the future of real estate in Nigeria?
We’ve seen numerous shifts in the past few years, from the rise of shared spaces and services bringing about co-working and co-living to this year, which has also shown us the value of mixed use assets, but also a need for privacy and self-sustainability. We believe there is gradual shift towards smaller, mixed used facilities that give customers some sort of balanced, but affordable and flexible lifestyle. This is the immediate future of real estate and it is what our purple nano product line brings to complement our purplelekki and eventually would complement our purplemaryland (formerly Maryland mall) product offerings. The drive is to be able to deliver on work, shop, eat, play, drink and live concept across our product offerings and back it up with a strong online marketplace, purple.shop.
What are the challenges for real estate developers?
For us as a lifestyle and real estate development business, the ability to deliver products to our customers and partners at sustainably attractive prices makes our major priority. Prior to a lower rate interest rate regime currently being experienced, attractive naira-based financing for real estate lifestyle especially around hospitality has not been entirely forthcoming. We also need supportive policies and economic laws to ensure we are all driving towards resolving shelter deficits in every form whether it be residential or hospitality. There is obviously an infrastructural gap that can only be driven by investors. This is even more apparent now than ever with the collapse of the oil price coupled with the pandemic, we can feel the need for domestic players and institutions to back leading domestic players that have boots on the ground and neck deep in the development cycle of our dear country, Nigeria.
We are not a portfolio international company or investor. We are Nigerians and we are on the ground. Our focus is to develop Nigeria, but Nigeria must provide an investment climate that is evidently supportive of growth so as the domestic players and institutions do not shy away from investing locally especially at a time like this. We are all we have. Our target is to continuously work on delivering value assets to our customers and partners at attractive prices irrespective of the exchange rate movements experienced. These movements form a threat to our margins created from lower interest rate regimes as our ultimate plan is not to continuously pass on this exchange rate changes in our lifestyle developments to our consumers.
Apart from development challenges, there are operational challenges from power cost, good access roads and other infrastructural deficits mean developers have to bear these costs. We are very mindful about pricing and continuous increase in prices in a down market. Our ability to sell or lease products at attractive prices can only be sustained where we do not have variables moving constantly. With the current economic recession as well as reduced spending power, real estate tends to be seen as luxury rather than an investment. We bank on the fact that the pandemic has shown the real importance of work, shop, eat play, drink, live in a singular location. However, this must be at the right price point.
Material sourcing and a weak domestic manufacturing industry continues to be a stretch on right product pricing for the domestic market, as appropriate items continually have to be sourced offshore. This coupled with the downward direction of the Naira continues to increase the cost of developments, limiting developers in terms of finishing and finance to innovate further. Notwithstanding, we continue to innovate and form alliances with our network of contractors, building partnerships that align our interest of delivering value to our consumers based on attractive pricing.
In terms of development and operations, we have found a way to work with the best of the domestic space we operate in whilst delivering at international standard levels fit for purpose assets. We need to ensure we are not losing our best hands at all levels of the real estate value chain to the Diaspora. Taking on international expertise at greater cost is at the detriment of the Nigerian Real Estate development Industry and can only lead to stagnation if the best minds and artisans are brought in and never home grown.
What do you think about the investor market?
The recent economic and currency issues in Nigeria has made investors wary. The confidence level in the Nigerian policy environment and in the market needs to be rebuilt. Fortunately, our product offerings work for our partners and our short, long and residential product are essentials. We have witnessed a significant off-take despite the turbulence associated with 2020. For Purple, we continue to build confidence that our investors have in us. Our plan is to continuously deliver value to them. We aimed to remain liquid prior to the pandemic whilst restructuring our books. We are achieving that via a combination of a second round of equity investment achieved in the chaotic year of 2020 plus additional domestic debt funding for our expansionary activities within the essential space despite market conditions.
We are still open for further investment on both the equity and debt funding and we have received significant interest across both lines. We would obviously inform the market as we proceed and take necessary corporate actions over the next year culminating in the institutionalisation of the business backed by decent corporate governance and processes. All of our daring steps have provided the pathway to create new products like PurpleLekki, PurpleNano and Purpleshop to our existing purplemaryland, formerly Maryland mall. These products can adapt in the worst of economic circumstances and also thrive in the best economic clime. Investors need to take this current economic cycle to back the leading companies of tomorrow, today. Our ultimate plan is to provide a liquidity offering for our investors over the next 24 months via a public offering or listing in the appropriate market and at the appropriate time.
What do you think is the next big thing in the residential market?
We keep saying to whoever cares to listen, we are a real estate and lifestyle development business. Even our residential developments are a function of co-habitation principle towards real estate asset classes in the first instance talk less of the multiuse as aparthotels, short and long stay as well as co-living. The concepts discussed here are alien and somewhat new to the market, but the market must adapt. We had conducted that research as far back as 2018 and began our quest for delivery ever since then. We are here now. The quest to create unique, but yet attractively priced living solutions for the mid-market, a discerning investor’s haven.
We understand you recently implemented a brand restructuring and offer new products. What values will the recent brand restructuring and new product offerings/launches add to the entire value chain and in fact the Purple as a group?
The Purple values have always been perseverance, audacity, collaboration and transparency. Although these principles have guided us thus far, we have only just better defined these such that our end users feel the purple way. We want to ensure our investors also remain very much at the centre of all we do as a business. With our new products, we are only ensuring that we offer our investors a diversified portfolio that enhances better returns.
For example, our Nanos will feature top tier hotel management services. Merging this hotel management approach with a residential style building has created a unique well catered experience for occupiers as well as a viable professionally managed asset for investors who are able to receive an assured tenancy return for these nanos at purplelekki, only where they choose to. Like I mentioned, the success of purple Nano at purplelekki is pushing for the need to deliver competitively priced purplenano to our mainland audience.
At the time of conceiving the idea of building Purplelekki, what did purple set out to achieve ?
Our strategy is a mixed use development strategy to ensure that all of our assets are sustainable and can continue to generate diversified income and returns no matter the economic situation. Our flagship asset purplemaryland has shown us that this model is practical and optimal for a market such as Nigeria. With purplelekki, our goal is to take this mixed use format to the next level by including Live (co-Living, short and long stay) to our existing retail, entertainment, advertising and co-working offering. This means end users can enjoy an all-inclusive lifestyle within our assets. They can shop, work, eat, play and live all within the same insulated well-secured complex. This we believe can be an advantage as the world continues to respond to the global pandemic and the change it has brought to daily living. In conceptualisation prior to the pandemic, we believed this is where the market should drive to and with the pandemic, it is now proving that our feasibility work is further grounded by the 2020 pandemic.
What specific challenges have you encountered in your line of business and how were they surmounted?
With our centre, the lockdown experienced this year made it challenging for our retailers world over to make sales. This had the knock-on effect of being able to afford rental payments. Our board and investor swung to action in providing rent-free grant periods to cushion the effect on our partner retailers. We expect to work out with our investing partners, a resounding way of also cushioning the effects on us. We have had to give grants to help cushion the impact for our tenants and partners. In addition, we have accelerated our plans to create an online platform to supplement our brick and mortar network. This platform allows us to service our retailers and mall users bridging the gap between the two during future isolated times and a daily service offering to our teaming first and third party retailers as well as our customers. In our developments, we are also aligning the interest of our development contractors with ours to ensure success in trying times like this.
What and who did you model business after?
The South African/Mauritian Company, Grit and the American, Simon are two interesting businesses we observe. In terms of growing a chain of assets, albeit mixed use in our case, these two businesses have shown what is possible for developers in this sector. For us, it is not a mere adaptation of what is in trend in other jurisdictions, but about what is workable in our domestic jurisdiction. We have aspirations of international diversification in the retail space and are working with other international partners to bring this to life in the coming year(s). Our goals are daring and a path to it is clear. We believe we can achieve those targets and remain relevant domestically and internationally. Our ultimate plan is to be able to provide a warehouse for the domestic large institutional investment base for regional and international foray.
How is Purple’s relationship with regulatory authorities?
We have a cordial relationship with regulators. We respect them wholeheartedly and can only continue to work with them to keep providing us with a safe and impactful policy driven environment that is pro-business growth especially in a difficult clime as this.
What’s the Group’s niche market in the business space and the economy?
We are focused on up to the mid-market niche as this space continues to house a majority of Nigerians. The universe of investors, large and small is significant in a market size like Nigeria. Purple will serve as the platform for realisation of wealth and value creation. We have seen the spending power of this sector improve significantly over the years and this group is aspirational in nature. We are hoping to continue to grow with this market and help this group of customers continue to improve their quality of life through access to our group’s offerings and capital structure now and in the new future.
In your assessment, can you say your kind of business have been accepted by the strata of the society? And what aspects of operations need to be improved upon?
Yes! We have seen a positive response to our products as our Lekki Nanos have pretty much sold out even during the uncertainty of 2020. We only opened up for sale immediately after the lockdown was over and we have thus far achieved 75% cash backed sale commitment. This product is for everyone. If you do not have one in your portfolio then we really do not understand your investment philosophy. It is a needed product whether you are in the Diaspora and need an aparthotel styled property or you are a domestic investor needing yielding assets or you are family man looking for an attractively priced, properly operated space or gift item for your loved ones or a co-living experience.
This gives us confidence that people understand the value of what we are building. Though we have achieved a lot within a short period, these businesses are still young and learning. We are optimistic that operationally we will continue to improve efficiency and speed in delivering for our customers and investors.
How’s your human capital?
We believe in family first and foremost, our team structure is lean, but hungry and our posture is can do. We are like a pack of wolves! We are collaborative in nature both internally and externally. We have assembled a strong team with a variety of experiences within the various sectors and have taken steps to ensure continued human development with our team. Many of our staff started with us in 2013 are still here dedicated to growing the brand and what it stands for, taking the lessons learned and rolling them into our new product lines.
What’s Purple Group’s unique selling point?
Our young and vibrant team. Our versatility and flexibility is a key selling point. Our focus spreads across different but related sectors, allowing our investors to spread their risk across different locations and sectors. Our retailers are prioritised as our partners and are consumers are recognised.
Looking into the future, where do you see Purple in the next five years?
We see ourselves as a household name, not just for our brick and mortar, but via our online platforms and our retail drive. We are positioning Purple to be the Grit of Nigeria and the Simon of Africa at large. Our story is still being written.