PROPERTY ARTICLES

In the light of the rising affordable housing deficit amid the global economic recession, Managing Director of UACN Property Development Company (UPDC) Plc, Mr. Abdul Bello, believes that an urgent overhaul of the delivery system is required. In an interview with HOUSES & HOMES EDITOR Michael Simire, Bello, a chartered accountant, submits that the authorities as well as private practitioners alike should be professional in tackling the issues at hand. Excerpts:

Tell us about your firm's "Going Green Campaign." What is it all about?
We know that we are in business to make money, but we are looking beyond that and saying that, as part of our corporate social responsibility, one of the agendas that we will be pursuing will be to say the environment where we build our structures what can we contribute? Because any activity that takes place in the environment leads to some sort of depletion. If we are responsible citizens of this world, each and every one of us must consider what we will do to replenish what we have taken. So we decided that in a world where everything is tending towards environmental consciousness and improvement, one of those issues that need to be tackled by UPDC in order to move forward will be the environment. That is what informed the Going Green project.

How can one link this campaign with the new corporate logo you unveiled recently? Is there any relationship?
Yes, we had to introduce it then: the touch of green and the logo to demonstrate that it is not just mere talk but something that we must look at everyday and decide what concrete action to take in pursuit of it. We have prime land in Ikoyi and those are heritage sites where UAC has operated for a long period of time; the colonial people were there and the tree are matured, and to that extent what people used to do was not carrying about the number of trees but simply going there with bulldozers and start construction. Our approach is that we account for every tree that we meet there and we recognise that the tree is contributing to environmental cleanliness, pollution, soil erosion and we say that as much as possible you must save what you meet there. Your architectural design must recognise that those trees are there; you must try and build around them. However, when you have to take down a tree, you must plant more trees than you met there. And that is what we are pursuing. In addition to that, we want to promote it in the environment, we also look at how energy can be conserved in our designs and implementation.

Tell us about your projects, like which ones have been completed, ongoing or on the drawing board?
The 1004 Estate is still going on; we have The Trenchard Place, which is on Gerard Road which is selling in the market right now; we have something in Park View Estate in Ikoyi; we have the Anchorage Estate, which is selling at Amuwo Odofin; we have the Romay Gardens, which is by the Third Roundabout on the Lekki Expressway; we also have the modern and very splendid Victoria Mall Plaza along Adeola Odeku Street, which is under construction. Concerning those in the pipeline, we something to do at Aromire, we have something on Global Road, which is also in the pipeline, and we have something on Cameron Road. On these projects, we are processing the approvals and we will start construction as soon as we are done.

Can you shed some light on one or two of these projects?
Most of what we are doing is residential, but the Victoria Mall Plaza is in phases and includes residential blocks of flats, office blocks, shopping mall as well as commercial parking.

How are you coping with the current economic meltdown? Are you in any way affected?
I think all sectors have been affected. I personally have been affected. Seriously, I think the real estate market has been largely affected especially in Lagos. I think nothing has affected anyone in the rural areas. There is not much in terms of price variation in Abuja, but Lagos on the Island, yes about 25 per cent drop in price has taken place and for places like Banana Island it has been more severe. But overall, I don't think we've gotten to prices we had, say in 2007. To that extent, its not too bad. Again, you wont expect the kind of situation that has arisen in the US or UK because the mortgage system here is hardly working. There is none, to be factual. So people have not over borrowed so to that extent the correction will just be minimal.

How would you assess the mortgage situation in the country? For example, it can be argued that the kind of houses you are building are not accessible via real mortgage financing. Should the entire system be overhauled?
We have made a lot of recommendations to government. Everybody recognise that this is not the kind of mortgage system that drives the real estate industry. Nobody has used this kind of system to achieve these kinds of results. You cant look at the mortgage system alone, some other sectors that depend on that to make it work needs to be addressed too. You have the lands reform which the government is trying to execute because the issue of title and how long its takes you to get title to regularised, what is in the title registry and how fast you can turn around a title are issues that will come in because the bank is lending and it wants to be sure that it can have a document that it can hold as security, that that document can be easily transferred without spending several years where it is held down; what you don't want to hold you are now forced to hold it. These reforms have to take place. Again, there has to be a pool of funds that is available for people to assess so that you borrow money at rates that are more palatable. Obviously, people who take money from the bank to buy the kind of developments that are need to borrow at 20-something per cent interest rates that are obtained for commercial loans and that is not proper.

You seem to be involved in partnerships in the execution of your projects. Is the economic situation affection your sources of financing?
My sources of financing, no; to the industry, yes. If the liquidity in the system is constrained, of course the real estate sector cannot be excluded from all that. To that extent, there is a credit crunch, there is restricted lending and only those that the banks know for their antecedents and what their future outlook is will they lend to. I don't blame them for that. But they need to be encouraged to lend more; otherwise this economy will not grow. A lot of projects are suffering from financial handicap as I speak because somebody was giving them money to finance this project and soon as this problem came up it pulled the plug. These are unfortunate development and I hope that the situation is corrected and the banks will continue to learn to the sector.

How are you feeling the impact of the rise in building materials' prices?
Unfortunately it is something we have to live with because I was mentioning to my colleague that, look you have an issue with people who want to expand capacity locally to bring more cement to the market is adjusted downwards, and you have to marry that with the fact that in the interim before the factory is ready there is a shortage of cement, you want to open the mill so that more cement comes in, and of course the man who has invested will be feeling that look, everybody is free to bring in cement, why am I investing? So this has to be sorted out and a solution found. We have increased prices and as much as possible that eats into our margins because we cant pass everything to the customer. It's a fact of life we are living with, but we are not happy.

I am sure you are bothered like everyone else by the disturbing building collapse trend, aren't you?
We are quality conscious and in our projects we ensure that are projects are in keeping with local and international standards. So we don't have that issue of building collapse. But I know that there has to be greater quality control. There is a skill gap in the industry and people are not professional in their thinking and in what they do. If you have cement that is of the right grade and you mix it in the right proportion, there should be no problem. If the steel that has been specified is of the right dimensions, you wont have problems. But these are issues where professionals sometimes are not even called to give their opinion or to make a decision. Somebody just wakes up and uses anything to build, and you are going up, and you know that this is risky. Aside from that you have people that are saying that you can manage. Well, you don't manage when it comes to things like erecting a high-rise building. You cant do that. But this is what is happening. So, government also has to strengthen its monitoring mechanism and we've made a lot of observations and Lagos State Government has been up and doing in this sort of thing. The government is trying but there are also some social dimensions to this problem and they have to be pragmatic about it.

Assuming you were the Housing Minister today, how would you set out to turn things around for the better?
First of all, I will not be made the Housing Minister. I'm not a politician. I work for UAC and I am quite happy working for UAC. But seriously speaking, a Housing Minister really needs to understand what is going on and Nigeria is a big country with a lot of challenges as well. We need to take a professional approach to these kinds of issues. Housing is very, very important. There are a lot of committees that have been set up to see how the sector can be invigorated and the World Bank has partnered with the Central Bank of Nigeria (CBN) and I was on one of the committees where we are making recommendations on the kind of reforms that can take place in this sector. I think if we implement what is coming from all these consultations, the present government should be able to deliver.

The housing sector is certainly feeling the strains of the energy crisis, isn't it?
Energy is a very serious issue. Seventy per cent cost of running those estates is energy-based. You have to depend on generators and that means that you have to depend on diesel. The customers are not too happy with the kind of money they spend just to have a peaceful night, and the kind of noise that generators also make: there are health issues, pollution and so on. But we hope that the government will implement its power agenda that public power supply will improve significantly so that these kind of issues that we are dealing with wont be there. But reforms in the power sector are vital to the survival of the country itself and I think the president is quite aware of what needs to be done. Privatisation is the way to go; there is no way the government can handle it.

A school of thought says we have to start some of these reforms in our own respective ways. What are your plans or what are you already doing in this regard?
That falls directly into our Going Green agenda because what we are looking at is, how do you consume less energy where the available energy is limited? How do you use that energy the most beneficial way? In our estate, any design we are approving now has to recognise the environment itself, how does the weather move, what kind of environment is it, what should we put there so that we have to rely less on artificial energy so that we go natural. We talk of energy saving bulbs and do a power audit of our estate to see how we reduce the amount of energy we use. By and large, I think it's a very wide agenda that we are pursuing and residents of our estates would be invited to join in this campaign - they are significant participants in this Going Green project.

There is no doubting the fact that climate change is a serious issue that requires urgent global attention. How do you think we should act locally to adapt to or mitigate the effects or impacts of climate change here in Nigeria?
I can assure you that climate change is here in Nigeria. All over Nigeria, you will find one form of effects of climate change or the other: desertification in the North, ocean surge in Lagos and deforestation/erosion in the South East. Everybody has to be involved. We've all done the environment wrong and we need to take active measures to see that correction takes place. We can look at how we deal with our waste, look at the ecological impact of whatever activity that we involve ourselves in. In UPDC, we are trying to find ways of enriching what we have taken away from an environment in the course of clearing land and building. We believe that in every household, in every individual, you have a role to play. For example, how do you use less water in face of shortage of water?