NNPC Properties Limited (NPL), the real estate arm of NNPC Limited established to capitalise on the potential within the Nigerian and diaspora real estate markets, has said its strategy could unlock over N50 billion in value from proposed investments in the Lagos and Abuja real estate space over the next five years.
The Managing Director of NPL, Uzoma Emelife disclosed this in an interview where she discussed the prospects and opportunities of NPL in the real estate space.
Uzoma said NPL has initiated the implementation of its strategy by conducting an internal housing market survey (NNPC ltd) in March 2024, where a significant 88% of the respondents expressed a desire to participate in real estate development projects led by NPL.
She said the level of interest from within NNPC Ltd alone suggests that the NPL brand is trusted and accepted, an encouraging indicator for the success of the proposed strategy.
The MD said the company aims to become a leading player in the global real estate market by reliably providing customers with the highest level of real estate solutions and optimizing value for its stakeholders, thus, competing with real estate companies of other National Oil Companies (NAOCs) like Saudi Aramco and PETRONAS.
She said by adopting a strategic commercial approach and forging strong partnerships with established real estate developers and reputable Facility Management (FM) Companies, NPL intends to leverage the brand equity and workforce of NNPC Ltd to maximize value from real estate development (residential) and Facility Management in Nigeria.
Speaking on the market opportunities, she said the Nigerian real estate market presents significant opportunities for NPL. “The current national housing deficit is estimated at 28 million units, with a World Bank forecast of an additional 700,000 units needed every year for the next 20 years, highlighting the vast potential of the housing market.”
She said the market volume forecast for 2024 is expected to reach $1.93 trillion, representing a significant value for NPL to exploit in this segment.
Uzoma said: “NPL has demonstrated its ability to facilitate housing product sales within NNPC Ltd, with N3.2 billion worth of sales facilitated in the last five years. This success highlights the significant potential for NPL to expand its market share and increase revenue by effectively positioning its products to appeal to the broader housing market.
“We have a huge real estate stock (356 properties) within NNPC Ltd with a potential for income from lease, tenant management, and maintenance across Strategic Business Units (SBUs).”
She further explained that there is also the growing urban population resulting in a rise in the number of both commercial and residential properties presenting opportunities for property management allowing them to provide services such as leasing, tenant management, and maintenance to a wider range of clients. We also have the potential to harness the average rental rates of 230,000/sqm for commercial spaces (offices, retail, hospitality, etc.).
She explained that the strategy is for NPL to extend its property management services beyond rental space management and collections to overseeing and maintaining properties on behalf of SBUs/BUs.
The company currently manages a total of 40 rental spaces across 11 locations within NNPC Ltd.
She said: “A revenue potential of N0.5 billion can be realised from property management/lease administration within NNPC. To further capitalise on the real estate market, NNPC Properties Limited (NPL) has developed commercialisation strategies for select properties, which are estimated to generate over N1.4 billion in revenue for the company.
“This initiative would involve identifying underutilised or nonperforming assets within NPL’s/NNPC Ltd.’s portfolio and devising strategies to maximize the value of these assets through various means such as lease, sale, or joint venture arrangements.”
The company intends to form strategic partnerships with real estate developers, investors, and other key stakeholders to expand its network and increase the scale of its operations in property/asset management.
The company is looking to also explore the Facility Management market in Nigeria, which presents significant growth opportunities as the current market value is estimated at $8.45 billion, with a projected Compound Annual Growth Rate (CAGR) of 5.4% from 2024-2027, indicating a significant potential for growth.
NNPC Properties Limited (NPL) intends to take advantage of its relationship with NNPC Ltd, which owns 17 office locations across Nigeria with a market value exceeding N7 billion, to provide Facility Management services across the business. This offers NPL a unique entry point into the facility management market, enabling the company to leverage NNPC Ltd.’s extensive real estate assets rapidly gaining significant presence in the market.
Uzoma said NNPC Ltd will significantly benefit from cost savings across its 17 office locations through the proposed optimization of FM services by NPL. “An estimated N5 billion in cost savings can be achieved via project planning improvement and execution efficiency, allowing NPL to generate a revenue of about N3bn annually,” she added.
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