Diamond Ilori is a youth with intimate knowledge of Nigeria and Dubai’s real estate markets. In this interview with IFEDAYO OGUNYEMI, the Business Development Manager at Savoir Prive Properties speaks about how deep market understanding, commitment to excellence and peerless client relationships can pave the way in the real estate sector.
What is the government not doing well regarding the standardisation of real estate business in Nigeria?
Instead of paying money directly to developers during the construction phase, the government should create Escrow Accounts to protect investors. While real estate companies are indeed registered through the Corporate Affairs Commission (CAC), it remains crucial to inquire about the extent of their regulation. By regulation, I refer to oversight by a government body that is completely independent of the real estate development company owners. Are such regulatory bodies in existence within the industry? I know of Real Estate Regulatory Agency (RERA), but what is the work of the RERA?
RERA is supposed to ensure that every single broker or real estate agent and their owners are regulated. Agents should all go through the trainings and examinations organised and judged by RERA before they can become official real estate practitioners, any real estate agent or owner caught operating without a RERA certificate or RERA broker card should be sanctioned or the company should stand to lose its operational license, this will ensure uniformity, professionality and quality in the real estate sector, it will also reduce the level of scams as more regulation and traces can be made. Most real estate agents are not professionally qualified. Most real estate companies are not well monitored and regulated which gives room for a lot of unprofessionalism which affects the market in general. RERA should control the level at which rents and sales prices are skyrocketing in the market.
To ensure standards are met in the real estate market, RERA should be responsible for licensing and regulating real estate professionals, including brokers, developers, and property management companies. RERA should establish criteria and requirements for obtaining and maintaining licenses, ensuring that only qualified and competent individuals and entities operate in the market.
RERA should develop and implement laws and regulations that govern the real estate industry. These regulations cover various aspects, including property registration, escrow accounts, lease agreements, strata management, and property maintenance. By setting clear guidelines and standards, RERA aims to maintain transparency, fairness, and accountability within the market.
RERA should actively monitor real estate projects, transactions, and market activities to ensure compliance with regulations. It should conduct regular inspections, audits, and investigations to identify any violations or irregularities. RERA should have the authority to take disciplinary actions, impose fines, or revoke licenses of entities found violating regulations.
RERA should play a crucial role in safeguarding the rights and interests of real estate investors. It should establish mechanisms to protect buyers and investors, such as requiring developers to obtain necessary permits and approvals before launching projects, ensuring that off-plan sales are properly regulated, and overseeing the escrow accounts where buyers’ funds are held during the construction phase.
RERA should provide a platform for resolving real estate disputes through its Rental Disputes Center (RDC) and the Real Estate Court (REC). The RDC should handle rental-related disputes, while the Real Estate Court should handle broader real estate disputes. These institutions should aim to resolve conflicts efficiently, fairly, and in accordance with the applicable laws and regulations. Landlords and tenants should be able to charge each other to RDC and REC if they feel like they are not being treated fairly. Through these measures, the government could contribute to maintaining transparency, protecting investor rights, promoting sustainable development, and ensuring a reliable and regulated real estate market in Nigeria.
What advantage does investment in Dubai real estate offer over that of in Nigeria?
Dubai records about two to three million tourist visits every month. These tourists will not sleep on the street; they need a place to stay. The hotel capacity in Dubai cannot, at the moment, serve all of them thereby giving investors who have homes in Dubai the opportunity to own an Airbnb apartment making around $10,000 to $45,000 every month, depending on the size of their properties. Reselling such property sometimes usually leads to getting about 35 per cent to 80 per cent capital appreciation in less than one to three years, Now imagine, (for illustration’s sake) investing $150,000, and making $8,000 every month, in one year you would have made $96,000 and also resell it for $200,000. You have just made 146,000 USD in the space of 12 months. This is only possible in places like Dubai, depending on the areas you are buying (Emaar beachfront, Dubai Harbour, Bluewaters etc.)
There is political stability and legal framework as well as economic growth and diversification. Dubai serves as a major global business and financial hub, attracting international companies, investors, and tourists. Its strategic location between Europe, Asia, and Africa, along with world-class infrastructure, has contributed to its prominence as a trade and investment destination. When investing, however, it’s essential to do thorough due diligence, consider local factors, seek professional advice, and evaluate one’s specific investment goals and risk tolerance before making any investment decisions.
There’s a saying in Nigeria that land banking offers more benefits than the basic real estate practice. Do you agree with this conception?
The usual sales pitch used by Nigerian real estate agents is “Buy real estate (land) and wait, don’t wait to buy real estate (land).” This pitch is often used to encourage people to do land banking. Land banking is simply buying lands in some choice locations and waiting for some time for the area to develop which in turn increases the value of the land, then reselling such land at higher prices. Fantastic and brilliant strategies; but let’s look at it from a logical lens. Not everyone who buys real estate wants to leave the lands or the properties for their children to inherit. Some want to invest in real estate for their retirement plan in the next two to three years. Some want cash flow; some have plans for sending their kids to school, and some need where to keep their money in order to liquidate it to start a business in the next one or two years.
Now imagine, I am Mr X, and my retirement is in two years; my plan is that when I am retired, I want this investment to serve me, either I sell it and use the money for business or I build it and rent it out but I went ahead to buy a land in a place where the development will take about five to seven years before it is matured enough to sell or even build. Did I wisely invest my money? No! Timing is what people don’t tell you about land banking. Land banking in many locations in Nigeria is not good for everybody because many are living in uncertainty. Land banking carries risks, including changes in zoning regulations, environmental considerations, market dynamics, and uncertain development timelines. The university you think will take five years to come might come later after 10 years which might not work with your timing. Everybody has timing in their lives. For some, their goal is for the next two to five years while for some, it is in ten years. For other people, they are just buying it for the next 20 years. And for secondary market properties (ready properties and ready communities), it is important to know that you are obviously buying for the price and value of a completed unit. So, regarding whether land banking offers more benefits than basic real estate practice, it depends on an individual’s investment goals, risk tolerance, and market conditions.
Both approaches have their merits and considerations. Basic real estate practice can provide immediate cash flow and potentially faster returns, while land banking can offer the potential for significant appreciation over the long term. Ultimately, it is essential to thoroughly research and analyse the specific market, location, and investment opportunities to make an informed decision based on your circumstances and goals. Consulting with a real estate professional or financial advisor can also be beneficial in determining the best approach for your investment strategy.
The use of substandard products in the real estate business has grown to a worrying state as occasioned by the rate of building collapse seen across Nigeria, how can this be curbed?
Over the years, I have a huge track record of working in the Dubai, Singapore, UK, and Thailand real estate markets. I have been actively involved and I know how these things work. I strongly believe that there are seven measures that could be implemented to control instances of building collapse and ensure the safety and stability of structures in the Nigerian real estate sector. The Nigerian government, through its regulatory bodies, can establish stringent building codes, which will establish a comprehensive framework to prevent such incidents.
The first approach is for the government to establish regulatory bodies such as the Lagos Land Department (LLD) and municipality organisations to oversee the real estate sector. These organisations monitor construction activities, enforce building codes, and conduct regular inspections to ensure compliance. They also have the authority to impose penalties or suspend projects that fail to meet the required standards.
Secondly, Lagos and other states should have strict building codes and regulations in place to ensure that construction projects meet certain standards. These codes should cover various aspects, including structural integrity, fire safety, electrical systems, and materials used. Compliance with these regulations is mandatory, and inspections are carried out throughout the construction process.
So let’s say I am about to build a house or a building, I must first submit my affection plan and designs to the Real Estate Regulatory Agency (RERA). After the approval of that, the first stage of the building should be done and I must also apply for approval to continue. When we reach the final stage and shortly before the finishings are made, approval should be taken to ensure that it is quality enough for habitation.
In the third instance, developers (builders) must obtain building permits from the relevant authorities before construction can commence. These permits should be granted after a thorough review of the project’s design and compliance with regulations. The approval process should include assessments by structural engineers, architects, and other experts to ensure the safety and stability of the proposed building.
Meanwhile, states should have a robust system of quality control and inspections throughout the construction process. Qualified engineers and inspectors should visit construction sites regularly to verify that the work is being carried out according to the approved plans and specifications. They assess the quality of materials, adherence to safety measures, and structural stability at different stages of construction.
They should place a strong emphasis on structural design and engineering standards. Licensed professionals should be responsible for developing the structural designs and ensuring they meet the required safety standards. They should consider factors such as wind loads, seismic activity, and soil conditions to create buildings that can withstand potential risks.
There should also be ongoing maintenance and inspections. After completion, buildings should be subjected to compulsory ongoing maintenance and periodic inspections. Property owners should be responsible for maintaining the structural integrity of their buildings and addressing any maintenance issues promptly – it should be jointly done by the community users or by the developer (as a service charge). The regulatory agency, municipality and civil defence should be responsible for monitoring and enforcing compliance with building regulations. These authorities should conduct inspections and audits to verify that buildings adhere to the required standards and safety measures. Non-compliance can result in penalties, fines, or even legal action. The municipality and other regulatory bodies should conduct routine inspections to identify potential risks and ensure that the buildings remain safe for occupants.
Lastly, the government should also focus on raising public awareness about safety measures and educating stakeholders in the real estate sector. This includes promoting safety campaigns, providing information about building regulations and guidelines and encouraging developers, contractors, and engineers to stay updated on the latest practices.
By implementing these measures, Nigerian real estate could aim to mitigate the risk of building collapses and maintain the safety and quality of its real estate sector. However, it’s important to note that no system is completely infallible, and occasional incidents may occur. In such cases, investigations will quickly be conducted to identify the causes and take corrective actions to prevent similar incidents in the future.
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