‘Rising cost of building materials shrinks developers’ profit’
Sa’adatu Aliyu is the Managing Director of Rural Homes Ltd, a subsidiary of Homes Group, an Abuja-based real estate and construction company which has executed several projects across Nigeria. In this interview with journalists in Abuja, she speak on rising cost of building materials as well as high cost of transportation is affecting the profit […]
Sa’adatu Aliyu
Sa’adatu Aliyu is the Managing Director of Rural Homes Ltd, a subsidiary of Homes Group, an Abuja-based real estate and construction company which has executed several projects across Nigeria. In this interview with journalists in Abuja, she speak on rising cost of building materials as well as high cost of transportation is affecting the profit margin for developers. Excerpt:
What has the Homes Group been up to in the real estate sector?
We have been busy trying to build our brand. We are, in fact, rebranding and Nigeria will soon hear much about the Homes Group Limited. Besides the upcoming projects under the Rural Homes brand, we remain active as an indigenous company that is proud of its achievements in the country.
What is the latest on the much advertised Karmo Distrct Market in Abuja?
On the Karmo District Market, construction has been on-going. We have so far modernised it through zoning, adequate spacing and provision of some special amenities to aid shopping especially for mothers and working class women and men. Examples of such amenities are space for creche, a dedicated bukka area, separate section for tailors, gold sellers, etc. And we are currently at about 85 percent completion level. We hope to start full operation within 2022 because construction continued despite the COVID-19 and other economic challenges which have affected almost every business. Luckily, we have bounced back, so we are on course and about to round off.
There is a farmers’ market which is a section by itself, part of the zoning that we did; it caters to fresh food and vegetables strictly. It has over 150 stalls and over 100 enclosed units.
We also have what we call a textile area within the market; all this is based on research that we did with other comparable markets which informed the zoning and general arrangements. Our warehouses are one of a kind. No other organised market has such a scale of warehouses as far as we know in the country. They measure a 100sqm with over 12 to 15 metres high headspace. You can imagine the volume we are talking about.
We also have a cold room section and it’s a separate structure with a dedicated transformer for the entire ground floor dedicated to the cold room and the floor above is dedicated to the meat section, including livestock and fresh fish area.
Will the market get patronage?
In fact, in that area, there is no structure like the market at all. So you have patronage from residents of Life Camp, Gwarinpa, Lokogoma and even Idu industrial area. So once we start full operations, it will be even easier to commute there, especially women that have to go to long and congested places to do their shopping. Now we have somewhere more serene but with the same thrill of a market square. Karmo District Market is a market for everyone.
What other projects are you executing currently?
The Homes Group is into commercial properties and development of mainly residential units across the entire segments of the housing industry and right now we have, in Abuja, the Fountain View, an on-going project consisting of 100 units of 3-bedrooms block of flats, terraces, and semi-detached duplexes. They all have boys’ quarters separately. It is also located in the New Karmo District. The appeal for this district is the layout. In Abuja, once the infrastructure is in place, the business of the day has been done for you so we commend the FCT Administration for a good job. The water is amazing from Water Board; no need for boreholes, the pressure of the water is more than adequate, and electricity is available. Really, the New Karmo District enjoys some of the best infrastructures.
We also have the Gardenia in Abuja, also a 100 units, as well as other projects spread across some northern states and one in Alaba, Lagos State. The Alaba Inter City Mall, we are presently clearing the site; it’s over nine hectares. The preliminary work there has been challenging but we are not scared; we are used to challenges at Homes Group.
Property developers in the FCT face a number of challenges but for you specifically, what are your concerns?
The main issue for us, apart from the usual one that everyone knows, is the price of building materials. It has been going upwards for quite a while and it doesn’t appear to go down. The effect is that as a developer, you can’t plan because within months of planning, the price of cement, iron rods, chippings, and red bricks, not to talk of high cost of transportation what with the fuel scarcity, then skyrocketing cost of diesel, all these directly affect almost everything we use in construction sites. The procurement department will tell you things have changed, but you can’t stop work.
Two things happen; your profit margin shrinks, and the project may extend beyond its delivery date and it is an enormous task trying to manage these difficulties.
Another challenge is the lack of proper infrastructure. Developers end up providing infrastructure themselves in some instances; the adverse effect of this is also felt by the potential end user. Many developers end up doing the roads leading to their sites, so government should intervene though there is a tax incentive for when developers do this, but this is a capital intensive undertaking, so it is preferable for government to handle this infrastructural provision; this would ease up on developers and customers in the long run.
Then we have the cost of land and lack of skilled labour. We are having to deal with not unskilled labour per se but poorly skilled labour within the industry. These young men and women could be trained adequately to pick up these skills; this makes it easy for developers. I’ll admit this is not only a government initiative; private corporations need to step in as part of their corporate social responsibility. Here at Rural Homes Limited, we take training and upskill our staff very seriously as you are only as good as your average personnel.
Frankly, tertiary education, for a society like Nigeria, is not the most important. With primary and secondary education, you are equipped basically to survive and with the proper skill, earn a good living. Developed societies honour skills so much that individuals are highly paid and coveted.
When you train a carpenter, a tiler, a painter, a mason as a developer, you are adding to your asset. In our company, we operate a system where our labourers work in clusters with a head, who is in charge of ensuring they are meeting up to the skill level required for the job while also ensuring upskilling is going on. With the right personnel, resources and equipment, construction will be faster and we don’t end up looking for skilled workers from neighbouring countries. We have enough capacity and potential in Nigeria.