Mr. Victor Alonge, a thorough-bred professional, is the 26th President of the Nigerian Institution of Estate Surveyors and Valuers (NIESV). In this Interview with DAYO AYEYEMI, the number one estate surveyor and valuer in Nigeria spoke about many issues ranging from the current economic challenges and their impact on real estate to the proposed deployment of e-GIS in valuation by the Lagos State Government; abandoned Federal Government’s property and his agenda for NIESV.
What are your concerns on the planned application of E-GIS to valuation?
E-GIS is an inevitable tool for ensuring that our land administration system is optimally managed. Infact, we should have started it before now but it is better late than never just as it is structured now in land administration. However, when we introduce it to valuation, it is in this environment that whether ignorantly or deliberately, people try to misunderstand or not really giving it the necessary attention that it deserves.
Valuation is a key economic tool for any nation. It is absolutely important because it speaks to the act of asset pricing, formation of prices. If you look at some of the economic crises in the global level, the fundamental cause of it is asset in price, which is basically another cause for valuation. If you look at the last one which is supply-induced crisis, it is the over-valuation of real estate especially in the residential sector that actually caused it, that is supply. So valuation is key and that is why the organisations and institutions globally that are financed or accounting related come together and said look, valuation is a major problem here, so how do we ensure that we overcome this challenge? This gave rise to what we now have as International Valuations Standard Council. If we look at that council, the truth of the matter is that majority of those on board are either finance, account or valuation professionals. So that tells you the importance of having valuation in economics. When you are talking of e-GIS in valuation and, essentially saying that because what I’m hearing now is that properties can be valued basically without human contribution, that you have a system, a drone goes out, does the survey, comes back to write the report and then calculates the value and gives you the value. It is a dangerous thing to do. I have never seen any nation doing that.
Even in what I referred to as mature property market, nobody does that in their process. It has never done that way. There is a need for e-GIS in the valuation process. When you are talking of carrying out survey, taking the features and the properties, providing data about property tax, e- GIS will do that. When it comes to the actual process of ascribing value to it based on the features of the data that we have from e-GIS, it will be human. Even in England, Australia, USA, where technology is actually at its advanced stage, e-GIS does not carry out complete valuation. Our concern is that, as an institution, it is dangerous, because there you have a situation where you have two, three or four properties essential because it is scientific length and breath multiply by the rate that gives you straight value, no human judgement, the aesthetic aspect valuation is not involved and that is where professional judgement comes in. So the moment it starts with government’s valuation for taxation, then you see it glaring moving into the private sector. This is dangerous and unequitable; it is not fair on those who pay the tax because the process of accessing, demanding and paying taxes should also be accompanied by the process where the tax payers can also dispute taxes and then go through it at the end of the day, there must be a sort of dispute resolution mechanism involved in the entire thing. So it is not about the tax you are supposed to pay, for this property is N10.00 so go and pay for it, if you don›t pay it this is what we will do and you will do it.
We need to build an economy that is built with confidence for the investors so that people coming will know that the process is transparent, the process is fair.
So e-GIS is a brilliant thing, we welcome it as a profession, especially in our land administration system. In valuation, which is probably the next thing we are thinking about, it has a role but it cannot be deployed for complete valuation process.
What is your institution doing to educate the government the issues you raised?
We are a professional body and what that means is that, we have an obligation to engage government, to advise government, to offer our own professional expertise to support the proposal at the disposal of government because at the end of the day, the success of any government is the success of those governed including ourselves.
So any right thinking Nigeria, whether you are a professional or a citizen, no matter your political affiliation, no matter your religious or ethnic affiliation, if you are reasonable when there is a government in place, you must do you best to support that government to succeed because the success of that government is the success of all of us. So as a profession, that’s our position. We feel that if something needs to be further looked at by the government from our professional point of view, we need to engage the government and provide our position. I am sure nobody is in government to fail. Everybody that you see, whether the President, the governor or the local government’s chairman, they all want to succeed. That is our role because we are established by law.
Despite the economy challenges, a lot of abandoned government’s property still litter the urban space. We have the old, federal secretariat, Ikoyi and other abandoned houses on Marina, Lagos Island. If you are to advise the government on the usage of these properties, what will be your advice?
We need to be careful and have the understanding that Federal Secretariat is already under a PPP scheme by the government and private sector organization. There was an issue and it has not been revoked. There are other properties belonging to the government that are either idle, vacant or poorly utilized or not optimally deployed. Yes! You see, governance is difficult. There are regulations and there are laws. I know that whether it is the President or even the minister, will want to ensure that those assets are immediately put into proper use or proper stage. But there are laws, and we have public procurement procedure and so on.
Government has to decide whether they want those assets, what they want to do it with the private sector. Do they want to sell it or they want to do it on their own? So it all boils down to what the government wants to do and how they want to do it, and I think the coming of the Ministry of Finance incorporated will actually help a lot on this.
There is something we have been worried about in our profession. It is about whether the Federal Government has asset registered. Does the federal government have the register of all its assets? You will be surprised that there is a lot of government’s asset that the government is not aware it owned. I think the first thing to do, which should have been done a long time ago is to actually have a National Asset Register of government assets. When those assets are known and documented properly, then government can look at them one by one and determine what are they being used for. Are they optimally used or are they empty and what can be done with them?
The register provides the basis for decision making. So, I agree with you that nobody will be happy that we have all those assets being idled. We are crying there is no money and government›s assets are just wasting away. Nobody likes that. So I think the first stage is for government to have their assets registered, and that is why our institution will actually be willing to work with the government to develop that. It is very important. We don›t have national asset register yet and we need to have it.
What are some of your agenda for the institution?
My agenda is clear. If you ask anybody in our institution that what is the agenda of the current administration? They will tell you it is 4Rs.
What do 4Rs stand for?
They stand for reform, restructuring, repositioning and relevance. We are reforming and restructuring the institution; we are repositioning the institution and we are ensuring that we are more relevant. They are key to actually determine how far and how much the institution can actually deliver on it own establishment’s objectives. We need to reform, there are a lot of things that we do in our institution internally, our internal policies and so on that we inherited 54 years ago and we are still doing it. The situation 54 years ago is not the same situation now. So we have over the years lagged behind in actually modernizing our systems. That’s the first thing that we need to do and we are working on that. The other one which is also in line with the reform is restructuring. We need to restructure to ensure that we are available, and accessible to our society. We have branches all over but are those branches properly structured to reach the necessary areas that they need to? We have to ask questions about how much that actually helped us. So to us, restructuring and repositioning are about making ourselves also available to our stakeholders and the government in a position where issues bothering on our position is being thought of, either in the private sector or in the public sector. By this we will be in a position where they will say, “We need to seek the view of professionals in Lagos.”
Repositioning ourselves also mean that we must also be in a position to anticipate to be proactive to helping our stakeholders. And because we are professionals in this area, we must be able to be anticipatory, and innovative to help and be relevant.
Let’s look at the real estate industry generally with the economic challenges. People are scared to invest in the sector right now. What’s your take?
You see, some people are scared and some people don’t have money to invest in real estate. Of course, you need money to invest in real estate. People are scared and I think that is actually a normal thing. There are different categories of investors: we have risk avert investors, we have risk friendly investors. Risk friendly investors are people who thrive in taking risk. The real estate sector as at now has undergone some levels of refinement because of regulatory and enforcement policies of the government to sanitize it. This is also coming at the time when the economy is also facing a list of challenges. Real estate development or sector actually follows general economy trend.
If the economy is doing well, real estate is also doing well. If the economy is down, real estate is down because real estate thrives at the back of prosperity of economy. So because we have challenges now economically and those challenges are removal of subsidy and floating of naira, both of them are policies that are necessary to correct fake lifestyle in this country.
Unfortunately, both of them have led to a tightening of the economy and we have the effect on the cost and then inflation. Costs have risen from foodstuffs to other luxury items, and you have to eat first before you do any other things.
The first thing people do now is to eat, and that is taking a lot out of the pocket and it has affected the consumer›s spending. Also because these have affected spending generally, real estate development is affected and most people are speculating.
People are really looking at downsizing because of cost.
Therefore, when demand is not strong, the supply is weak. I so much believe that it is a cyclical stuff. We are in that area of recycle and I think it will pick up again. We need to adjust to a level of pricing that we have in the economy and when that adjustment is properly met by us, the activity will improve. Even as we speak, there is still development going on. The only thing is that it is not on the scale that we used to know before COVID-19. COVID-19 came, had its own impact on real estate development sector. As we were just getting out of COVID-19, we ran into this economy restructuring so to speak – the policy of floating the naira then removing of subsidy. I think the sector is still doing relatively not too bad but it could be better, If we look at the contribution to the Gross Domestic Products (GDP) over the last four years, It has always remained the same.
I want to find out how the professionals are coping at this particular period? What is your professional advice to your colleagues on how to navigate this period?
You see, we are professionals, whether the economy is up or down, our services will always be needed. The way we are able to navigate the challenges of this upside -down In this economy is by providing quality service, value-adding services because this is the time your client needs you in terms of giving advice that adds value to your clients, and being honest and ensure that you always maintain integrity in anything you do. That is a way to navigate this because a challenging time like this brings with it the reasoning by client to actually patronise professionals. No sane investor would want to blindly go into anything now. In managing the existing investment that you have, a wise investor would want to make use of professionals to give him advice on how to optimise that investment.
So how the professionals are navigating this economic challenge is by providing quality service and then personalized self. You know in those days when you can sit in your office and tell client to come to you. Those days are gone. You need much more client’s centric-service delivery, and that’s the way you can get it.
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