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Propertygate diversifies, seeks enabling environment

By Chinedum Uwaegbulam
24 June 2019   |   1:58 am
Amid the poor performance of the real estate and weak state of the market, Messrs Propertygate Development and Investment Plc has advised operators to form vibrant industry groups, which will engage and collaborate with governmental authorities....

Propertygate Development and Investment Plc’s Company Secretary, Mrs Janet Fifo (left); Managing Director/ CEO, Mr. Adetokunbo Ajayi, Non- Executive Director, Mr. Jonathan Ogungbola at the Company’s Annual General Meeting (AGM) in Lagos.

Amid the poor performance of the real estate and weak state of the market, Messrs Propertygate Development and Investment Plc has advised operators to form vibrant industry groups, which will engage and collaborate with governmental authorities as well as other stakeholders on burning issues affecting the sector.

The company has also announced plans to exit property advisory services and focus more in real estate development. It intends to push the diversification goal by deliberately pursuing investments in other carefully selected areas and ventures .

Managing Director/ CEO of the company, Mr. Adetokunbo Ajayi made this know at the 10th Annual General Meeting of Propertygate Development and Investment Plc, held in Lagos. He said: “With exit from advisory offering, the company is currently holding a significant stake in PG Readzon Services, a real estate and allied services firm.”

Ajayi said that the country recorded a GDP growth of 1.93 per cent by the end of 2018. That was an improvement compared to 0.82 percent growth recorded in 2017. The year also ended on a positive note with a GDP growth of 2.38 per cent in the last quarter of 2018.

According to him, the real estate sector recorded a negative annual real GDP growth of -4.74 per cent for the year; a further decline compared to -4.27 per cent recorded in 2017. Quarter four result was equally negative, with a real GDP growth of -3.85 per cent. Its overall contribution to total real GDP for the year declined to 6.6 percent compared to 6.85 percent in 2017.

“The construction sector performed relatively better than real estate. It recorded annual real GDP growth of 2.33 per cent for 2018, an improvement on 1.0 per cent annual growth of 2017. Its contribution to total real GDP was relatively stable at 3.73 per cent compared to 2017. Real estate development for sale remained sluggish throughout the year.

“Contracting market, spurred by lack of functional mortgage, rising unemployment, fragile economy and consumers’ apathy, was a major contributor to poor transaction volumes recorded in the year,” Ajayi said.

Ajayi noted that 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 per cent in 2016, -4.27 per cent in 2017 and -4.74 per cent in 2018). “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,” he said.

He revealed that the company operated a disciplined business and financial operation within the year under review, with concentration on its on-going projects.

While admitting that operators in the sector are still facing myraids of challenges, he said that some of the challenges are systemic in nature. Ajayi said, innovative thinking and actions is 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.

His words: “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.”

June 19, 2019
The International Monetary Fund (IMF) April 2019 World Economic Outlook projected global growth to slow from 3.6 per cent in 2018 to 3.3 per cent in 2019, before returning to 3.6 per cent in 2020. In another April 2019 Report, the IMF projected a real GDP growth of 2.1 percent for Nigeria in 2019 and 2.5 percent in 2020.

The report further predicted an annual average inflation of 11.7 per cent in 2019 and similar figure for 2020. The Central Bank of Nigeria was more optimistic with a projection of 3 per cent for the current year. First quarter result showed real GDP growth of 2.01 per cent, which was better than 1.89 per cent of Quarter 1 2018, but lower than 2.38 percent recorded in Q4 of 2018.

The CBN expects inflation to rise to 12 per cent, and then drop downward due to projected productivity gains in the agricultural and manufacturing sectors. It projected stability in the foreign exchange market, given increased oil production and contained import bill. It maintains this positive outlook, notwithstanding expected pressures from volatility in the oil markets. It intends to adjust Monetary Policy Rate in line with unfolding conditions and outlooks.