Out of an estimated $25 billion Diaspora remittances into Nigeria in 2016, about 10 percent of this amount went into investment in real estate which underpins the interest and confidence Nigerians outside the shores of the country have in its real estate market.
The economic recession in the country, which managers of the economy say is easing off, has in a very significant way, reduced economic activities, crimped individual and institutional income and ultimately diminished the purchasing power of potential buyers of real estate assets.
In spite of this, developers have continued to put products to the market with considerable patronage from Diaspora buyers who have been the major drivers of activities in the market in the past 10 to 12 months with their stronger currency which gives them more naira.
“Because of the recession and depreciation in the value of the naira, a lot of money coming into the market now is Diaspora funds taking advantage of the stronger currency they have which gives them more naira. A lot of our subscribers now are from Nigerians in Diaspora”, revealed Emmanuel Obire, MD/CEO, Multi-Infrastructure Development Company (MIDC), in an interview.
But not as much Diaspora funds as expected are coming into the market as a result of what Udo Okonjo, Chair/CEO, Fine and Country Realty (WA), calls “confidence factor”. She reasons that “as much as we talk about a country’s business and confidence index, it is important that developers understand the importance and the role they can play in boosting the confidence of Diaspora investors”.
Most Nigerian investors overseas have had their fingers burnt not only by trying to invest through their family and friends, but by dealing with developers who, especially at the low and mid level of the market, struggle to deliver on their representations whether in terms of quality, timeliness or customer service experience. It is, therefore relevant, at this time, that real estate industry operators insist on working and representing only developers who commit to the same standards that Diaspora and international investors are familiar with.
“The world is a global economy with numerous opportunities available to investors, including Diaspora investors who could choose to stay invested in an environment where there is a sense of stability, sanctity of contracts and a transparent system. Most however, have desire and psychological connections with Nigeria as a motivator, and typically want to ‘spread their risks’ to include assets in their home country, for when they retire, return or visit. Most are owner occupiers and represent a growing class of discerning professionals and high net worth entrepreneurs that seek quality, value, peace of mind, and convenience as key ingredients of their investments”, Okonjo noted.
To boost the confidence of these Diaspora investors and raise their demand level, developers have to embrace some factors which include quality, credibility, compliance, service excellence, pricing and convenient payment.
Quality should be at the centre stage, but should not be taken to mean, over the top finishing and specifications. Quality is about ensuring that the appropriate construction and finishing standards are met (at the luxury level, it means they are exceeded, but this means different things to Diaspora and international investors who have global benchmarks to operate with).
Credibility is also critical and so, developers should use recognisable brands to build a sense of credibility starting from the contractors and appliances to the marketing professionals. All these are important aspects. They should not cut corners when they run into rough waters, level up with buyers when timelines change. Changing pricing after a contract has been signed, especially in an off-plan residential project, is a major credibility issue and one that can be avoided by ensuring that the right financing structure is in place upfront.
Compliance demands that developers should stick to building codes and approved plans, just as service excellence requires building a solid customer service experience, especially for off plan projects that require long term engagement. Timely delivery and ongoing communication of stages is non-negotiable. A professional firm should be appointed to interact with clients throughout the sales periods, keeping them abreast of the market conditions, project progress and other relevant information that will boost their continued confidence.
Pricing has to be transparent and subject to objective valuation. All costs have to be included and disclosed upfront so that investors, who typically operate in structured environments, are in a position to make an informed decision and plan effectively. It’s also important that a creative genius and convenient payment plan is structured by the developer or with a financial institution that understands this segment of buyers with their unique requirements.
To inspire more confidence in the market, Fine and Country will be taking the best of Nigerian real estate events to the Diaspora and international investors’ in London in October. The event, known as Refined Investor Series UK (Diaspora & International Edition), is viewed as the leading premium real estate forum for astute and aspiring investors to receive accurate and current market insight. It will be leading conversations that will address the myths and misconceptions about investing in Nigeria while exposing and connecting investors with already safe, pre-qualified real estate opportunities from the leading and most reputable Nigerian developers.
This two-day international edition will showcase verified current and upcoming projects in the residential and commercial segment and will be held in London Marriott Hotel, Grosvenor Square, Mayfair, London W1K 6JP, UK not far from the vicinity of Fine and Country’s Parklane office. It will attract leading Nigerian Diaspora professionals, sports stars, entrepreneurs, family office administrators, wealth advisors, and real estate enthusiasts.
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Author: CHUKA UROKO