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00:00Nigeria's real estate sector contributed 5.2% to GDP in 2024, and Nigeria's Minister of
00:07Housing is projecting that the size of the market could reach $2.25 trillion by the end
00:13of the year.
00:14However, balance in affordability and profitability remain a challenge.
00:17Joining me now to explore this conversation further is the CEO of Northcote, Ayo Ibaro.
00:22Thank you so much, Ayo.
00:24Pleasure to have you on the show with us.
00:26Well, it's quite interesting.
00:28This is one sector, obviously, that we know has a lot of potential.
00:31You and I have had several conversations about the potential of this market across various
00:36elements of the market.
00:39Now, the federal government is seeking to attract investment, especially into the residential
00:43housing sector, particularly through its Renewed Hope Cities and Estates program.
00:49But talk to us about the residential arm of the market.
00:53I hear it holds the largest share.
00:56Talk to us about that.
00:57What do you expect?
00:58Yes.
00:59Even globally, when you look at the sizing of real estate markets, it's typically divided
01:04into residential and commercial, and you'll find that residential does hold, like you
01:08have said, a large proportion.
01:10Now, one reason why residential is also important is that it's the foundation for increasing
01:17the income-generating capacity of the middle class, without which the overall economy cannot
01:22grow.
01:23So I think the federal government is right in trying to attract investment to that sector.
01:27But some will argue that it's not always a question of attracting funding.
01:32It's really more of the legal environment in which property is developed.
01:39For example...
01:40I do apologize.
01:41Could you just hold that thought for us?
01:42We need to quickly go to African markets.
01:44Well, join us again.
01:45We're just going to go to our African markets, and then we'll continue with our conversation.
02:53We'll continue with our conversation on Nigeria's real estate sector this year.
02:58CEO of Northcote, Ayo Ibarra, is still in the studio with us.
03:01Ayo, thank you for your patience.
03:04Let's talk about...
03:05I mean, you were talking about the residential sector, it's the bigger arm, and of course
03:09that you also help the middle class, if I remember correctly, but finish that thought
03:15for us.
03:16Yes.
03:18I think what I would like to speak about while attracting funding to the market might be
03:23a good target to have.
03:26One can argue that it's really more around making the legal environment a bit more flexible.
03:32So take, for example, land titling and the Land Use Act.
03:36It's still a difficult situation in Nigeria.
03:40I recall, if I recall correctly, the minister not too long ago was speaking about 90% of
03:46land assets having some level of incompleteness when it comes to their titling.
03:52So residential is important, again, because it does drive further investments in other
03:57sub-markets.
03:58So when residential is sorted, which is why even the mortgage markets need some work,
04:03you find that retail sees a bit more of growth and then, of course, also...
04:07Right.
04:08If I could just comment here, and take you back to, because I did also listen to the
04:11minister when he was in Saudi Arabia, talking about how the federal government continues
04:16to have challenges engaging with the state government over land.
04:20And I wonder, what exactly is the problem?
04:23Is it a legislation problem?
04:25Why does this friction continue?
04:28I mean, it's a question that has pretty much confused quite a number of us in the real
04:35estate market when you look at each and every stakeholder.
04:38What I would say is, while there is some agreement between the federal and the state governments,
04:43it does take quite a bit of time.
04:46And that is largely because the Land Use Act, again, puts all power to summarize in the
04:51state government's hands.
04:53And state governments are not very quick to allocate land assets and approve transactions
05:00in directions that they don't entirely support.
05:03And so the federal government, wanting to be law-abiding, has to go on in negotiation
05:09process.
05:10And that slows things down.
05:11If you take, for example, the Renewed Hope project you eloquently spoke about earlier,
05:18what you will find is quite a number of state governors are not as forthcoming with their
05:25support as they should be.
05:27That's when you speak with the parties who are in the project.
05:30So it's a matter of-
05:31Is it because they have their own?
05:32Because I know they also have their own housing schemes.
05:35Yes.
05:36Yes, they do.
05:37And again, it's usually a matter of alignment.
05:39They don't always fully support what the federal government is doing, but they don't
05:43want to say it.
05:44And then they have other plans.
05:45And then there are certain things they want as a part of the transaction from the federal
05:51government that they're yet to get.
05:52So that's really what this boils down to.
05:57But in the end, state governors typically come around and you start to see assets being
06:01developed.
06:02Right.
06:03And I saw somewhere that there's a surge in demand for luxury apartments in major cities.
06:10Let's move to the other end of the value chain.
06:13Talk to us about what trends we can expect in that segment of the market.
06:17So the luxury real estate market rarely ever gets into trouble because the typical demand
06:24and supply dynamics, take for example, pricing of input materials on the supply side and
06:31then the ability to pay on the demand side that affects maybe your mid-market housing
06:35and so on and so forth, doesn't really come into question when you're looking at the luxury
06:41real estate market.
06:42It's usually a question of design.
06:44What is the quality of the contract?
06:46Those are the discussions had at that level.
06:48So it's not really something of a surge.
06:51It's just the normal state of affairs.
06:53You continue to see more luxury apartments, the numbers will just continue to grow in
06:58terms of pricing.
06:59Right.
07:00Well, thank you so much, Ayo, for talking to us today.
07:02We appreciate your time on the show.
07:04CEO of Northcote, Ayo Ibari, looking at Nigeria's real estate sector this year.