Bamidele Adewole, CEO of PWAN Stars, is a leading figure in real estate development across Lagos’ Lekki-Epe-Ibeju Lekki axis with 20 years of experience in financial advisory and business development. In this interview, he shares his journey from real estate agent to developer, addresses Nigeria’s housing deficit. Excerpts:
How did you become a real estate developer and what inspired you to pursue this career?
My journey into real estate started about a decade ago. I started off as a realtor, selling plots of land and houses and earning commissions. It wasn’t easy those days because I did not have any background in marketing so I had to learn “on the job”. Fast forward four years later, and I decided to transition from realtor to developer as I felt it was the right time to take my business to the next level.
The major inspiration for my venturing into real estate was the desire to contribute as much as I could to solving a national problem, being the housing gap. I knew I would never be able to do this alone, but I felt that if I play my role, it would help in some way, no matter how small. Also, as a finance and investment professional, real estate being a viable asset class, aligned with my background and training. It wasn’t so much about the financial rewards for me, but the fact that I felt it was something that would allow me make a difference to people by developing and promoting a product that could lead to financial empowerment and long-term wealth creation.
What was your first project, and what were some of the key lessons you learned from it?
My first major project was one 2.5-hectare project also located in Sangotedo. It was a site and service project. The title is very much OK and the land was in a good location. However, one major lesson learnt is to ensure that before embarking on a project, one must obtain necessary funding, so as to avoid disruptions and to ensure complete delivery. Raising funding for projects is very difficult at the moment, especially with escalating interest rates, but this is a major requirement for success in the property development industry.
Under the biting economic condition in Nigeria, how can an average Nigerian still own a home despite challenges like rising costs and limited income?
An average Nigerian can own a home through a combination of savings and leveraging government-funded mortgage schemes that allow them to spread payment over a long period of time at low interest rates. As the income of the individual grows, they may decide to pay down on the outstanding mortgage facility even before expiration in order to reduce their interest cost. Another option is to put up the property for rent and use the rental proceeds to defray outstanding mortgage obligations.
For us at PWAN Stars, we also have the option of co-ownership where three, four or five people can come together, contribute funds towards co-owning a home. Any of the co-owners who subsequently have the resources can decide to buy out the others and own the home fully. The last option available, is to acquire a fairly affordable land even if it is not in an urban area, but one that has good title. Over time, as one’s resources grow, one can start to build on the plot gradually until their home is fully built.
What are the key factors that shape your approach to property development today?
Some of those key factors include funding, ensure adequate funds are available for development. I have spoken about that already. This requirement is one that cannot be over-emphasised. It can make or mar a project. Secondly, focus on quality and not profits. For a new entrant in the market, the focus shouldn’t be on profits alone, but more only quality. Rather than chasing after profits alone, it is more important to do something really nice and admirable as it would speak for you later in your journey as a developer.
Thirdly, location, we don’t do our developments just anywhere. We are very deliberate about where we put up our structures. Certain minimum infrastructure must be in place before we commence work, such as roads, drainage and power. We also look at the commercial viability of the location before we decide to invest our resources. Fourthly, sustainability. Again this takes precedence over profitability. I am not saying we don’t do business to make profit, but we always think long-term. We want to build a business that would ultimately outlive us and one that can stand the test of time. We are also conscious of our environment and we strive to include in our developments, certain amenities that do not have adverse effects on the eco-system. This is very important to me in particular.
How would you describe the current state of the real estate market in Nigeria?
Real estate in Nigeria has always been a thriving industry. The demand for properties will always be high given the huge housing gap in the country, estimated at over 17 million units, which in my view is understated. Another interesting estimate is that only 10% of Nigerians own their own homes. What this means is that there are several opportunities for all players to take advantage of. However, there are also challenges. Firstly, the unfavourable macro and micro-economic realities currently being experienced not just in Nigeria, but globally, has a significant impact across board, with real estate not being an exception. In times like this, most people tend to focus more on their basic needs first, and if they have anything extra, they may consider investing in assets like real estate.
Secondly, the recurring trends of house demolitions and collapsed buildings have led to skepticism regarding the viability or integrity of housing projects and this has invariably increased the perceived risk in the industry. So,while the opportunity for growth and development exists, and always will, these headwinds to a large extent, make it difficult for the industry to fulfil its true potential.
In light of the harsh economic conditions, how has your business been impacted, and what adjustments have you made to stay afloat?
As I stated earlier, the economic realities affect everyone in some way or the other. As a company, our response has been to ensure that we focus more on two major areas, which are, one, the provision of high-quality products and two, the provision of exceptional customer service. We believe that in times of uncertainty, most investors tend to be risk averse and therefore settle for “safer bets”. They look to invest in companies with credibility, integrity and track record. With the official hand over of keys to our new homeowners at The Edifice Apartments, we have proven that we are able to deliver on our promises to our stakeholders. We will continue to improve on the quality of our products and service offerings to remain competitive in the ever-evolving market place.
What are the main challenges developers like yourself face, especially with the rising costs of construction materials?
The rising cost of building materials is a major challenge. We developers find it difficult to transfer these cost burdens to buyers because we operate in a highly fragmented and competitive industry with new players emerging on a regular basis. We are however, typically left with no choice but to carry out occasional price reviews in line with prevailing market conditions, and even though this may have an impact on demand in the short term, the market eventually adjusts. Again, with focus on quality of service, we believe we are well positioned to stay competitive in spite of escalating material cost pressures and other headwinds.
How do you ensure that your projects align with the needs and financial capacities of potential buyers?
We are very deliberate regarding which customer segment we serve. Our products are primarily targeted at the upper level of the lower class, and to some extent the lower middle class. We understand that every customer segment has peculiar requirements and tastes and we are constantly learning about what the needs of our customers are. This we do through thorough research, detailed empirical studies, interactions with prospects and existing clients, customer profiling and other similar methods in order to know who they really are and what they like. This process is always ongoing as our customer needs and capacities are constantly changing.
Can you share your approach to managing project timelines and budgets, especially in the face of economic uncertainties?
The simple answer to this is to ensure that we have the right people on our team. Amongst the key resources for every project is the quality of personnel involved in its execution. We don’t compromise when it comes to this matter as we know how important it is to get it right. We have a robust team of land surveyors, quantity surveyors, engineers, architects and so on.
With increasing focus on sustainability, how do you incorporate environmentally friendly practices in your developments, and how does this fit into your broader business strategy?
We are very big on sustainability matters. As a matter of fact, we are deliberate in ensuring that our projects meet international best practices in sustainability. This we do by ensuring that we incorporate eco-friendly amenities in all our projects. Such amenities which we have already deployed in our existing projects include bio-digester systems for automated sewage and waste water treatment, carbon filtered expeller hoods to replace the traditional smoke extractors which have adverse environmental effects. We have also made adequate provisions for green energy as an alternative source of power supply to each unit. This we are doing through the use of solar panels and inverter systems. We are planning todeploy solar based water pumping machines as we do not permit the use of generators in any of our developed estates. For our ongoing projects, we intend to deploy water conservation technology through recycling and possible reuse of treated waste water. As much as possible we would engage local communities in our building projects and provide them with adequate tools, and where necessary, skill-based training and other forms of support, as we are strong believers in the benefits of community development and people empowerment.
What lessons from past projects have shaped your current development strategies?
The biggest lesson we have learnt is to ensure that we bulk-buy our materials early in the construction process in order to mitigate or at least manage inflation. For our first project, we had to deal with the challenge of cost escalations from vendors, suppliers and contractors. However, with adequate funding in place, it is better to buy materials in bulk so that even when prices increase, one is not affected as much. By managing inflation efficiently, we would be able to keep our prices down to a large extent and this will support one of our major unique selling points which is product affordability.
Looking to the future, what trends do you foresee shaping the real estate industry, and how do you plan to adapt to these changes?
I see a greater role being played by technology. We are already in the era of smart home automation and I see it becoming more of a standard feature in housing developments, especially within the middle-class segment and potentially lower segment. I also expect to see more emphasis on the provision of green energy solutions as more developers are beginning to embrace sustainability practices in their developments. The awareness is growing, amongst both developers and would-be homeowners. I expect that a time would come when building a residential property without including these features would be regarded as “old fashioned” and outdated. Regarding how we plan to adapt to these changes, we are already incorporating these technologies and features into our developments, so we are well positioned and ready for the future that lies ahead.
How do you approach marketing your properties to attract potential buyers in a competitive market?
Our marketing strategy as discussed earlier, is somewhat unique in some ways. We don’t adopt the mass marketing strategy. We hardly “make noise” like many of our peers in the industry. We prefer to let the quality of our products speak for us. We also provide our clients with the best possible customer experiences such that they almost feel obligated to come back to us, or at least refer us to their networks. We work really hard to protect and enhance our brand, as we believe that a strong brand is a crucial component of modern-day marketing. Therefore, while others may choose to adopt the “fast and furious” approach to marketing, ours is more “slow and steady”, with an eye on long-term value creation, sustainability and ultimately impact.
What advice would you give to aspiring real estate developers entering the industry today?
My advice to them is not to get involved until they fully understand what it takes to survive and thrive in the industry. Because we have a “free entry, free exit” system in the country, there are so many developers who come in unprepared, get their fingers burnt, and aren’t able to cope with the demands and challenges they face. While having financial resources is not an absolute must at the start, it is important that one at least understands how to raise funding for their business, as real estate is highly capital intensive. Many developers therefore struggle to make meaningful impact due to lack of funding and lack of understanding regarding how to raise funds for projects. Beyond this, there’s also the technical aspects of property business which is often overlooked by many real estate entrepreneurs. I believe every aspiring developer should have a mentor or role model as this would help improve the quality of their decision making and ensure they don’t make the same mistakes that others before them have made. As the popular saying goes, they should “look before they leap”.
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