Adequate investment in real estate panacea to economic recession – Merrybells Director

Why did you decide to reward your clients with parcels  of  land and houses? Actually, the essence of all of us being here today is to compensate our clients. We don’t even call them clients we call them our ambassadors. We started in 2008 in Lagos, and after six years of successful operation as a […]

Why did you decide to reward your clients with parcels  of  land and houses?
Actually, the essence of all of us being here today is to compensate our clients. We don’t even call them clients we call them our ambassadors. We started in 2008 in Lagos, and after six years of successful operation as a real estate firm we extended our operations to Abuja in 2013. And the reception here too, has been wonderful such that after the first year anniversary we had to compensate our clients and we gave them plots of land and one couple won a free trip to Dubai. So, the essence of this  is to tell our ambassadors that we appreciated them in the past, we are appreciating them now and we will continue to do so for a long time to come.

What category of real estate do you operate?
We operate in the real estate industry which comprises of sale of land, building of houses for clients, building of houses for sale and maintenance of houses and other property related concerns in real estate business. That is the broad overview of our operations. And presently, as it were, the selling of land is what we call sites and services and constantly in Lagos. We have four locations of sites and services.  And we have few that we are selling. One of them is Coastal Town Homes that are fully built and furnished and they are going for N50 million. We have given people the opportunity to pay at 40% discount. In Abuja here, we have 14 thriving estates.

How would you assess the current economic situation as it affects the real estate sector?
 The economy is doing badly now and one of those things that characterise economies that entered recession is that they will always bounce back. One of the things that cushion the effects of the recession is adequate investment in real estate. What we did as a company when the government announced that we are in recession is to crash the prices of our lands and some houses. We crashed them by as much as 5% and when we waited for the economy to bounce back and when it did not we crashed it further down to 10%. We went ahead to crash it further down to 20% and that almost dipped into the capital that we invested.
And for us to assist further, we said okay we are going further down to 40% decrease so as to show solidarity with the state of the economy across board; be it land or houses or what have you. Even if you have employed us as managers of your facilities, the same price slash is extended to you.  
One of the advantages that we have in our company is that our CEO is a guru in real estate business and he has mentored very many real estate practitioners that mentioning their names will only amount to advertising. Now, he is a member of the International Cooperative Society and it will interest you to know they only have three members in Africa and he is representing Nigeria.  He is a national executive member of the Real Estate Association and Developers Association of Nigeria, so he is known to  the core in the business. What he brings to the table therefore is that he tailors our products to the needs of the consumers.
Merrybells therefore embarked on a statistical evaluation and we discovered that Abuja has a housing deficit. However, we found that there are  a lot of locked down buildings because they are overpriced. We have seen in our research that Abuja builds luxurious houses to the tune of 80% of all houses built and that its real demand for such is just 25% and its low cost housing counterpart demands is 75%. So that is why many of the luxurious houses that have been built are lying fallow.

How do you intend to make a difference in the real estate sector?
 We are coming with a product that will make it very possible for a common man to have an accommodation. So what we are bringing on board is that within a short while, you can rent and later own the same house. Everybody desires to own a house of their own but first everybody desires to first find a place to rent for some time. So it is a rent to own arrangement but it is going to be a clear departure. The difference being that in the present system, if a house costs N10 million, and it is not affordable, we will give you an apartment of between N3 and N4 million to start with. The second difference is that elsewhere they will tell you to pay 30 to 40% of total cost of the facility and we are trying to introduce more liberal terms of between 0 to 10% maximum. Merrybells therefore looks at giving the grace of a minimum of 10 years upward for the full payment on facilities.  

What is your take on the huge housing in deficit in the country?
The shortage of housing in Nigeria is put at between 15 and 17 million units of housing. That is, 17 million families need shelter. And even the provision of the government every year for mass housing cannot satisfy a thousand. And there is no room in our income to sustain it. Another thing is that there is a financial policy that disallows mortgaging beyond 25% of your income. And if you look at the reality in our country, for most, if you save 25% of your salary for 300 years you can’t build a house. So that policy is at best dead on arrival. It is not sustainable. So basically what they do now is to use the little housing available to do ‘man-know-man’.  So what we are telling the government now is to consult with private practitioners. We have a globally acknowledged body, Real Estate Developers Association of Nigeria. They can come to us.

What are the challenges facing the sector?
Our major challenge in this country is the parcels of land and documentation. And this, by virtue of the Nigerian laws, is in the hand of government.
We have been dialoguing with state governments. A couple of weeks ago I was in Akwa Ibom after then I went to Rivers. Presently we have something to do with Oyo State, and what we are asking them is to give us parcels of land and also give us documents to that effect.