Source: This Day —
The Chief Executive Officer, Wealth Island Properties Africa, Mr. Tade Cash in this interview with Kayode Tokede speaks on the impact of high interest rates environment on developers, among other property investment-related issues in Nigeria and across the World.
What do you see in the next 10 years with regard to property investments?
From an anticipatory dimension, despite the fact that a couple of people are moving out of Nigeria, the population of the country still makes the country the biggest consumer market for a lot of product- housing inclusive.
In Lagos especially, looking at the next decade with the growing population and being the fifth largest economy on the continent, presently, there are some people who would not be able to afford to live again in the city because it is going to be one of the most expensive cities to live in.
The value of land in Lagos would become a gold mine, people that could positively take advantage of this anticipation would be lucky.
How has the securities market impacted the real estate industry?
Real estate and the securities market which is also called “paper asset” what differentiates them is for now is both markets elasticity to inflation,
While I give credit some of the industry pioneers who are listed on the bourse and are leveraging public funds to expand the real estate market. The size of the market presently does put some limitation on the number of and attractiveness of real estate as an investment portfolio.
Whereas, the industry provides a magnificent cushion against inflation, it for now still an attractive as a unilateral portfolio for a company that does not have other baskets of product that can assure investors of.
Private placements can works but that will have to come from a place of experience and proven track records and most of all depth of team promoting the investment.
Paper asset is real but can be a difficult vehicle to wealth with from the properties perspective. But I dare say there are exceptional cases and I give credits to those who have pushed those boundaries.
Why does higher interest rates cause real estate purchase prices to decline?
This definitely discourages developers that like us to venture into financial transaction with institutions that peddles such rates.
For the housing needs we are trying to meet, its just sensible to shake hands with investors who can move at your pace and wont dump additional risk on you and your stakeholders.
Why has there been a gap in raising funds from government institutions to help the real estate market?
The real estate market in Nigeria is quite interesting as it presents a lot of opportunities at the same time. One of the issues we are face with today are short-term funding for long-term projects, as opposed to a long term funding.
The Real Estate industry is a unique ecosystem and being where a unilateral approach to pricing only complicates its functioning. As a developer, the proposal of a short-term funding can be underwhelming for practitioners and promoters of projects.
In Wealth Island Properties, where I manage we do what is called ‘Urban Development’ which deals with revitalizing cities and abandoned or marginal lands.
These are capital intensive ventures; from seeking government approvals and consents to allow of access those land to approving the works which basically is salvaging the difficult terrains through engineering solutions. Funds for these are usually invested with the hope that the solutions we are deploying will run through a course of time before the natural space is finally transformed.
So, dealing with the financial houses on our projects has been very difficult because the short-term perspectives only piles pressure on us and most of the time not realistic for our business plans. I am hopeful that one day some of the financial houses in the country will see values in long time investing.
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