Deacon Babajide Durojaiye is the Chairman/ Chief Executive Officer, Legrande Property Development Company Limited. In this interview with DAYO AYEYEMI, the reputable he speaks on germane issues affecting the sector and what can be done to change the narrative.

SO, how are the operators in the real estate sector surviving the nation’s economic situation?

That question is a very hard nut to crack in the sense that many developers are running into serious debt. They have houses they want to finish but they said we can’t pay that money for the increase In cost.

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Many developers are facing it all over the place, go and check in the banks and everywhere. The sector has the highest bank debt record vow,so anybody that say they are surviving it is a lie, until something is done about the cost of materials, something is done about the per capital income of the people, something has to be done about mortgages, something has to be done about credit policy in this country. We can’t survive it. Who will survive it with the interest rate at around 26 percent, 28 percent in real estate? We can’t.

In real estate industry, for real estate to thrive very well the two areas must be balanced. There must be willing buyers and there must be supply of houses. They will thrive very well, but government cannot provide all the houses


But do you think that the government, at present has the capacity to do that?

Probably, I think that the first step that this government took has shown that it has a programme and a plan that will really help the real estate . One thing the government has done is to come and support the real estate in building their capacity. That’s what the government is doing right now, and what it has done is to use two of their sectors to empower this area.

So government is looking at two areas. Also, government wants to build houses in every state of the federation, that is 36 states plus the Federal Capital . The minimum is 500 houses. They are looking at building about 100 units in each local government, that is 774 Local Government Areas. It will help the real estate to build capacity. The only thing that is remaining on the other side is for the government to be able to talk with the private sector and increase the minimum wage from N30,000 to at least, something between N150,000, N200,000. It will be able to balance that area and I’m telling you, real estate will bounce back.

All of us want to see how we can support the government. People should not just say government is bad, they should look at what they can add to the government because we will continue to see bad government. So we must be able to see how we can make the government to be better and that is what we stand for. We want to be able to partner with government to deliver these houses, to make sure the houses are available and are affordable.


What’s your take about the mortgage system in Nigeria?

The mortgage system is a failure. The mortgage system where you have to pay as much as 30% per annum is a total failure. So I think a lot needs to be done in the mortgage system.

Mortgage system should be able to run within single-digit interest rate, that is one thing that is very certain. All charges on mortgage should not be more than 2.75% maximum because mortgage is a necessity. It is not something that you have to push to luxury. Even for people that are just leaving school, you must put them into your mind and you control just like how you have been able to put them in mind to achieve a better tomorrow. So, giving them mortgage at 30% does not work, and I think the Federal Mortgage Bank is now being restructured by the new minister to be able to stand as a mortgage bank. We believe in his idea and what he is bringing on the table, and that is why we are partnering with the bank.

They are bringing what the current people want so that you will be paying rent and you are the owner of your house, and that will give you more confidence in this country. It will give you confidence to work at any post in this country; it will not make you run away because you have an asset you can boast of; you have something you can leave back to your children’s children. So housing will not be a risk with what he has and that is what we are really working on. With this new system, mortgage will be a new thing needed to make people understand, because many people do not understand mortgage.

If we start with that, many people will have confidence in this country. Many people that have left the country will come back.


Can we say the issue of job insecurity is another threat to mortgage in the country?

Yes, it is a challenge and the challenge is not one . The issue of job insecurity and the issue of oil theft are the things that really reduce the capacity of those companies that are folding up,. People are not able to remit their dollar out of the country. This is one of the things the government needs to address.

There’s work everywhere and there’s work every day. For somebody to be able to loose his job, you will get another job, you will even be able to do two works in a day if everything is well structured. For me, if we have a very good environment and a very good system in place,we will not be talking about lost of job because you will get another one.


Are you talking about mortgage for the off takers or mortgage for developer?

Developers don’t take mortgage. It’s off takers that take mortgage.


But there was a time the Federal Mortgage Bank had Estate Development Loan for developers.

I think the concept is a failure from the inception because there is no way you want to build a house, without having an off taker in place. You can’t build a house for ghost. Developers are not the one that will stay in the house, so you can’t create mortgage for a off-taker for a developer. You can only create mortgage for the subscribers.

One thing the bank is doing right now, which is right is that before it gives you money, you must have off-takers, I mean people that will take the loan.

The present housing minister knows what he is doing. He understood mortgage and he will give you direct condition that you must have offtakers to take the houses because they are the owner of the mortgage not you, not developers. Developer is just to build. Once he builds, he goes and the house will just be there . I think it is one of the things the Federal Mortgage is facing now because they build the houses, people are not taking them.


Many people are of the opinion that there should be a construction bank that will give money to contracts or developer at a single-digit rate. Are you in support of this?

Sure I am in support, but the major thing is that this aspect has nothing to do with mortgage. Mortgage is for off takers .

The second aspect is the construction. The construction have a major set back, because 99% of the bank in Nigeria does not do long term loan. What they do is short-term and short finance can’t finance real estate. So we can see that area is already a failure, and that’s why we are having housing that are selling at high’s wrong. Housing is not supposed to be like that, it is to be a necessity, things that government will intervene, things that banks will intervene to make it affordable and available for people. If you walk around in the night,you will find out that many people are here gisting, they would have gone to a place or the other to sleep, they need a shelter. Shelter should not be expensive. The banks are not encouraging that in Nigeria. I don’t know how government wants to do it, but I know they can do it. For government to invest between N500 billion to N800 billion in housing per year is not too much. lf you invest that in five years, the housing deficit would have been the story of the past. Like what the minister is trying to do, build in every street, build in every local government. The migration will be reduced because you are building an estate that has all facilities and people will be willing to stay. Everybody will not be running from the north, from the east to Lagos State. The major thing is that the houses are too expensive, and one of the thing that is making it expensive is non-availability of long-term finance for real estate.


Most of our building materials are still import base. Does that mean that we don’t have local materials that can fit in like the imported. Most building materials like tiles, doors, flooring, windows are still being imported?

If we have to say the truth, some materials are being imported but the materials that are being imported are less than 30 percent. Don’t let anybody deceive you, as at now, it is getting close to about 20 percent because most of these things are being produced in Nigeria. The tiles are being produced in Nigeria. We are using Nigeria tiles – royal tiles, CDK. We are using all of them in Nigeria. All of them are in Nigeria. What are you using in the house that is not locally made now? We are making cables, bulbs in Nigeria. So the element of importation is not much. If you are talking about cement, 80 percent of what is used to produce cement is available in Nigeria. So what are we talking about except we want to deceive ourselves?. So let us have a structure that will make us to have a value chain. that will bring most of these costs cheaper and available so that people can enjoy the value of those houses.

Like now, if you want to get a house, if you want to live big, you have to go to Ikoyi, Banana or go to GRAs.

We have different levels, so if you are not staying in those three areas you are not staying in Lagos. It is not supposed to be, it is because of the infrastructure that is available. The only thing that distinguish them is the infrastructure. If there is good infrastructure in Mushin, people will stay in Mushin and you will derive your value for money.

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