July 13, 2024

Housing Finance Development

It's Your Housing Finance Development

We are building a blockchain powered exchange for trading properties – Purple Real Estate CEO

Mr Olayide Agboola is the Chief Executive Officer of Purple Real Estate Income Limited.

He is also a transformational Nigerian entrepreneur and finance executive who has driven impact across multiple corporations and in various roles, including corporate finance, asset management, investment banking and real estate.

In this interview with Nairametrics, he speaks on issues bothering on Nigerian real estate sector and other challenges in the nation’s economy.

Enjoy the conversation.

NAIRAMETRICS: What is your take on the investment landscape in the country post-COVID-19 pandemic? 

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 Olayide Agboola: Nigeria’s current investment market is ripe with possibilities. There is a saying that the best time to invest is when low prices intersect high-value potential, and we have identified a range of opportunities in real estate, property development, and various sectors across the country.

Post-pandemic, we see innovation in technology increasing inclusion and efficiency across every stage of the value chain, regardless of sector. As we develop our Proptech and investment technology, investors and homeowners can gain access to a market ordinarily enjoyed by larger and more influential institutions in the ecosystem.

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NAIRAMETRICS: What are the current challenges faced by the real estate industry in Nigeria? 

Olayide Agboola: The underdevelopment of the mortgage market affects the growth of our real estate and property development sector. A lack of available data and providers’ unwillingness to lend can make home and property ownership inaccessible to many. Therefore, more data is vital to help understand the immense opportunity. Our industry also needs more policies that will stimulate investment. With more partnerships between the government, local and international investors, and developers on policies that improve the ease of doing business, we can boost access to space for individuals and unlock potential among businesses that remain underserved.

Our country’s infrastructure deficit has been a consistent development priority for real estate developers since our businesses have to navigate the undersupply of power and upgrade unpaved roads to paved standards – this contributes to the complexity and cost of projects.

Real estate investment platforms like Purple will continue to play a leading role by taking on risk, which helps more commercial investors partner with us as we focus on bringing high-impact real estate and property development projects to the market.

NAIRAMETRICS: What are the prospects for real estate business in an emerging economy like Nigeria? 

Olayide Agboola: Nigeria is the second most developed market in Africa after South Africa and is the second largest consumer market on the continent. Over the years, Nigeria has experienced an increase in the size of its expatriate community, from the number of Nigerians from the diaspora coming home to relocate or holiday, to the rate of high net-worth individuals with an appetite for state-of-the-art residential developments.

There is also an enormous opportunity to invest in safe and modern accommodation that empowers the next generation through productive environments that help students in Nigeria to live, work and thrive.

We have identified investment opportunities in strategic urban and cultural centres, Abuja, Ibadan, and Benin as vibrant cities with rising industries and populations in need of economic inclusion, growth, and physical security.

We believe there is an opportunity to combine real estate and technology to increase growth and profitability through our experiential offer. As fintech products become increasingly integrated into different Proptech offerings in the market, we are developing technology to further our customer base and support more access to property ownership. We are developing a game-changing product to be leveraged to increase access to housing and property owners through a suite of intuitive investment solutions that can be accessed digitally in a way that is safe and easy to manage.

NAIRAMETRICS: When do you intend to list your shares on NGX and why do you want your company to be quoted? 

Olayide Agboola: We intend to list our shares after our initial public offering (IPO) closes on December 23rd. This is a step toward opening up the Nigerian market to new retail investors. This will be followed by the opening of our mixed-use Purple Lekki facility in Q1 2023.

In 2023, we intend to launch Fractions, our Proptech investment app, and drive the next phase of construction and capital deployment strategy including the delivery of a new 15-story Purple Macro Project in Maryland and our 10-story Purple Urban premium residential estate in Lekki.

Purple being quoted will provide access for capital growth to expand our diversified portfolio of sustainable projects, as well as build on new and existing relationships to enhance brand awareness and credibility.

NAIRAMETRICS: What value do you think listing your shares will bring to the company and what are your expectations in terms of foreign and local investors investing in your shares? 

Olayide Agboola: This raise is part of our evolving strategy that strengthens our position in the market. We see this N10 billion IPO as part of a larger N35 billion capital-raising plan to take our REICO to a new stage of growth.

Taking on the IPO during this period is helping us boost capacity and increase our equity base as we move ahead with property acquisitions and open up investment opportunities to Nigerians interested in the gains of appreciating assets.

We’ve noted significant interest from Nigerians in the diaspora, international investors, the commercial and impact investment community, and domestic investors, and we’re looking forward to developing partnerships as we advance.

The proceeds from the Offer will support research and development and the expansion of the group’s existing portfolio by diversifying its new lines of business and geographies.

NAIRAMETRICS: What is the current state of your real estate investment packages and what benefits does it offer to the public? 

Olayide Agboola: We are offering 2,000,000,000 ordinary shares at N5 each. The offer is available at invest.purple.xyz.

Purple is providing people with an opportunity to own shares in revenue-generating assets that are world-class and benefit from the success of our investment strategy.

The market will gain from our projected equity return rate of 18%, from which dividends will be paid. Importantly, citizens will own some of the most iconic properties that define the future of Lagos and contribute to a futuristic skyline.

NAIRAMETRICS: Do you think the Federal Government is doing enough to encourage real estate business in the country, especially in the area of housing, mortgages, and regulation? 

Olayide Agboola: The government has made some efforts to support the industry, particularly through the National Housing Fund and other initiatives. National and sub-national governments have also implemented important interventions, such as the Lagos State Real Estate Developer Database through LASRERA, to increase the safety and control of real estate transactions. Initiatives like these should be replicated and implemented across the country to unite the industry and protect the public.

Developers must also be incentivized to engage in the development of social housing and infrastructure projects that will significantly improve the lives of average Nigerians. Take into account student housing and retirement homes, both of which are typically long-term investments. Access to pension funds and other untapped sources of finance should be improved. These funds will go a long way in improving the infrastructural developments and the quality of life of Nigerians.

In an attempt to facilitate pension fund activities in Nigeria, the pension industry regulator, PenCom which has seen assets swell to N14.36 trillion as of the end of July 2022, approved guidelines allowing workers to access 25 per cent of their Retirement Savings Accounts (RSAs) contributions as equity payment to facilitate a residential mortgage. This policy is expected to boost the growth of the country’s mortgage and housing loan market.

NAIRAMETRICS: How can investors be encouraged to sustain participation in the real estate market? 

Olayide Agboola: Real estate investors prioritise securitization, and the market requires more structures such as REICOs to be successful and commonplace. These structures provide regulated avenues for investors to invest in real estate, creating opportunities for both investors and developers.

More progressive approaches to capacity building and capital partnerships between ministries, urban planners, property developers, financial centres, the development finance community, and impact investors will significantly contribute to infrastructural development in the country. Our industry needs more investors that adopt a long-term view.

Purple’s IPO is a significant step that demonstrates how the real estate industry can raise capital if:

Enabling policies and regulations that support new capital markets products or structures are developed

Technical assistance and financial support to develop appropriate and well-functioning market infrastructure are provided

Thought leadership on various capital market topics is provided through research, knowledge-sharing, and capacity-building initiatives with relevant market stakeholders

NAIRAMETRICS: How has the rise in forex affected your company and the industry generally? 

Olayide Agboola: It has been challenging; prices fluctuate daily and barely decline; we have seen the costs of our projects rise significantly, but we have managed to order long-lead items and hedge our positions as much as possible. To support the industry, more affordable Naira financing should be made publicly available.

Effective contingency planning, foresight, and a focus on partnering with local investors have helped shield our business from the headwinds of forex issues, positioning us to profit. We have benefited from the acquisition and development of dollar-pegged assets in this regard.

In which way do you think the Federal Government could revive and reposition the nation’s fledging real estate market?

So far, President Buhari has created the Presidential Enabling Business Environment Council (PEBEC), which aims to remove the bureaucratic constraints of doing business in Nigeria. The council ratified the new Companies and Allied Matters Act, instituting reforms that will improve the ease of business.

Developments such as this increase local and foreign investor confidence and help investors adopt a long-term view of real estate markets among other strategic sectors contributing to the domestic and regional economy.

We have noted the progress being made with the Nigerian Development Banks which have made significant investments in oil and gas and support more growth in trade and commerce. More can be done to support private sector businesses contending with increased costs of operations due to the precarious power supply and subpar logistics infrastructure which is a major brake to construction and development, especially in under-funded cities and towns across the country. These issues can affect progress and confine growth where it is high potential.

NAIRAMETRICS: Where do you think purple will be in the next 10 years? 

Olayide Agboola: Throughout the next few years, we will continue to focus on diversifying our portfolio with new models entering the market. By investing in purpose-built student accommodation and creating social and enabling environments for students, we will promote short-let apartments and Rent Now Pay Later (RNPL) credit solutions designed for students from lower-income backgrounds. These innovations harness the rise of technology and property management platforms. Investment priorities such as this have the potential to drive the real estate market to new heights as we build novel technologies that enable smarter cities and boost access to property ownership.

PurpleLekki, the new construction will nurture tech-empowered communities and offer best-in-class entertainment, world-class retail, and hospitality with its experiential offering PurplePlay.

As we morph into a tech-powered real estate and financial services business – a first of its kind in Nigeria, the next decade will see drive a deeper integration with disruptive technology through Purple Proptech – a wholly owned Purple entity deploying experiential tech-based solutions, to bring down barriers to financial services and investments.

Fractions, a key element of our Proptech offer, will feature Purple’s real estate pipeline and acts as a real estate sales mechanism for developers, providing established and aspiring investors with access to investment-grade real estate returns and the ability to trade safely. Purple’s Fractions App is being built using a blockchain-powered exchange engine robust enough for national stock exchanges and is currently in use by leading institutions.

Beyond driving this transformation over the next few years, we are committed to leveraging our expertise and convening power to spark knowledge exchange and boost capacity, and collaboration among a rising Proptech industry.

As we increase investment in Nigeria’s real estate market, we will continue to create more profitable opportunities that help investors understand and partner with the domestic economy.