Real Estate: Harsh operating environment threatening business Developer

Against the backdrop of the severe and harsh economic climate the real estate sector of the nation’s economy has found itself at least in the last three years in which business continuity is now being threatened, operators in the sector have no option than to engage in innovative thinking and actions, just as they have to diversify their revenue if they must remain in business.

L-R, Propertygate Development and Investment Plc’s Company Secretary, Mrs. Janet Fifo, Managing Director/CEO Propertygate Development and Investment Plc, Mr. Adetokunbo Ajayi, and Non- Executive Director of the company, Mr. Jonathan Ogungbola, at the company’s Annual General Meeting (AGM) in Lagos last week. Reviewing the performance of real estate sector at the just concluded 10th Annual General Meeting of Propertygate Development and Investment Plc in the year ended December 2018 in Lagos, at the weekend, the Managing Director and Chief Executive Officer of the Lagos-based real estate development company, Mr. Adetokunbo Ajayi, said “The last few years have been very challenging for the sector. It recorded negative real GDP growth for the last three consecutive years (-6.86 percent in 2016, -4.27 percent in 2017 and -4.74 percent in 2018) respectively. “Unfortunately, many of the factors accounting for the struggle of the sector are still much with us. Many operators in real estate development and services space have been hard hit by the lingering slowdown in the sector. They have suffered from acute revenue shortage to severe liquidity crunch. “These have had devastating impact on many operators, even threatening their business continuity. Going forward is not an easy task, as some of the challenges are systemic in nature. However, innovative thinking and actions are required on the part of operators. The need for diversification of revenue should be taken very seriously in view of the experience of the last three years. “Having a mono income source can put an operator in a severe strain when the business climate of the income source begins to falter. Operators may also have to rethink their business structure and other operational strategy issues, products and services offering, funding mechanics and other fundamental issues critical to corporate success. “It is high time for vibrant industry groups to emerge, to seriously engage and collaborate with governmental authorities and other stakeholders on burning issues affecting the sector”, Ajayi noted. According to him, Propertygate intends to focus its attention mainly on real estate development, pointing out that the company has over a decade operated more as a development trading company, adding that going forward, it intends to do more in development for investment for strategic reasons. “Propertygage is exiting property advisory services. With exit from advisory offering, the company is currently holding a significant stake in PG Readzon Services, a real estate and allied services firm. This will help the revenue diversification goal of the company.

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By Emmanuel Okogba, 25 June 2019 for Vanguard Nigeria