Wayne Wright

South African property company JHI has been doing business in Nigeria since 2007. Jaco Maritz asked Wayne Wright, JHI director for business development about the company’s experience in the West African country.

Please give us an overview of your business in Nigeria.

JHI established a joint venture business called JHI Property Services Nigeria Limited in 2007, based in Victoria Island, Lagos. The business provides property services to developers, banks, private clients, and any other property owners based in Lagos. The priority service offerings, as demand requires in Lagos, is project and development management, leasing, marketing, as well as property and facilities management.

Due to the current global recession which has placed many of our projects on hold, JHI continues to offer these services from headquarters in Sandton, South Africa.

How would you describe the company’s experience in Nigeria thus far?

Partly due to the recession and of our introduction of new services into an unsophisticated property market in Nigeria, where previously all real estate administration and facilities management activities were conducted in-house by our clients, we have been disappointed at the progress made thus far. Numerous proposals have been submitted by us to a broad based client spectrum, of which two or three developments have commenced. The biggest negative factor in the property development market currently is the lack of financing for the construction of new buildings. This, together with non-delivery, has proved very frustrating in the short-term. However, JHI is still poised and ready to meet the demands as and when the market improves, as we perceive the Nigerian market could offer huge potential in the long-term.

JHI has formed a joint venture with a consortium of Nigerian property developers. Do you think it is important for foreign investors to take local Nigerian partners on board?

One of the critical success factors of a property services company in Africa is to partner with local expertise, knowledge and operators who are well positioned. The selection criteria is to partner with developers, funders and other property development companies who are able to provide a pipeline of future projects, a portfolio of buildings to be managed, access to a broad client base, and adhering to our core value system. This system consists of integrity, focus, progress, confidence, having a passion for property and commitment to getting it right. JHI's partners in Nigeria are Alpha Consortium, SVDC Developers and Brandt Ventures. Nigerian law requires joint venture partnerships with local companies, especially in the professional services sector of the market.

What are the main challenges facing Nigeria’s property sector?

The main challenges facing Nigeria's property sector are project finance sources, property portfolios, access to property database information, land title confirmations and equity finance.

As regards retail mall tenanting tasks, a strictly prohibitive import ban on certain vital product lines, especially in apparel, footwear and other consumer goods lines, restrict marketers such as JHI to fully introduce a wide spectrum of retailers into the local market. Should these hurdles be lifted by government then the local consumer market would be exposed to a variety of international shops which are currently trading in other countries in Africa.

The main buoyant property sectors, such as retail, commercial, hotels and residential properties continue to be in high demand throughout the country’s main cities. Services currently in high demand are services management and project management, while the letting of various projects is taken from marketing of the property.

What would you say are the main investment opportunities in Nigeria’s property sector?

Investment opportunities in the form of joint venture participation by foreign banks, private consortia and wealthy individuals are available. Typical structures relate to a partnership covering debt, equity and land value into projects in ratios equivalent to their input of the investment. Exit strategies are equally important, especially when projects mature and profit taking occurs. JHI successfully handed over Southern Sun's five star hotel comprising 215 rooms as project managers to a joint investment and development consortium.