How South-West governments are losing millions to Apapa gridlock —Wemabod MD

HOW has the real estate industry fared in the last year?

From my own perspective, the real estate industry in the last year did relatively well even though it’s been a basket of mixed fortunes, with a couple of uncertainties in the real estate market. However, with what is happening in the money market, the yield in real estate is almost, if not very close to, what obtains in the money market. So, it is a huge opportunity for investors in real estate and this is the right time to begin to invest in real estate.

Now the sustained depression in the oil market has contributed to the slow pace of real estate development transactions. The foreign exchange quagmire that the country has found itself in also has its impact on the real estate industry. These are the challenges of real estate. There opportunities too. Rates have bottomed out in the money market, now the real estate yield is almost at par. So, investors can actually put funds in the real estate sector because there isn’t much difference.

There has been much talk about the Apapa gridlock. How is this affecting Wemabod?

Wemabod is a company that deals in real estate, property development, facility management. The way we are configured, we represent the interests of the entire South-West governments; the six states of the South-West. There are a lot of real estate assets owned by the states of the former Western Region, spanning through Apapa, Ikeja, Lagos Island, Lekki and more. It is a bit worrisome that the Apapa gridlock has literally killed business, not only real estate, it has killed business generally in Apapa. But I will deal extensively on real estate, which is our own area of operation. The real estate sector is the worst hit by the gridlock in Apapa. But it is important for us to understand how the gridlock initially came about.

Apapa, in those days 10 to 15 years ago, despite the beehive of activities was still a very livable environment. But unfortunately, with the pressure on the Apapa port, the inability of government to develop other ports like the dry ports and other seaports, it has become impossible to see how goods coming into the country will be delivered and that is why Apapa has been choked literarily.  Unfortunately, the logistics system around delivery of goods and removal of goods from the port has also not been well thought of. So that is why you see trailers that are not supposed to be on the road or on the bridge have literally blocked the entrance to Apapa itself. So, this has suffocated the life of real estate, so to speak, in Apapa and its environs.

That is why real estate suffers hugely from that phenomenon. A lot of residential apartments in Apapa are now vacant and most residents have moved from Apapa to other parts of Lagos. And this is very significant, because that movement in itself is creating other problems in those areas they have moved to. Majority of the people that have moved from Apapa now stay in areas like Lekki. That, then underscores the nature of life that Lekki has now been exposed to. Lekki has literally become a slum of its own. Between VGC, Oriental Hotel and the Toll Gate, often times you will spend three hours on a journey that should not be more than 15 to 20 minutes maximum.

And because we are talking about Apapa, it is important for us to commend the efforts of the Federal Government. They have tried to open up Apapa in a way with the construction that is currently going on, we believe that will ease the movement of traffic out of Apapa on that axis. But we still have the axis coming to Ijora to contend with. You should also commend Federal Government for the rail transportation system because that rail is ending in Apapa. That will also ease movement of goods away from the port, instead of the usual trailer services.

But we will also like to recommend that the construction of trailer parks and the effective management of traffic, not just trailers, but vehicles too, should be the main focus of government. Now that we are going to have good roads and rail services, chances are that business activities will come back to Apapa and this is the time to hit the ground running in planning to ensure that eventually, we do not go back to another round of problems.

What was business like for Wemabod before the gridlock and how is it now?

What has happened now is that we have a lot of real estate assets that have been either abandoned unutilised because of the situation we have there or the ones that have been occupied before, the tenants have left. And don’t forget that Wemabod is a subsidiary of Odua Investment Company Ltd. So, what has happened is that we are losing on an annual basis rental income that is supposed to be part of what should be going to our shareholders who are the state governments in the South-West region. On an annual basis, we lose revenue running into hundreds of millions of naira because of voids, that is, properties that cannot be occupied because of the situation we have there. And those properties are also decaying. At the point when life returns to Apapa, we will still have to raise finance to redevelop the assets to bring them back to a tenantable position.

So, there is a huge loss of revenue that should go to the shareholders which are the state governments. And we believe that it is important the state governments to come together and with a voice and speak to the issue of Apapa as it relates to real estate interests in Apapa, and the loss of income. If this is done, chances are that the Federal Government will speed up action on what is currently happening in the redevelopment of Apapa and then reposition the real estate industry.

I just believe that as we talk about Apapa, it is important for government to redouble their energy in bringing Apapa back to life. The reality of the matter is that there is major influx into Lagos every day. And if the whole of Apapa is literally closed down, this brings to bear a lot of pressure on other parts of Lagos. We strongly believe that the infrastructural works going on around Apapa axis should be fast-tracked. We strongly believe that business owners should be further encouraged by way of some tax concessions because a lot of people have lost money and they should be encouraged by way of tax exemption for them to remobilise to jumpstart their dying or dead businesses, because it requires a lot of money to restart a ‘knocked engine.’ This is our appeal to government to take a fast-track approach in addressing the major issues around logistics, infrastructure, trailer parks that are supposed to be designated, avoid a situation whereby trailers that are carrying heavy loads are sitting on bridges that are expensive and causing the wear and tear that we are seeing on some of these bridges.

What is the potential income to be expected if Apapa returns to normal?

I have done that analysis. It runs into hundreds of millions annually.

Most real estate developments that claim to be affordable really are not by the average Nigerian worker. Do you have any suggestions as to housing that is truly affordable can be developed?

When you talk of affordable, there is really no housing that is not affordable. It is a function of the category of prospective buyers that you are dealing with. There are civil servants that are not earning more than one to two million naira per annum. The category of the affordable home concept that we are talking about will be quite different from the category of workers who are probably bank workers or oil industry workers; there is also a bracket of housing that is affordable to them.

So, we have different categories. For us as a company, it is important for us to choose the market within which we want to operate. We believe very strongly that because we represent the interests of the South-West governments, we should be able to participate in affordable homes ranging from between two to three million naira to N15 million, attending to various categories of the populace.

However, at the back of affordable homes is also financing for development and social infrastructure. The truth of the matter is that affordable homes can never be affordable homes when you use the same method of construction. There is no affordable cement, cement is cement and it is priced the same. There is no affordable reinforcement. Reinforcement is reinforcement. It is priced the same way. So, to be able to get to the root of the affordable homes concept, it is important to use funds and technology to be able to drive cost down so that we can eliminate those construction inputs that raise the cost of development. There are various technologies that are being introduced into the country now that actually lower construction cost and it is helping in delivering homes for the populace.The other aspect is cost of access and cost of land. For affordable homes concept to be successful, the government where those homes are to be built must provide land because the cost of land can push the cost of homes above affordable limits.

Cost of land and social infrastructure, I mean roads, drainages; power and all that government should be in a position to provide those services, so that those homes can be really affordable in the real sense of it. I think Lagos State government is doing something like that with Lagos Homes, and I see no reason why that can’t be replicated in other parts of the country. Affordable home is a good concept if well implemented, and if government is willing to support the concept in the real sense of it.