Gone are the days of developing 50-60 Million Naira homes and call them affordable housing – Kola Ashiru Balogun

 

Excerpts of an INTERVIEW with Kola Ashiru-Balogun, Managing Director, Mixta Nigeria Plc (formerly ARM Properties) on 3INVEST on-air Radio show:

Mixta Nigeria, formerly ARM Properties is instituted to reflect ARM; acquiring 100% stake in Mixta Africa SA. An Africa focused large-scaled Property Development Company, headquartered in Barcelona, Spain, with subsidiaries operations in Senegal, Cote D’voire, Tunisia, Morocco and now Nigeria. Kola has a M.Sc. in Real Estate.

Ruth Obih: Welcome to 3INVEST on-air.

Kola Ashiru-Balogun: Thank you, Ruth. Thank you for having me here today.

On change of Name

Kola Ashiru-Balogun (Response): Thank you once again Ruth for the opportunity to be a part of the show this year. From ARM’s point of view, ARM Properties presents an opportunity to focus on affordable housing in Africa. So, the company decided to acquire Mixta Africa, which was earlier mentioned to have subsidiaries all across Africa – in countries like Tunisia, Morocco, Cote D’voire, Senegal and also now in Nigeria. As part of that integration plan, ARM decided to rebrand and concentrate all of its real estate assets into an entity called Mixta Nigeria. We then rebranded ARM Properties into Mixta Nigeria. The company still has the same people but now enjoys better support from all other listed subsidiaries and helps us assess better funding across the Africa platform.

On plans and Strategy

Kola Ashiru-Balogun: Mixta Africa does have plans to roll into some other African countries. We have plans to go into markets where we see opportunities, but like you said, Nigeria still remains the primary target for the company. Within Nigeria, what you find is that through the Mixta Africa platform, prior to the acquisition, Mixta Africa delivered over 10-thousands housing units across Africa. So, you can almost say that is the single-source and largest developer within Africa’s affordable housing in our platform. What we intend to do is to replicate the same thing in Nigeria. Our plans in Mixta Nigeria is the need to focus on affordable housing; and for us we really believe that’s where the opportunity and the need lies. Gone are the days of developing 50-60million Naira homes and call them affordable housing. We have to come back to making things affordable to the everyday-family or create products that people can join the property-ladder and grow as their families grow.

On Affordable housing

Kola Ashiru-Balogun: Well, the very interesting study that we did was to assess the income-pattern that we see across Nigeria and we realised that there are different price segments for different affordable housing segments. We came up with another 3-5million Naira segments. It’s going to be very difficult for any private entity to work within that segment; we call that Social Housing Segment. For us, affordability is around 10million Naira bound; so, I will call that between 7-12million Naira bound. With this, you will see that that someone at an entry level, depending on the institution can afford, provided the right financing is in place. That is how we segment the market.

On new projects

Kola Ashiru-Balogun: What we’ve actually done is that we have created the first of our projects that we are borrowing more or less a template from Senegal. It has been executed successfully and has been accepted in that market. It is called Residence De La Paix. We call it RDP, just to short-form it. The target again, is affordability and we are starting homes at about 9.95million, so it is still within the range of that affordable bound.

There is nothing anybody can do, one has to provide those infrastructures with any development. They constitute at least 30% of your costs and so you have to put that into it. What we want to do differently; we started with the Shell Concept 30-years ago, whereby we delivered houses and to share-level but we realised that it still doesn’t materialise into that first-time homebuyer buying into the house. Yes, we were successful; we sold the houses but to actually get people to move into those houses was a huge step that buyers weren’t willing to take. With this RDP project, what we decided is to do a basic move-in finishing level. You don’t have the luxuries of a full marble stone, tiles or anything; just basic finishes that will enable buyers to move into the property. But, the standard infrastructure still exists within the Estate; you have the pimped roads, the water system and sewage systems. More importantly, what we are doing here is to ensure that there is a mixed and proper balancing of the residents staying there. There is 2-bedroom and we have the 3-bedroom apartments which are priced differently. But, obviously, for the starter-persons that want to move into their first property, there is no reason why such cannot start with a 2-bedroom, and as they grow with their family size increasing, they can then move into a 3-bedroom.

On Acquisition and payment plan

Kola Ashiru Balogun: We have payments plans. What we’ve done differently in this RDP project is that, we looked at the market and came out with three different payment plans. So, if you pay the full payment plan, you get a discount, and you can also decide to structure your payment over one year or 24-months. On the 24-months payment plan, you start with 10% payment and you continue doing the payment in instalments as the project is being developed. That creates an affordable means of getting into it. At the same time, what we are doing is to speak to banks about providing the financing to the buyers upfront and a lot of banks ordinarily wouldn’t be interested in off-plan financing but because of the credibility of us as a developer and as long as you can deliver the homes and bring buyers that can afford the homes, they will surely finance the project.

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