Nigeria’s Real Estate Market Not Affordable – Assetrise Boss

What is Assetrise, what is Flapcoop, and what is the relationship between the two?

Assetrise Limited is registered to solve a strategic need in Nigeria’s and Africa’s society. Our mission is to make housing affordable to all and by doing so, we consider Real Estate as consisting of residential – industrial, commercial and agriculture. To make housing affordable has necessitated that we create fresh Estates, especially, like our projects in Epe, Lagos State such as Official Garden City and the City MBS, Mowe. The affordability of these new Estates is because they are new sites. Take Magodo for example, a plot of land is about N150 million or N200 million. If you want to make houses affordable, definitely not here [in Magodo]. We are bringing the word Asset into real estate; thus for every real estate opportunity, you own a land, you own a house whatever you own, Real Estate is an asset. To champion a cause especially for the younger generation to crave asset ownership, we called it Assetrise, implying, “Let the asset rise”.

To achieve this aim, having discovered that the target market we need to start from is a timid youth population, and some adults who don’t have the available means to own assets, we introduced our model which is a cooperative society to harness their resources, put their funds together and save towards asset ownership. So, we registered a cooperative society with the Ministry of Commerce, Industry and Cooperatives(MCIC), Lagos State, to be allowed to practice as a co-operative society, hence the name Flap Multipurpose Cooperative Society Limited, which is branded as Flapcoop.

Assetrise and Flapcoop are solving the same problem. The distinctive factor between the two models is that Assetrise is licensed to practice Real Estate by the Lagos State Real Estate Regulatory Authority (LASRRA). We are also regulated by the EFCC (Economic and Financial Crimes Commission) as well as SMEDAN (Small and Medium Enterprises Development Agency of Nigeria). All for real estate development. While Flapcoop is licensed and regulated by the MCIC to operate as a co-operative society. As a co-operative society, real estate is far distant from you but because our major focus is real estate and agriculture, there was a need to register a real estate company which is now called Assetrise. Members who were supported to save and to grow their financial-base to own assets, started from Flapcoop and then came to Assetrise to own the asset. That is the relationship between the two companies, Assetrise and Flapcoop.

At what point did you conceive the idea that Flapcoop will fund Assetrise. When did you see a need that there should be a co-operative society through which people can grow their funds and use it to own assets?

With my experience in Nigeria, I can say that the gross level of poverty we have in the land is due to structural problems either by the government or private institution formulation. Privileged to have schooled in the United Kingdom, I discovered that there is a level ground for everyone to play because the society gives you the privilege of creating wealth at ease.

When I came to Nigeria we started a company called Flap Africa. Our goal was to make sure that luxury and assets are affordable to every Nigerian. We went to Zenith Bank, told them our vision and they decided to partner with us. But sooner than later, we ran the market and we saw it was not a ready market for Nigerians because affordability is a problem. We needed to solve the affordability problem. And why we need to solve the affordability problem, we need also to find through our model going up to the grassroots, picking up the ordinary person in the society to become our asset owner. Why do we need to develop this model? I can tell people that 80 per cent of saving account holders, especially in Nigeria, cannot access loans from any bank. For example, if you have a savings account today and you call for a loan, one of the major requirements the bank will ask you is where is your collateral. It means go and bring your land documents but these same guys own 80 per cent of the funds but they can’t access them. If you have assets, you can take your assets to the bank.

So, the major problem we want to solve is to enable people to own assets that will guarantee their financial liberation, financial independence and financial stability. What do I mean? Once they are able to save to own an asset, they have broken the poverty stranglehold. How? Once you save your N2,500, you are able to realise buying a land well documented, and possibly you build on it. Now, when you go to any financial institution for a loan, they will ask you for your collateral, then you will have something to present. Also, you own an asset today.

I will give you a clear example. I have a friend who was a doctor when we were in the NYSC [National Youth Service Corps]. He was saving and he saved up funds and bought two plots of land at Ladimi in Abeokuta, a very popular place. Five years later, he had to go for his masters abroad but his father could not find him, he went back to the land he bought at N800,000 each, and our company bought each of that land from him at N14 million. He was able to pay for his tuition. What is the wisdom here? Assetrise! If he had kept that N800,000 in the bank for that five years, it can’t grow up to that. Real estate is a common ground for us to break poverty. Many people think of real estate, Oh, let me buy a house and build and live. No! There is a transactional part of real estate that can solve a problem and that is where Flapcoop came in. Registering a co-operative society that is well organised and updated and regulated by a strong government like Lagos State, and all their bodies and people are privileged to escape the hustle and poverty. This is where Flapcoop comes from.

How is Flapcoop run? Can a member who is saving towards an asset get a loan from his savings?

First, in today’s digital age, you can be in a hole and the world will know you if you are able to use digital creativity to your advantage. When we launched our first product, we got people from Port Harcourt, not only in Lagos, that subscribed. Almost all our co-operative [members] in Lagos, came via online; and some came through referral because when satisfied, you refer someone else. Getting people into the co-operative society has not been a problem. Second, the co-operative society owns two models to support both asset ownership and financial liberation. Just like you can save in a co-operative society but necessarily saving to own an asset now depends on your option. With your savings, just like the normal standard of a co-operative group, you’re opportuned to get loans from the co-operative. Our members can get up to 50 per cent loan on their savings. If you’re saving towards owning an asset, you can still get a loan. A clear example, schools have just resumed and some of the cooperative members own lands within our Estate. To pay for their children’s tuition, maybe they are presently out of resources, they make a call to the cooperative and they can get quick loans not because they are saving but because they own an asset with us. That is where we are coming from.

Last month we launched a product to actually face this squarely and we call it Asset Boundary. Simply, owning a real estate asset is beyond the pillars and the blocks to build; it is a financial instrument for me. Saving is a good culture but it’s a bad strategy towards wealth creation.

I will give a clear example, what is the inflation rate in Nigeria today, inflation is about 18 per cent; so imagine when inflation is over 30 per cent, and what will happen to the value of your savings if you saved your money till December with the bank. Maybe they will give one per cent or two per cent but your money has lost value by over 20 per cent in a month.

So, saving is not a good medium to create wealth but saving into an asset can be. I will give you an example, one of our members who was involved in a pension savings plan and for working over 20 years, he was able to save N6 million, N30,000 per month. Another member, who saved N10,000 per month in one year bought a plot of land in Abule Egba as of today, her one-year savings is now valued at N25 million, a land that she bought at N420,000 then. But the man who saved for saving sake will today be getting a N30,000 pension. What can a N30,000 pension do in today’s economy? The wisdom is that the person who has saved for an asset today and decides to sell that land at N25 million is liberated in today’s economy. Saving towards assets is the best strategy in today’s economy. To make money you can decide to even sell that asset anytime or transfer it to future generations.

With the rate of inflation now in the country, will you re-price your product offerings?

One thing about this industry that we have chosen to play is that it is one of the most agile industries. For instance, we have products we have been selling for months now, their price has increased. We started Palm Rate Estate at N700,000 in less than two months its now N1 million per plot; we started City Ambiance at N750,000 last years, as of today its now sell for N2 million, and by next month when we’re done with construction, then it would have been N4.5 million per plot.

Real Estate can change in price, though there is inflation everywhere, it’s commanded by the force of development. Our Visual Garden City in Epe that we were selling for N750,000, sold for almost N3 million. You can see that Epe is a fastest growing community in West Africa with all the amenities forthcoming, infrastructure development both government and private; these are forces that are pushing up the price.

Where has the rising inflation left the Real Estate sector in times of cost and patronage?

With the major impact of the current global inflation, the knowledge sometimes is that Nigeria is the only one being hit by inflation. The United Kingdom government is crying. Inflation is everywhere, no matter how. Now in the real estate sector, inflation has reduced the purchasing power of many people, and that is why we have decided to create a better product that will still put us out there in the face of the inflation.

I will give a clear example, the Power Outreach Estate innovation that we launched two-three months ago has no existence in Nigeria; it’s a noble idea from us, Flapcoop and Assetrise. Why do we have to do this? People buy real estate products with the notion to leave it for some time to earn from it. But we are saying, No! If you leave that money in the bank whether you like it or not, it will be dis-valued by inflation. In keeping that money in a product like Palm Rich Estate, we will plant palm trees on the land you own. While the land appreciates in value over the years, by the third year, 18 to 36 months, the palm trees will start to produce fruits and you will start making money. This is a better product to educate people amid inflation. To us, we see every opportunity in the industry to manoeuvre inflation. Why invest too much in investments in residential development now? I will give you a clear example, if you do residential development in Magodo, for example, the least you can sell a four-bedroom duplex even a two-bedroom apartment is about N53 or N80 million. For N150 million, it will depend on what you’re developing. How many Nigerians can afford a rent like that amidst the inflation? There are still Nigerians who have this money in their accounts and could channel it to where in a few years to come they can come back and buy Magodo. (to be cont’d)