Affordable Real Estate in Nigeria

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Ronal Properties, a reputable real estate firm in Nigeria, has transformed to Mixta Nigeria and it is new mission is the build affordable housing of less than 10 million. The desire of the new company was presented at a side event at the launch of Mixta Nigeria in Victoria Island, recently. The press conference was attended by Kola Ashiru-Balogun, Managing Director, Mixta Nigeria; Shade Hughes, MD, Mixta Hospitality Company; Bode Olaide, ED, Mixta Nigeria; Deji Alli, Chairman, Mixta Africa; and Daniel Font, CEO, Mixta Africa. According to the Managing Director of Mixta Nigeria, formerly known as ARM Properties. “The essence of this event is to launch the Mixta Africa brand into Nigerian market and to also rebrand ARM Properties as Mixta Nigeria. This will be operating within Nigerian real estate market. “The reason for this is because ARM Nigeria which is our parent company acquired Mixta Africa and completed the acquisition earlier this year. This is the formal launching of the acquisition and the reason for the acquisition is to enable ARM increase its foothold across Africa and deliver more houses across the continent.” Balogun said Mixta Africa has over the years been able to deliver over 6,000 housing units and would be bringing that expertise into Nigeria to be able to deliver more homes to the Nigerian market. “Another reason for this move is also to be able to attract more foreign funding. We got an approval from our shareholders earlier this year to change the name ARM Properties to Mixta Nigeria.” The Chairman of Mixta Africa, Mr. Deji Alli said, Mixta Africa, the parent company, is based in Spain and has subsidiaries in Tunisia, Morocco, Senegal, Cote D’voire  and now Nigeria. The company had, in the past, developed projects in Algeria, Egypt and Mauritania. Alli said, “At the core of our business are affordable homes. From the name, we can deduce that Mixta Africa is an Africa-focused real estate development company. Its distinguishing features, looking at its operations in different African countries, is its speciallisation across the income groups.” He said in countries like Senegal and Morocco, they have been able to successfully deliver homes to buyers at equivalent of N5 million and that they intend to bring down cost of project management within the Nigerian environment so as to be able to reduce the delivery cost of homes to end users. “For us, the key interest is the affordable homes. We like this to constitute about 60 percent of our business, portfolio and investment in various countries where we operate. “In line with what we see about how African economies are evolving, we see significant opportunities in the hospitality sector such as hotels and retail malls. In Nigeria, for instance, hotel development is one of our projects. And when we say retail malls, we are not just looking at the western-styled retail malls, but the kind of thing we did in Oluwole Market where are taking traders from the informal market into a more organised setting. Depending on the situation we find in each country, we decide on which segment of the market we take.” On the latent risk in using offshore funding for housing projects in an economy with unstable exchange rates, he said “If you are tapping into the fund or debt market overseas, the interest rate is usually low and with this, you are left with one risk which is the exchange rate. In a place like Tunisia, what we have done is to make sure that we don’t take that exchange rate risk.

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We retain our money in dollars and borrow locally and because it is cash-backed, you are able to get a more competitive foreign exchange from that environment. “The big problem for developers in Nigeria is that by the time you borrow money at 21-25 percent interest rate, it will be very difficult for you to deliver homes at affordable rate to buyers at N10 million and that for us is a critical market and that is the segment where we would like to stay in this country.” About the target market, he said “Historically, most of the homes we have done in Nigeria have been within the upper N25 million. But with this combination we have now, we an incredible opportunity to come down the ladder to sub-N10 million homes and to do that, it means we have to go areas where land is not exorbitant and where there is a critical max of buyers. “Outskirt of Lagos is a key area for us and Abuja is another important area for us. We will also be looking at Port Harcourt. These are the few areas we are going to concentrate on in Nigeria for now.” He said “Mixta Africa which is a holding company was acquired by ARM and so, this a 100 percent subsidiary of ARM.  Our target is mainly residential and our primary focus is on affordable homes. We think this is an area where there is a challenge because material cost is huge. “For example, in Senegal with a smaller population than Nigeria, we have done over 600 homes in the past few years. The entry price for homes in this country is about 30,000 Euros, an equivalent of N6.5 million or thereabout. We think that if we are able to achieve such pricing in Nigeria, we would be appealing to a wider population of prospective homeowners.” To achieve this successfully, he said “We need government with an aspiration to deliver homes to low income earners and to back that up with policy and also ensure that people can borrow long term at affordable rate to acquire their homes. “This is the difference between what happens in Nigeria and other countries where we are operating. Until we reach that point where government recognizes that it has interest in providing homes for low income people, achieving that pricing is going to be difficult in Nigeria. “We are going to be care how we are going to segment the market. We have to look at how our portfolio is diversified across Africa. We have what is called social housing programme which is promoted by government with an objective to deliver homes to the people at a given price point. In Morocco, for instance, all homes under this programme cannot be sold higher than 25,000 Euros.” He said this has been achieved because there is a policy in place followed by an economic policy. For Nigeria, that is even opportunity because there is no price policy here. In Nigeria, N5-6 million housing is not possible to achieve. He said the product they would be launching soon is to enable them deliver housing at N10 million. “This is not where we would like to be but that is a good start. We are coming to do is to bring efficiency to lower the price.” (ThisDay) Related

 

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