INTERVIEW: How we’re contributing to real estate development in Nigeria – Chairman, Hotigraph Ltd
As Nigeria’s real estate sector continues to evolve, several challenges facing the sector have also hampered it from realising its true potential.
Inadequate regulation is one of the challenges facing the sector.
Subscribers to home ownership plans in the country have said the failure of the government to regulate the sector has put people seeking to own homes at the mercy of unscrupulous estate developers. But the developers have also noted challenges in the capital intensive sector. In this interview, Ahmed Abubakar Goringo, the Chairman of Hotigraph Nigeria Limited, speaks with PREMIUM TIMES’ Kabiru Yusuf on the impediments in real estate development while recommending possible solutions. He also speaks on the company’s successes with its estates in Abuja as well as its challenges.
PT: Your company Hotigraph has been around for a long time, tell us how it came into being.
Goringo: Hotigraph is a real estate developing company in Abuja since 1999. We have had constructions around Nigeria. Currently we are doing projects in the FCT, Enugu and Lagos.
PT: What are the specific challenges facing your company?
Goringo: Like you rightly know, life is full of challenges, without challenges you will not move anywhere. Real estate in Nigeria is a very premature industry so there are a lot of issues, some of them based on government regulations while others based on financing. The market is an all-comer market.
PT: How would you describe the regulation of real estate in Nigeria?
Goringo: Well. Real estate business is not regulated in Nigeria. There’s no established rules for players in the market. That’s why I said it’s an all comer market. Everybody can establish himself and get into the market. But the coming of the Real Estate Developers Association of Nigeria (REDAN) has helped to register competent developers especially here in Abuja and Lagos. But there are still a lot of quacks in the market. And with quackery, you know what you get in terms of quality and in terms of delivery. Also in terms of genuineness, business and intention.
Like I said, if there are basic regulations there, the mortgage industry will be very sound. Apart from the mortgage, there will be some specific government intention to deliver quality houses by providing some level of financing for real estate developers. Like you know, the economy of Nigeria isn’t stable and building materials are skyrocketing everyday and that makes construction expensive. And that’s why houses are expensive too.
In that case, you will have stock of houses with few buyers. The willing public are there but there is no financial backing. So in as much as the government is providing mortgages, the government should also provide the medium to regulate building materials.
PT: What is the progress of work in the fourth phase of your Abuja project?
Goringo: This project began in 2014 with phase one and two. They are all located in the Karmo district along Nizamiye Hospital. We have a total of 47 units for the two phases. The first two phases were financed by Aso Savings. We have done business with them before.
Our first delivery was in 2018. We delivered to the subscribers and they took up from there. The interesting thing about our houses is that we deliver semi-finished properties. The external infrastructure will be done 100 per cent, then individual subscribers will finish the internal work. You find out that when we are done with our work, the project is incomplete but that’s the contract scenario. Individual subscribers will complete the project to their taste.
Because, one of the things we experienced in the market is that you finish a property and the subscriber pays money for it and at the end of the day he will bring the property down because it does not meet his specifications or taste. So we try to get the structure well then the internal finishing will be left to the home owners as they so wish.
We started delivering the second project in 2019 and we have handed over 100% to subscribers. People are finishing their project now and we have almost 50% occupation as we speak now.
Currently, we are working on phase three and four.
PT: How many people subscribed to phases 3 and 4?
Goringo: We have 47 units in phase 3 and 45 units in phase 4. What we have currently is about 38 people that made payment in phase 3. We are also in touch with those that asked for a refund.
PT: Can you tell us how many subscribers you refunded?
Goringo: Yes. We have refunded about five of them. One thing that paused the system was COVID-19 but we are back to refunding people now. We have classified our refunds in two classes. There are those that have made 20 per cent payment which we are considering to pay back and there are those that have made 100 per cent payment. We are in touch with them and we are discussing how best to make the refunds. But interestingly, there are some of these people that indicated interest in refund but upon our going back to site now, quite a number of them are willing to go on with the project because we have a timeline to deliver phase three.
Another interesting thing is at the time we noticed infringement and went to court with Aso. We reached out to all the subscribers to stop payments until further notice. The essence of this business is not to gain money but to deliver and we did a lot to inform them as of then.
PT: What are the related concerns with your financier, Aso Savings?
Goringo: Like I said earlier, we had a project with them initially and we’ve been facing some back and forth but we went to court and contested the issue at hand. So at the end of the day the project was delayed and some subscribers wanted a refund but there are people that want to continue. Because we are in court for this long time, it’s normal for people to ask for a refund. We are out of court now to see how we can resolve the problem with Aso and so we can move on.
But as I am talking to you now, irrespective of the problem, we are back on the site and work is on progress.
PT: But, Aso Savings is accusing your company of delivering poor quality projects. Isn’t that a worry?
Goringo: Hotigraph is a professional construction company, I am an architect and the constructors are competent so the issue of quality is something we do not take for granted. We make sure that we deliver all our projects to the best of our ability. Yes there is a situation where you can have 40 houses going on at the same time. You might have one or two issues that will come up. We have phase 1 and 2, people are living there without any mishap and we are now in phase 3.
You should also know that we are not building bungalows, we are building high-rise structures and for them to stand over a period of time, there must be sound (quality) actually.
So you see the point here is there are insinuations going on but we cannot jump into debates on the pages of newspapers. But when the building is strong it is strong. If it’s bad, it’s bad that you don’t need any scientific proof.
But if it is so, why are the subscribers not complaining? If we had not gone to court, we would still be working by now. We took them to court.
There is also the issue of roofing that we experienced and we acknowledge that if there is any structure that has a roofing issue, we change it completely. I can give you receipts and transfers that we have made to that effect. We hired roofing companies to do that but unfortunately we had fraudulent ones, that’s what caused the roofing mishap.
Even those that have entered their apartment for six months, we still go there to ask them if there are problems.
PT: When we contacted Aso officials, they said the issue isn’t about delivering a sound project but there was a contract that you agreed to deliver a certain project and you didn’t?
Goringo: Well the thing is we don’t have any contract with Aso Savings. We only have a facility agreement with them that stipulates obligations, rights and responsibilities of each party and those ones are there.
But the issue here is I actually don’t want us to delve into the issue of who said what. But like I told you, we went to court. We took Aso to court and we were the ones that told subscribers to stop making payments. We did all of that.
They can say all what they want to say but everything is there you know. Now we are back on site and we are discussing with them.
PT: Did your company breach the said agreement?
Goringo: I don’t want to delve into that really. Because we are negotiating, so let’s keep good faith and see how that comes out. But like I told you, Hotigraph are the ones that took legal action at the time we felt things are not going well.
PT: What would you say about the negotiation with Aso?
Goringo: We are still talking. That’s all I can say.
PT: How do you explain these issues to your subscribers?
Goringo: Well, a lot of them have been coming to the office and we are apologising to them as a business entity. We told them that we went into this business to deliver houses and we are still on track. We will deliver the houses of all our subscribers.
It’s a loss to Hotigraph anyway. Because the business you started when cement was N2,000 you are now completing when it’s about N4,000. So you definitely know that the issue is not about profit. It is about safeguarding the integrity of the company. We are looking at the interest of the company and why it is necessary to maintain the integrity of the company.
The real estate sector is an integrity space. The moment you fail, you have de-marketed yourself but the important thing here is to manage the situation and ensure we deliver this project.
The timeline we have for phase 3 is to deliver by the end of this year.
We would hand over the 3 bedroom terraces and as for the 4 bedroom terraces that we have advanced. We will deliver by the end of June.
PT: What is the practicability of meeting the deadline you mentioned?
Goringo: By experience and from what we have gone through. I can assure you that the 4 bedroom terraces will be delivered in June while the 3 bedroom terraces will be ready by December. Some will be ready even before then by the grace of God.
If anything changes we will get back to them and discuss.
PT: In a broader sense, tell us about the challenges facing real estate in Nigeria?
Goringo: The idea of an all comer market is a problem. REDAN needs to do more to sanitise the market and of course housing might not be a government priority but the government must make it a priority. Apart from delivering housing, the estate development needs economic growth. And good housing is one of the indices for measuring a developed country so that should make it a priority.
So we hope that there is a way where not just mortgages are provided but low interest financing should be put in place for real estate developers that are genuine and pass the criteria test.
Another thing is that would-be house owners should ensure that whoever they are dealing with is registered with REDAN so that if there are issues like that REDAN will be in a position to interface. It is in the interest of REDAN to do that. The sanctity of the real estate market is to the glory of REDAN.
Also the government must regulate the prices of building materials and engineers’ design must come down to local (level). Our housing taste must be based on our setting. A lot of people when you build traditional houses for them, they’d prefer duplex.
So the entire setting, the government, the uptakers, subscribers, regulatory bodies and estate developers need to come together and work on this issue.
Similarly, the bailout that the primary mortgages are looking for should be provided by the government.
PT: What is the future of real estate in Nigeria?
Goringo: The future is real estate, certainly. Just like the government is picking interest in agriculture, they should also pick specific and special interest in real estate because that is where the future is.
Even the most developed countries in the world are into housing so why not Nigeria. Real estate should be part of our development plan and aspiration.
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This content was originally published here.