This, in addition to an anticipated 170,000 Square Metres of prime office and retail spaces, and a rising profile of a luxury residential assets are fast giving Ghana’s Real Estate sector the status of being the nation’s economic crown.

These impressive statistics, coupled with increasing Real Estate activities in the economy are opening up another window of opportunities in the market. These opportunities are in the area of Facilities Management.

With the Ghana Real Estate market attracting billion-dollar investments, investors are keenly interested in how to preserve the value of their asset, increase occupancy and reduce operational costs to guarantee their returns.

So how should Facilities Managers in Ghana position for these opportunities?

1. Grow Capacity and Understand Global Standards: For any individual, Facilities Management company or service provider to take advantage of the huge opportunity in Ghana FM market, they must develop the capacity to be able to respond to the volume of work, sophistication and demand for international quality standards of the foreign Real Estate investment. FM professionals who lack this knowledge will soon become irrelevant in the scheme of things.

2. Speak the language of Business by Demonstrating Value: Investors want to make profit on their Real Estate assets. So there is high demand for Facilities Management professionals who can demonstrate how process efficiency, reduction in breakdown and availability of critical equipment affects the bottom line.

3. Understand Strategic FM Planning: Giving that Real Estate cost constitutes up to 40% of business overhead, those who want to take opportunities in the market will understand how to align organizational goals with Facilities Management objectives. This is because if well-structured, FM can play significantly in the business performance goals of the investors. So FM professionals with the requisite skills and know how in the development and implementation of strategic processes, procedures and tactical plans will be highly sought-after

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A close look at the country’s 2017 budget puts the nation’s total oil and non-oil revenue at N4.9trn. This, in the face of increasing recurrent expenditure of which the National Assembly accounts for N2.9trn, while our creditors take up another N1.6trn; is bound to leave the nation with tough choice of borrowing as much as N2.36trn from local and international sources to fund capital projects.

Interestingly, Nigeria is a place where, regardless of the shortfall in revenue, the recurrent expenditure always get 100% funding allocation at the expense of capital projects. In fact, over the past five years, the nation has spent more 5 times more on recurrent expenses than capital projects. This presupposes that capital expenditure always have to scramble for crumbs or survive on inflows from creditors, who may consider our plight through high-yield government instruments that overcrowd the private sectors ability to borrow, grow the economy and create jobs.

In the face of these challenges, Real Estate and Construction remains one of the most viable sectors that the government can concentrate on to stimulate the economy. It is not by chance that the sector is the second largest employer of labour behind the Agricultural sector in Nigeria; it is a demonstration of the opportunities it has brought to other economies.

If judiciously explored, these opportunities have the capacity to create jobs, increase spending and then return confidence to the Nigerian economy. While this is not a blanket position on the possible ways out of the current economic challenges, as a player in the Real Estate space, this article is about immediate actions that I believe can help Nigeria explore Real Estate as one of its economic drivers in 2017.

Foreign Exchange policy

A rather inconsistent foreign exchange policy in the last 24 months significantly contributed to the country sliding into an era of Stagflation. If not fixed, our anticipated growth will only be momentary. The Nigerian FX market can be likened to a borrower who needs to borrow money without having the cash flow (which is FX inflows) to repay its obligation or collateral security (FX reserves) to even secure it.

In my view, the 41 items that were banned can be seen as one of the major issues creating this issues and the divide between the inter-bank market and the parallel market rates. Most of the items on the banned list are responsible for $4bn to $5bn worth of imports annually.

Secondly, our country is structured as an import dependent economy and cannot have a ‘floating rate’ or ‘flexible rate’. Countries like Egypt who have implemented this policy are dealing with high inflation in excess of 24 percent. In view of these situations, it is obvious the government needs to shore up its position through assets disposal and a slight devaluation to N350-380 range to encourage investments and reduce impact on our lean reserves.

To do this successfully, government will have to eliminate capital controls cancel the so called “floating rate” and peg the exchange rate, shore up its foreign reserves to boost confidence, devalue the naira to a mid-range average of N330-N350 and lift the ban on the 41 items excluded from the inter-bank market and provide more transparency in FX dealings.

Release Pension Guidelines for Homeownership

There’s an urgent need for the immediate release of the required guidelines for pension fund investment in Real Estate assets, which will dovetail to the mortgage sector.

Equity finance has been one of the major constraints of home buyers and this a strategic policy guideline would immediately unlock access to N5trn, which is sufficient to provide equity down payment for 300,000 to 500,000 houses.

By extension, this is capable of generating between 15 – 20 million jobs and positively affect job creation along the construction value chain. It will also create a mortgage industry estimated at $35bn. This simple action would attract capital investment, drive growth for mortgage-backed securities and deepen the capital markets. I believe if 7.3 million Nigerians contribute to the pension scheme program, they should also have a say on how it’s spent; it should at least be spent to their direct benefit instead of letting some of them retire in rented apartments with nothing to show for their years of meritorious service.

Privatization/Securitization of Federal Government Assets

A close look at the 2017 budget shows the Federal Government will be investing almost N100bn of tax payers’ money in building Office towers for MDA’s. Rather, Office development for MDA’s should be advertised to the general public for purchase, to stimulate the Real estate sector,

Alternatively, these assets can be listed through a REITs product to attract foreign investments. The immediate benefits include: more money for the Federal Government to execute social projects and focus on infrastructure, long term preservation of these assets, growth of new service sectors such as Facility Management (which is currently one of the largest employer in the UK and constitute 5 percent of the United Kingdom’s GDP), better efficiency in space use and so on. I am not ignorant of the legal constraints to get this done, nevertheless, I am convinced that; where there is a will, there is a way.

Utilize the Nigeria Sovereign Wealth Fund on Infrastructure Development

The Nigeria Sovereign Wealth Fund is currently about $1bn (N500 billion) in various investments. This is more than the total budget of the Ministry of Power, Works and Housing and also enough to act as counterpart funding for crucial and critical infrastructure development.

In addition, I will advise viable projects within the country should be concessioned to facilitate interstate trade especially in the area of transportation to support laudable initiatives such as LAKE Rice project and the proposed LAKAJI project. There are many more like that, and this intervention would improve our general infrastructure and ease of doing business within the country. This needs to be given urgent attention because buying bonds and other financial instrument are good for the long term but may not be able to provide the short term wins we desperately need to get our economy out of the woods.

 Effect a Title Regularization / Title Insurance system

While most people believe that the land use act is a major problem, and a repeal will set the real estate industry free, I think the major issue here is efficiency. In a country where trust is a major issue, an abolition of the land use act may not be a magic wand as it’s be taunted. What is key in this process is for state government to set up an efficient one-stop-shop for title registration and planning approval – which may even become a viable Internally Generated Revenue (IGR) channel for them. Taxes are major revenue drivers for State Government for example Lagos State has demonstrated this  improving its IGR on land transactions from N11bn in 2011 to 27bn in 2013 and currently in excess of N50bn through efficiency, more can be done in this regard if the state government can aim to regularize title within 30 days and adopting title insurance to provide the necessary comfort within this period, this will increase the volume of transactions and deepen the insurance industry and its contribution to Nigeria’s GDP and job creation.

Damola Akindolire is the Executive Director, Real Estate Development, AMFacilities.

While some, particularly the Blue Chip Organisations, clearly articulate their objectives and document them, it can hardly be established that SMEs have theirs in any form of documentation. Notwithstanding the category any business belongs however, the reality that Real Estate and Facilities Management activities gulp up to 30% of business overhead cannot be lost on them.

So in the face of current economic situation, it is no surprise that most organisations are taking a closer look at their overhead and seeking creative ways of reducing overhead or increasing productivity to salvage dwindling bottom line. But how can organisations reduce Real Estate and FM spends without heaping up deferred maintenance or truncating operational efficiency required to deliver the result at the end of the day?

Here are few lessons that could help you meet your REFLM objectives and your corporate goals, without impacting negatively on your business performance. These lessons stem from the top drivers identified in a case study survey of 250 top business decision markers in the United States.

 The following are some actions the survey attributed to the superior performance. Thus, for businesses looking to align their corporate goals to REFLM objectives, here are actions to be taken:

1. Standardize your Policies, Processes and Procedures: This is the first step to consider if you want to align your REFLM objectives with your corporate goals. Standardizing your processes, procedures and policies gives a clear picture of your organisation’s entire asset management process – from procurement, to maintenance and eventually disposal. This helps in better planning of the business operations. For example, the policy can state clearly what could be procured, when to procure, how to procure and even how to dispose. When things like these are under control, the business goals are clear and the REFLM objectives can be easily planned into it. For example, if a bank has a clear policy on new branch roll out, then it is easy for it to plan its Real Estate and FM operations ahead.

2. Place your Spend under Management Control: This is the next thing to do after standardizing your policies and procedures. Doing this engenders process efficiency and helps the procurement department deliver strategic value, because there are established plans upon which they can leverage economy of scale to the benefit of the corporate goal. It also ensures that spends are made strategically as, approval will be base on business cases and operational exigencies.

3. Computerize your Operations and Maintenance Systems: According to the survey, best-in-class organisations who have strategically aligned their corporate goals and Real Estate and FM objectives achieve 56% savings through improved operational efficiency. This figure becomes instructive in the face of the increasing sophistication of Real Estate assets, especially in emerging markets like Nigeria.

4. Support Capital Projects Planning with Systems and Technologies: If your corporate goal and FM objectives must align for better business performance, this support is very essential. Planning elements such as budgeting and fund allocations must be supported with systems and technologies is such ways that they impact operational areas like space planning and put in place measureable Key Performance Indicators (KPIs). From result of the survey, organizations that did this were able to save up to 29% on capital project expenditure.

5. Improve Space Planning: If the REFLM objectives of any organization must deliver on its corporate goal, space planning will play a critical role. Planning, besides helping businesseses optimize the use of space, also plays significantly in employees’ productivity. For example, the survey under review shows that best-in-class organizations increase their utilization by 2.5% and achieved 14% cost savings from higher visibility in space-related costs.

6. Establish Measurable KPIs: We have written a few articles on different KPIs and the important questions to ask before setting them. This part further gives credence to the need to set realistic and measurable KPIs that align with your corporate objectives. However, we must quickly establish that while cost savings should be one of the KPIs that make up the list of KPIs for operational efficiency, businesses must be careful not to starve productivity and key business drivers on such basis.

The truth is that Nigeria’s current economic situation boasts of all the signs and more. This is expectedly compelling asset class holders, especially Real Estate investors, promoters and developers, to seek survival strategies that can help preserve the value of their assets, because Real Estate draws significant impetus from the condition of the economy.

It therefore gives to reason that for Real Estate investors and promoters to successfully build or invest in this current economic dispensation, they must employ time-tested strategies that can defend the value of their assets, reduce lifecycle cost on the assets and more importantly; maximize their return on the asset (ROA).

One strategic imperative for asset managers, owners or developers to achieve the aforementioned is to look beyond the phase of design and construction, and pay adequate attention to the total lifecycle of their assets, rather than just the cost of design construction. This is important because besides design and construction (which constitute about 20 percent of the total asset life cycle) unalloyed attention should equally be given to the other 80 percent of the lifecycle and strategic elements in the defense of value.

These strategic elements include: occupancy, repair, rehabilitation, maintenance, disposal, etc. So for those who are building or investing in Real Estate in this recession, here are some of the critical areas to rethink if you want to retain your asset value:

Design: This is the conceptualization phase of a project, but very important to the eventual life cycle cost of the asset because if given adequate attention, the total lifecycle cost of the asset can be kept at controllable level in the face of unfriendly economic climate. Therefore from design stage, promoters must pay attention to balance functionality, maintainability and operationability of the asset rather than aesthetics.

Procurement: One of the areas that has proven to heap huge cost on Real Estate asset classes is procurement. If you procure wrongly, you eventually pay the price in the long run. It is advisable to procure materials based on quality, cost, favourable payment terms, delivery condition, pedigree of the vendor and after-sales support. In spite of operating in a distressed economy, attempting cost saving through wrong procurement method will mean kicking the can down the road. The asset will still have to pay for it in some ways, either cost of repair, replacement or deferred maintenance.

Construction & Installation: Ensure you secure a very good contract with well spelt out scope, performance requirements and payment milestones with adequate incentives and penalty clauses to motivate good performance. Contracts should include retention fee to be held all through the defect-free period.

Commissioning & Handover: Perhaps the most exciting stage of a project but if not carefully done, could scuttle all preceding inputs. Here ensure you conduct a joint final inspection with the contractors, design engineers, facility managers and other relevant parties to certify completion state and agree on snag list with specific close out dates before final demobilization of the building contractor from site.

Operation & Maintenance: This part speaks critically to the most important 80 percent of the total asset lifecycle. For developers or Real Estate promoters, this is when you need a professional and competent Facilities Manager. First, agree on an annual maintenance and operations budget. This helps ensure that the asset retains its value in spite of the economic conditions. Second, ensure that the Facility Manager develops a good Asset Reference Plan comprising of the asset register, maintenance plan and condition and maintenance history of the various components of the asset in return. This can help address the issues of deferred maintenance that may come to hunt the project in the course of its lifecycle.