Victor Alonge is the Senior Partner and Chief Executive Officer of Nelson Thorpe Alonge, a firm of chartered surveyors and estate surveyors and valuers. In this interview with MAUREEN IHUA-MADUNEYI, he says it will take at least six months to one year post-recession for the real estate industry to pick up
Nigeria has been declared to be out of recession and it is said that real estate was the most hit while it lasted. What effect will the exit have on the industry and when will changes be seen?
The Minister of Information and Culture was the one who told the whole world that Nigeria was out of recession. I am sure the country’s coming out of recession is not just about proclaiming it; I think the economic indices will have to attest to that. What are the parameters that aided the conclusion in terms of employment, increase in Gross Domestic Product, inflation, disposable income of Nigerians and job creation as well as investment by major employers? We need to have the objective data that the government is relying on to come to that conclusion.
As far as we are concerned in the industry, there has not been much change. In a recession, real estate is always badly hit; it is a cyclical challenge that real estate faces. And the key thing is that because real estate backs the economy, even when the economy is out of recession, it takes a while for that to be translated in the industry.
But the economic indices nationally are not pointing to the fact that we are out of recession. I think it is just propaganda as far as I am concerned, and there are quite a number of institutions within the economy such as the chambers of commerce, Manufacturers Association of Nigeria and others who need to come up and substantiate that. Even the National Bureau of Statistics needs to give us data. But things have not changed as long as real estate is concerned; capacity is still low, uptake is still very low, we have vacancy rate still very high and even where there are tenants, the rate of default is very high and landlords have had to take the heat.
If the government is able to come up with statistics to back the claim, how long will it take for the effects to begin to manifest in the real estate industry?
It depends. Nigeria is a country where we don’t take recordkeeping and documentation seriously. The Minister of Power, Works and Housing, Babatunde Fashola, recently charged estate surveyors to come up with data to support our operations and the industry, but it is not our fault; it is a national thing, a culture; people acquire or sell property and they want to be anonymous because of issues outside the market and we are affected.
In terms of how long it will take, if the government comes out today and gives us convincing data, with evidence from other climes, it will take a minimum of six months before the exit from recession reflects on the industry because then, the economy will allow for planning, which will feed into other sectors. Evidence from places with robust data show that it will take about six months before we begin to see the effects but the full effect will take over a year.
What are some of the effects the recession has had on the operations of professionals in the industry?
It is hard on our operations as estate surveyors and valuers, and it is there in the open. Properties are available and vacant, but there are no tenants; and then, the rents and prices are ridiculous and you have to convince the landlord to offer a discount. As estate surveyors and valuers, we don’t fix prices or rents, the market does; and when we say the market, we have the seller, the buyer and the market makers, which we are part of, but we are not even the only market makers.
If you have a property to sell, for instance, I cannot tell you what price it should be; you probably must have an idea how much that property is worth. When I am contacted to advise you, I do it based on the technical analysis of the market, which is evidence of transactions that have been concluded and it is left to you to take it. Some landlords insist on what they want, and the point is as estate surveyors and valuers, if you tell me what you want for your property, whether it is reasonable to me or not, I will not completely send you away because even if I give you an advice, it is an estimate, the market will determine how much the property is worth.
So, in a recession, because the dynamics are different, you put a property on the market and you have all sorts of scenario play out. So, when people blame estate surveyors, they need to understand the procedure in the market and the dynamics of that market. We are just market makers and professionals.
So, the recession has affected us, the traffic has been low and you can see that the supply into the market is constrained because no one wants to start a project that won’t be taken up. Prices have also nose-dived and because of the challenges of having to spend more time and resources selling one property, our income has been affected and it has been challenging for estate surveyors and valuers and others too.
Having been in the industry for a long time, what would you say about its growth prospects and the way out of some of its challenges?
I have been in the industry for some time, I have also actively operated in developed markets and I am able to compare both. One thing that is seriously lacking here is government support to develop indigenous expertise; it is a major problem in terms of supporting the small and medium enterprises, especially within the consultancy sector. It is when you develop indigenous capacity that you can have national growth. The industry is heavily underdeveloped and the participants are not also organised properly; whether you are talking of engineers, estate surveyors, architects or the quantity surveyors. We are not organised.
I have not seen that level of cooperation and integration among the various professional bodies, which is important; we see a lot of inter-professional conflicts and that will not help the industry to grow. There is a need for cooperation and for professionals to see the industry as our own and therefore foster closer integration. Most of the professions are public interest professions. Yes, it is a means of livelihood for us but we are first and foremost trained to help the nation grow and develop, and that responsibility must always be at the forefront of whatever we do.
The industry is still chronically underdeveloped and I am not seeing any clear-cut efforts at developing it; the segmentation and fragmentation is too much rather than coming together to focus on the main issue. I will like to see more cooperation among professionals. The poor support we have from the government is because government depends on the professional bodies’ cooperation and organisation to be able to provide necessary support; but because we keep fighting and encroaching on individual turfs, we are not able to come together and foster that cooperation and provide a platform to relate with the government and speak in one voice for the government to take us seriously.
No government will reject any effort by professional bodies to develop the economy; it is in their interest because they are in government to serve the people better. In developed climes, professional bodies are the engine room of most of the development that happen in various sectors. For instance, most of the revolutionary developments in the banking sector were not started by the government; they were started by the industry and government had no choice but to support it, and that is why the Nigerian banking system is one of the most creative. We need to recognise that in our industry and look beyond individual mandate and look at the industry as a critical mass for all of us. Professional associations are more like pressure groups because their primary role is welfare and capacity building of their members and the more they advance that objective, the more they create space for their members to be useful to the economy.
Is it then safe to assume that you are not satisfied with the contribution of professionals to national development?
Absolutely. To be honest, I don’t think I am satisfied; that does not mean that individually we are not doing our best but we need a framework. You can have motion but without the critical element, which is movement. To have movement, we need a framework. All the professional bodies within the industry need to know that the industry is the most underdeveloped in our economy, whether we like it or not.
Government has been talking about housing deficit, nobody seems to be taking any lead, we leave everything to the government and individual professional bodies will be talking in isolation and nothing can be achieved that way. We need to come together, work together on an industry basis and until we do that, we will only be making our individual efforts and that will not translate to anything.
Look at the GDP, real estate contribution is less than 0.5 per cent; that is ridiculous. In other developed climes, we have up to 20 per cent and when we look at the components of securitisation and debt sales, they can have up to 60 per cent. The industry drives the American economy. We can’t sit down to have a multilateral approach to such critical issues as professional associations; we are busy fighting ourselves when we were individually trained. Why can’t we see the bigger picture and leave behind those little prejudices because of national development.
Look at England where I practiced for a long time before I came here, that cooperation is all over and cuts across research and other aspects. You see that collaboration in the interest of the economy because as long as we continue to allow individual prejudices to drive our professional contribution to our industry, we will not make the necessary progress that we need and the other industries will laugh at us.
You see a lot of talented and bright young graduates from universities moving out of the industry to others because they can’t see prospects and unfortunately, this industry is the most underdeveloped, which is where the growth prospect is. The opportunities in this industry are bigger than what they have in finance and most other sectors but we can’t see them. I think there is a need for that understanding within the leadership of the industry and the professional bodies as the knowledge base of the industry, which will have to drive this.