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By Maduka Nweke
The skyrocketing cost of construction in Nigeria is more than just rising material prices; it is a complex web of regulatory bottlenecks, land acquisition hurdles and infrastructural deficits.
Dr. Chiedu Nweke, a real estate magnate and legal expert, is at the heart of these challenges.
As Chairman of Periwinkle Residences Limited and Managing Director/Chief Executive Officer of Swampsea Construction Company Limited, he has spearheaded some of Lagos’ most ambitious projects, including Orange Island and Periwinkle Lifestyle Estate.
With a Doctor of Business Administration (DBA) and extensive experience in hydraulic sand filling, land reclamation, and oil waste management, Nweke has left his mark on developments like Lakowe Lakes and Agbowa Timber Village. A senior figure in the Lagos Bar Association and Chairman of Orange Island Development Company Limited, he brings firsthand insights into the forces reshaping Nigeria’s construction landscape.
In this interview with Daily Sun, he speaks more about the real estate sector, the hidden forces stunting its growth and why the it costs a fortune to own a home in Nigeria.
What informed your decision to go into real estate?
Generally, I am an entrepreneur. I started as a maritime lawyer and got involved with the oil services business. I worked for many years in Port Harcourt, servicing Shell, Agip, and Co. I started doing capital dredging for oil companies, and it was while doing capital dredging that I was invited to Lagos to reclaim what you know today as Lakowe Place. That is about 1,000 hectares of land reclaimed from Lakowe Lakes under my company, LW Dredging. I led that project before deciding to replicate what was done at Lakowe Lakes. That was how I created the Orange Island Development Company, which eventually became Orange Island in Lagos.
While I was working on Orange Island with the royal family in Ikate, Oba Elegushi invited me to develop what is now Periwinkle Lifestyle Estate. It has grown significantly, with many projects under Periwinkle, as you can see.
Following the complexities of working and securing land in Lagos, how have you been able to navigate dealings with royal families who see land as oil?
Well, for me, I am almost like a Lagosian. Some people may claim to be more Lagosian than I am, but I consider myself one of them. The most important factor is the know-how—they believe in you because of your integrity. Not just because you claim to have integrity, but because you follow through on agreements.
I am an investor and, being an entrepreneur, I partner with various people. I have partnered with the Lagos State Government on projects like Orange Island at Lakowe Place. I have also partnered with Mixter in ARM and General Reeves to develop Agbowa Timber Town. At Periwinkle, I partnered with Oba Elegushi to create Periwinkle Lifestyle Estate.
Real estate is a business of symbiosis—a give-and-take relationship. Once all parties understand what they stand to gain, we can all work together successfully. That is what it takes.
Can you assess the cost of construction in Nigeria?
The cost of construction is too high. The major factor is the cost of funds. Even if you use N100 million from your own pocket, that money has a cost. Now, if you go to a bank to borrow N100 million, the interest rate will be between 36 per cent and 40 per cent. In contrast, in the U.S., interest rates are around 4 per cent; in the U.K., it is lower; and in Dubai, it is just over 1 per cent.
There is no country in the world where commercial interest rates are in double digits, except Nigeria. The commercial interest rate is what drives the economy because every money has a cost. If I take N100 million for three months, by the time I am repaying, it becomes N150 million.
Now, the question is: when you sell, will you make enough to cover the cost? That is why many businesses fail. Ideally, the cost of borrowing N100 million should be in single digits, N6 million or N16 million at most. The average profit margin for any business is around 25 per cent. However, in Nigeria, borrowers are paying 35 per cent interest while expecting a 25 per cent profit. This imbalance leads to abandoned projects and stalled developments.
What kind of real estate development do Nigerians need?
We have been in the real estate and oil business for over 25 years, and the key question is always demand. Nigeria has a housing shortfall of over 17 million units for the middle class alone. In my opinion, we need more than 25 million homes, ranging from medium-sized to luxury homes.
When we started, we realized that land in Lagos is scarce, and people are reclaiming land from water bodies. Instead of building single homes on large plots, we opted for high-rise developments to maximize space. That is what informs the trend you see today.
We provide different types of housing: studio apartments, semi-detached homes, terrace houses, and villas. Location is also key. We have developments in Lekki, Ikoyi, Victoria Island, Eko Atlantic, Ikate, Chevron, and Sangotedo to cater to different markets.
Unlike in other countries where mortgages finance real estate, in Nigeria, it is mostly cash transactions. That is why we are expanding to places like Awka, Anambra State, with Bethlehem, a project aimed at redefining housing in the region.
Do you think real estate is empowering Nigerians beyond big names like Periwinkle and Eko Atlantic?
Real estate is the biggest industry in Nigeria. No industry employs more people. From cement manufacturers to transporters, bricklayers, masons, carpenters, and laborers, the sector absorbs a massive workforce.
However, the government has not properly harnessed its potential. If well structured, real estate could reduce unemployment and inflation. Every family dreams of owning a home, and a structured housing policy would provide clear pathways for homeownership.
Why do we have numerous residential estates, yet many Nigerians lack shelter?
People are occupying these estates, but the process is slow. The housing development cycle takes time, between 12 and 18 months, sometimes up to five years.
Developing an estate requires acquiring land, securing approvals, and providing utilities before actual construction begins. It is a long-term investment. For example, a project like Periwinkle takes about a decade to fully materialize.
What can be done to reduce the cost of rent?
The government should address the high cost of building materials, most of which are imported. Fluctuations in exchange rates also drive up costs. If you started a project when the exchange rate was N750 per dollar, and now it is N1,500 or more, you can imagine the impact on construction costs.
Has building collapse reduced in Nigeria and what is responsible for that?
This is an important issue. A building should never collapse unless there is an extraordinary event like an earthquake. The key factor is regulation. In the past, people built houses without involving professionals. Today, there is more awareness of the need for soil tests, structural assessments, and compliance with regulations.
The government must continue to strengthen regulatory oversight to ensure safe construction practices.
How do government policies impact real estate?
Everything the government does affects real estate, positively or negatively. Real estate can drive employment and economic growth, but policies must make approvals, land acquisition, and material sourcing easier.
Incentives for cement manufacturers, similar to what was done with petroleum subsidies, could reduce building costs. Strengthening regulations on imported materials can also help lower construction expenses.
How does real estate in Anambra compare to Lagos?
There is no comparison. Anambra is still evolving, with only a few urban centers like Onitsha, Awka, and Nnewi. Lagos has a development history spanning over 100 years. Anambra is still largely rural in comparison.
Is mortgage financing working in Nigeria?
No. Mortgage financing in Nigeria is underdeveloped. A well-structured system would allow employees to access home loans through structured deductions. However, without job stability and proper data, mortgage institutions are reluctant to lend.
Real estate is an informal market in Nigeria, with many buyers lacking traditional employment structures. This needs to change for mortgage financing to thrive. That is a struggle for the company. Even though there is no data, people move around. Only people who work in banks and oil companies are truly working because they love their jobs and would not like to move around. But if you go to other sectors of the economy, people who work there move around because they don’t even take it as work. They can be sacked today, or they can resign today. Assuming you are working in First Bank, you don’t want to be sacked. If they say you should come to work by six, you come. If they say you must leave by eight o’clock in the evening, you will do it because you know that if you don’t, you lose the job. Because you treasure the job, the institution that offers the mortgage, first of all, knows that it will give the person working in First Bank before giving it to the person working in another organization. These are the factors hampering mortgages, but I think that we should develop more—more development and more institutional setups. Check Periwinkle; most of my competitors don’t even have offices. So, assuming you are working for them, the institution giving the mortgage cannot even know where to go, let alone give you the mortgage. Again, most people who buy don’t even have jobs, so everything is informal. The people that are buying the homes don’t have jobs. They do contracts, supply this or that, and make money to buy it. Rarely do we find people who are working in the ministry or somewhere else. Very few of them are in the market buying property because they don’t have the money. They are not paid well.
Where do you think Periwinkle will be in 10 years?
Where is Periwinkle today? Probably, it is one of the largest businesses of its kind in Nigeria today. So, with the kind of projects we have and the workforce we have, in the next 10 years, we will be one of the biggest. Then, Periwinkle will become a household name in Nigeria. That is where we project Periwinkle to be in the next 10 years.
Do you think real estate should be regulated by a single authority?
I think the issue of regulation in Nigeria is over-regulation—conflicting regulatory authorities and bodies. Sometimes, we have too many regulations. But we don’t need to have one single body because if you are developing, so many things come into play; standards come into play; professionalism comes into play. The consultants and engineers are regulated by their professional bodies like the Nigerian Institute of Engineers, the Architects’ body, and so on. Even lawyers are regulated, and there is material regulation too. Sometimes, there are too many regulations, conflicting and not yielding proactive results. Instead, they slow down the process due to bureaucracy. So, the ones that are not important should be eliminated so that the ones that are important can function effectively. Regulations are not done in Nigeria alone, so whatever regulation we have must match what is being used in the US, UK, Dubai, and so on. It is just about borrowing what other people are doing and then using it to structure ours. But you know, Nigeria has its peculiarities—things change color when they come to Nigeria. Presently, in my opinion, regulations are not properly defined. There are too many people involved in regulation, too many bodies.
Do you think the Federal Government is managing urbanisation well?
If you look at Lagos, at the end of Lekki Phase 1, as you start going towards Epe, it is not urbanized because anybody can build any road, and anybody can do anything. So, the only places that look like a town are Lekki, Victoria Island, and Ikoyi. Once you go down to Ikate, Chevron, and beyond, sometimes you see a road, sometimes you don’t. But do you know these are things the government should have done? The government should have provided those roads before developers even entered those areas up to Epe. But they left it, and after people have built roads and constructed homes around the areas, they come and start squeezing in new roads. That is very poor urbanization, and that is the challenge we are having. Most areas are not properly planned.
What can you say about the Millennium City planned by Governor Obiano in Anambra State?
I am aware that the Obiano administration invited Periwinkle to do the Bethlehem City. I also know the promoter of the Millennium City—he is my friend. The Millennium City is close to where we are doing the Bethlehem City. It is still evolving. All of them are still in the early stages of development, all coming up. We hope that in the next couple of years, the major areas of Awka will become a city.
Is there anything in real estate you would like to share with us outside what we have discussed?
Like I said earlier, real estate is the biggest employer of labor, and it has great potential. It is something I always tell young people—this is your oil, and it is the way to go. The value chain is so long. From the point of soil testing, people are involved in structural work, cement, sand, and granite. Imagine the number of people employed. When you now talk about aluminum, the wood industry, and trees—it is a base market of its own. I think more attention should be paid to the real estate sector of the economy.
How do you manage OMONILE in all your construction sites?
It is all about Community Social Responsibility (CSR). You must understand the community and be part of them. Like I said earlier, I am a Lagosian. I am like part of them, so it is a natural process. When you get to know people and they know you well, they become your friends, and then you are Omonile too. They take you as one of them.
Do you think the Land Use Act is favorable to property developers in Nigeria?
The establishment of the Land Use Act was against the real owners of the land. The Act, which was decreed during the military era, was designed to give the government undue advantage over the real local communities that own the land. The Land Use Act came about because the government was looking for land, and local communities were resisting releasing it. The government, therefore, decided to take all the lands so that local chiefs would no longer be a stumbling block to access. The Act itself is anti-business because, traditionally, if you want your business to thrive, people must be free to provide land. When the community loses the right of ownership of land, then you have to go to the governor and tell him, “We want this land to be for a school.” The governor can say, “No, you can’t do it,” because they have overriding power due to the Land Use Act. The Land Use Act originally came through a military decree. The intention initially was good, but now it requires a review. If you want your business to thrive, people should be able to provide land freely. To open up real estate, people should feel free to transact. That is what is being limited. There should be a middle course where the government can regulate what people do with land, but not in a way that vests all land in the governor, thereby stripping local communities of ownership rights. The Ajah area was thriving, then the government came with demolitions and asked everybody to vacate. After rebuilding, none of the people they pushed out could get their places back. It is very unfair. It has brought bad results in some areas and good results in others, but in many cases, people were forced to leave areas where the government felt it could benefit more.
