Propertygate Development & Investment Plc., recorded notable improvements in the various financial indicators with a significant increase in gross revenue last year, compared to 2014.
The Managing Director of Propertygate, Adetokunbo Ajayi stated this in his report to the company’s annual general meeting, held in Victoria Island, Lagos, recently.
The company recorded success in its financial results for the year ended December 31, 2015, said Ajayi, and that other areas that witnessed improvement in the year compared to year-end 2014, included gross profit, profit before tax, net assets and retained earnings.
On the company’s activities in its operational environment, Ajayi said, “As responsible corporate citizen, Propertygate is committed to giving back to the communities around us by creating long lasting impact in our environment.
In the year under review, we began the construction of a 372 meters long road starting at Olusi road and connecting Kolade Abayomi Street, Sangotedo, Lekki Peninsula. The road is the first of its kind in that area, having a standard major drainage as one of its features.
“In the year under review, the Board of Directors continued to maintain its high preference for quality, excellent and expertise to further the course of the company. We have been relentless in our aspirations to preserve credible corporate governance practices, as this is important to actualisation of the company’s objectives,” he said.
He said despite the prevailing economic challenges, Propertygate would continue with her best to remain reliable and dependable.
According to Ajayi, the global economic environment of 2015 witnessed challenges from Euro market, the Brazilian and Russian market recession, slow growth in the Chinese economy, decline in global oil price and other imbalances.
This led to a global growth rate of 2.8% as against 3.6% forecast by the International Monetary Fund (IMF) in its World Economic Outlook report of 2015, he said.
Nigeria, now more integrated into the global economy, suffered the impact of this global trend. In addition, the GDP sluggishly increased by 2.8% in the year, down from 6.2% recorded in 2014, he said.
He stated that government’s revenue suffered a huge blow due to decline in oil price, the country’s major export; while inflation closed at 9.6% by year end.
The performance of the Nigerian Stock Exchange in 2015 was very poor, as shown by the market indicators. The economy was also negatively affected by the volatility of the naira and dwindling foreign currency reserve, he said.
He stated that the naira suffered progressive decline in value in spite of the various measures adopted by the Central Bank of Nigeria.
During the year under review, the challenges undoubtedly undermined the performance of the Real Estate sector. While development activities continued in traditional commercial real estate cities such as Lagos and Abuja, operators exercised restraints with respect to new development, he said.
He said developments for sale faced tough battle for patronage from shrinking markets. The real estate investment markets across the spectrum were not spared; growth slowed down, rental rates suffered a drop and void increased.
Availability of development finance for projects took a deep, as traditional lenders struggled with their own challenges; and for those willing to fund, sluggish demand undermined projects’ viability.
Interest rates for developments averaged about 25% per annum throughout the period. In the same view, access to mortgage finance became more difficult, with interest rate mostly above 20% where available, he said.
Ajayi said land and property value witnessed significant differentials across locations.
Areas with proximity to commercial centres continued to experience demand pressure, thus escalating their value; while many other areas, due to poor infrastructure were not as fortunate. The year did not witness significant public infrastructure works in most real estate hubs, neither were there major policy pronouncements to trigger a game change.
Like previous years, he said, access to quality real estate tracts for development remained a challenge, while transformational improvement was not recorded in land administration in major cities. Capacity across board, from suitable personnel to competent service providers remained a concern to operators within the year.
He stated that not all was gloomy in 2015. Notable development projects were delivered within the year across different property class. Enthusiasm for acquisition of property assets remained significantly high throughout the year.
The repeated assurances at different fora by the federal government to ensure increase in housing supply were commendable, though there were no corresponding pronouncements on mortgage finance to help purchases.