I see growth in industrial real estate state in the near future – Bolaji Edu

Excerpts of an Interview with Mr Bolaji Edu, CEO of Broll Nigeria, a real estate service company.

Ruth Obih: Welcome to 3invest on air.

Bolaji Edu: Thank you very much, I am happy to be here.

On options for Non-grade A Income Producing Real Estate;

Bolaji Edu: The truth is, that segment of the market- grade A office buildings and prime retail is only a very small portion of the total real estate market and in terms of the retailers who are in the market at the moment, a vast majority of them are in informal sort of shops and informal premises.

So if you are looking into investing in retail for example, it is possible to buy or rent a small building on a busy street in Lagos-Island or on the mainland or even somewhere like lekki. Brand it properly, provide good services, good car parking provision etc.

You would find that there is a lot of interest from local retailers who are looking to grow their business, whether that’s fashion retailers, pharmaceuticals, food restaurant retailers as well. I think that’s a real area in which someone without a huge amount of capital can get an income producing asset which may also provide capital appreciation as well.

On factors to consider when situating Income Producing Real Estate;

Bolaji Edu: There are two areas to look at:

  1. The legal and planning perspective
  2. What locations will give you the best opportunity to rent out your properties?

From the legal perspective, you need to make sure the land in which you are looking to acquire is zoned for commercial and retail purposes. Also, your lawyer who is advising you on the transaction should make sure all the planning approvals are achieved. From a property perspective which I’d like to focus on in this discussion, you need to know what type of retailers you are trying to attract and ensure that you are targeting a location which has the right customer base for the retailers you are looking to attract.

At the same time you also want to find a location that’s as prominent as possible. You may not be able to afford to be on the main highway but you don’t want to be on the backstreet as well. So finding a location which is just off the main highway is easy for people to access.

Also, as we have all experienced in Lagos, finding parking is incredibly difficult. So if you can find a location that can provide some parking provisions for the customers and again that’s something that will enable to attract the right retailers and also enable the property to command the highest rent possible

On the best type of real estate to invest in the present economy;

Bolaji Edu: Well, I think that you need to consider where you think the market or the economy is going to be in 5 years’ time. Real estate is a long term investment, so you shouldn’t just be looking at where things are at the moment.

One area that we believe is going to see a lot of growth in the next few years is in the industrial sector: warehousing and manufacturing and the reason for that is because the present government is putting a lot of effort in balancing the economy and also trying to diversify the income and revenue stream away from oil and gas and also trying to make the country more self-sufficient in terms of producing and manufacturing goods.

This is not something which we have done so very well in the past, but I think it’s just so because lots of opportunities and for people who are looking to invest in real estate to invest in Industrial assets, the industrial heartland of Lagos-state. So places like Ikeja, Oshodi and Lagos Ibadan expressways as well. There are opportunities right now to buy plots there and I think that’s an area in which we’ll see growth in the near future.