Middle to small scale players in the real estate sector should band together to be able to enjoy economies of scale and achieve lower cost housing.
This was a submission of Obinna Onunkwo, the Deputy CEO of Purple during the Nairametrics Real Estate Industry Outlook Webinar that occurred on March 9, 2024.
- Onunkwo noted, “To drive down pricing, we have to be a collective. If you’re a big player, you can push it on your own, and if you’re a small player, you have to band together.
- “We encourage guys in the middle and lower end, it’s advisable to come together. In doing that, you may cut out the middlemen if they don’t want to play ball and revise pricing downward. However, it’s all with a goal of delivering a product to the consumer that is affordable.”
Shared services can also lower costs for small-scale developers
Mr Onunkwo speaking further, noted that with shared services management structure, small-scale players in the sector could also help themselves lower costs.
- He said, “There are other things you can also do, you can also do shared services. Many times, when site work is done, what is done with all the containers and excess labour you have? You can have a collaboration with a next-door neighbour developer where you align your workflow together in a manner that before making mistakes with the excess capacity, you can move them to that site, and that’ll lower your costs.
- “If you’re able to collaborate across project management, we can have a shared services structure where we can share costs around and that’ll lead to lower prices that we can transmit to the consumers.”
Developers should try to optimize land
Onunkwo noted that developers should try to adopt the land optimization model, highlighting that building only one type of facility on a piece of land is no longer a sustainable model. He highlighted that with land optimization, developers can optimize yield and diversify their portfolio, thus bringing stability in their assets.
