Looking at the nexus between real estate and economic development, Founder of Eximia Limited, Mr. Hakeem Ogunniran, said that real estate has the strength to drive other sectors of the economy.
Disclosing this during the webinar organised by the Lagos Chambers of Commerce and Industry (LCCI), Ogunniran stated that everything takes on land, pointing out that if land is optimised in use in any cluster, one would get the best of it.
Besides, he added that land also enabled other economic sectors, being it finance, Information and Computer Technology (ICT).
“We always tell the guys in ICT that even the cloud lives on land, so everything is about the land. So if you want to maximize the potential of any economy or cluster, you have to pay particular attention to land and land’s uses,” he said.
Speaking on the theme:”Harnessing Lagos Island’s Comparative Advantage: A Sectoral Analysis”, Ogunniran, who is also the Chairman, Lagos Building and Investment Company (LBIC), stressed that investment capital is rational, and that people can predict capital with values based on certain factors such as risk, return and regulations.
To recreate economic value of real estate in Lagos Island, he stated that one would need to look at those factors and do the needful in terms of ensuring that they are present in the neighbourhood.
“We can talk from now till anytime, we have to understand those factors exist. This is critical for example,if you have any cluster where property is being marketed by one of the topmost real estate firm in the world for five to six years and still don’t have a buyer, you must understand that there is an issue with the real estate in that particular segment.
“I always talk about the three R, (3R). We are looking at the drivers of real estate’s capital we have to focus on the three (3R) – Risk, Return, Regulations.
“Risk and Regulations are somewhat macro in nature,” he said.
To recreate Lagos Island’s real estate, Ogunniran said stakeholders would want to know what they needed to risk in the cluster, while expecting authority to focus on investors’ friendly regulations and also put in place an environment that would enable people to earn good returns.
Looking at the attractiveness of Lagos Island for real estate’s investment, he said the population of people that visited the location daily was huge, adding that the location is central and accessible.
“It’s a strong existing neighbourhood that that are complementing real estate industry already – all the banks are there, Nigerian Stock Exchange is there and Shell is there, so there’s a strong existing neighbourhood that are complimenting, which are critical for real estate.
“The Lagos State High Courts are there, no thanks to #EndSARS, but all institutional supports that you need for a proper real estate cluster are already on the Lagos Island,” he added.
Talking about physical infrastructure, he stated that Lagos Island remained the first real estate settlement in Lagos with good physical infrastructure and drainage system, adding that the Blue rail line and a new hospital are upcoming.
According to him, all these constituted good points in talking about Lagos Island.
“Proximity to big market and trading hubs of Oke Arin, Idumota and others are all strong drivers of real estate’s prosperity,” he said.
Identifying issues with Lagos Island, the luxury real estate developer said the environment has become stunted, pointing out that investors would want to know the potential pipeline of the area and the assets that would be delivered in the location next five years.
Comparing rental values of Lagos Island to Ikeja, Ikoyi and Victoria Island, he stated that while the former commanded N50,000 per square metre (sqm), the latter cost between N300,000 and N400,000 per sqm.
He pointed out that investors in real estate always look at return on equity (ROE) and not return on emotion or return on ego.
On what to do to turnaround the Lagos Island as an investment’s destination, Ogunniran suggested that it would require the holistic review and implementation of Lagos Island Master Plan on regeneration.
Besides, he said there would be need for notable state’s presence, adding that there would be need to recreate its value; introduction of development’s incentives and need to look at its approval order.
Ogunniran said: “ We need notable state’s presence; the state needs to lead development; we need to create development corridors. It’s good to have locked up shops and talk about upgrades, but we need to create clear economic corridors and focus on the development of those corridors.
“We need to strengthen the attractiveness of Lagos Island. Today, I can tell you that as far as real estate is concerned, Lagos Island is not very attractive.”
He cited two cities: Johannesburg and Santiago’s development, and how the government partnered with the private sector to turn things around.