Amid continuous ravaging of coronavirus across the world, several reports have indicated and some are still suggesting that the health of real estate and facilities management industry is not good based on the fact that lockdown, one of the measures being used by the governments to contain the virus, has significantly shut down most commercial real estate, which constitutes the main component where substantial revenue is being generated by players in the industry. Nigerian real estate and facilities management industry is not an exception in this regard. Ukeme Peters, Head of Planning, Enterprise and Management System (PEMS) at Alpha Mead Group, one of the leading total real estate solution company in Nigeria, speaks with our analyst on what have been the impact of the virus in the industry, coping strategies being implemented to ensure continuous service delivery to the clients and what the future holds for the industry.
Tekedia: No doubt, this period is volatile for businesses, individuals and governments across the world considering Coronavirus Outbreak. As a business that has presence beyond Nigeria, what have been the coping strategies for business continuity?
Ukeme Peters: The COVID -19 outbreak has affected lots of businesses and indeed it has affected Alpha Mead as well. However, our coping strategy is the years of investment in human capacity development and technologies. Before the pandemic, all around the world, especially in developed economies, the Real Estate and Facilities Management (REFM) industry was seeing an impressive increase in investment and application of technology such as artificial intelligence, robotics, and other intelligent solutions that helps buildings become what is now called smart buildings.
At Alpha Mead, we were also in the vanguard of this global trend – rethinking our processes and systems in line with global best practices. This period is indeed putting those organizational resilience strategies, capacities and scenarios (such as technology adoption and application; risk & quality management systems, and Health & Safety) to the test. And we are happy that beyond these as the bedrock of our COVID-19 operations, they also present an opportunity to proof the viability of our years of investment and leverage it to continue to provide solutions for our customers in this unusual time.
Tekedia: Apart from devising the strategies, how would you describe your company’s innovative approach this period compare to what it was before the pandemic?
Ukeme Peters: I think my response to that will be this period provides us with the opportunity to test our innovations around processes, systems and technologies in a real-life scenario. So, what we have been focused on is driving increased acceptability, adoption and scaling our systems in line with the demands of the times and those of our customers.
For example, one of the cruxes of this time is, by all means possible, reduce physical contact of people. As an organisation that cares about our people – either employees, customers, vendors, and other stakeholders – even before the government lockdown was announced, we already took a strategic decision to shut physical delivery of most of our services. We have also reviewed our supply chain strategies and completely eliminated to the barest minimum what we call JIT supplies. Even though supply chain efficiencies are challenged by the highly complex and regulated logistics arrangement of the time, we leveraged on the relationships we have built across the chain before this period and I can tell you, we have been very happy with the results.
The business has also scaled up remote support to handle customer issues especially from our residential operations which is at its peak delivery times this season. We have a 24/7 customer call centre available which can be contacted by telephone, email, WhatsApp and through our social media handles. We have observed an increase in the use of these channels and we are also able to continue to handle inquiries from customers concerning our other real estate products.
We also slightly modified our Health, Safety, Environment and Security protocols to include specific COVID-19 protocols to ensure the risk of infection for our employees and customers are eliminated as much as possible. Definitely, it has affected basic site operations protocols such as cleaning frequency, substance use and PPEs.
Tekedia: Since the virus becomes pandemic, what has been the impacts on Facilities Management Industry, especially the commercial real estate component?
If you follow our webinar on the 15th of April, you can check our website for excerpts. I did mention that the Corporate Real Estate and Commercial Real Estate sectors are amongst the hardest hit in the REFM industry as social distancing and lockdown strategies are enforced for close to four weeks now. As the use of these facilities reduced its operations and foot fall, we have seen a marked decrease in facilities management scope of activities especially as it concerns reactive procedures. Some planned/fixed operational procedures are still on-going in some cases even though largely scaled down.
Let me also state that this has affected the Corporate Real Estate sector in varying ways depending on the classification of such organization into essential or non-essential businesses. So, in some cases, the demands from essential businesses have increased as a result of more stringent requirement in terms of operations, hygiene and HSE requirement which has increased and is now subject to more regulatory influences.
Tekedia: Your company recently held a webinar to educate professionals and other stakeholders in the industry about the impacts of the virus. Based on the insights you shared with them, how do you see the impacts in short, medium and long terms?
In the short term while businesses remain closed, revenues and cashflows of businesses may continue to dwindle and that may also affect critical obligations to stakeholders. This is expected to continue even few months after the restriction to businesses are lifted given the fragile macroeconomic condition at the time especially as a result of oil price instability
Post COVID -19, business operations, processes and demand pattern from customers are expected to be altered. I believe there will be a new normal, which businesses have to quickly study and adapt their operations to fit. At this point, only businesses that are able to inject flexibility into their processes and are dynamic in nature will be able to cope. Therefore, the lockdown period should be used to innovate and create new ideas.
In the medium term, depending also on how long the COVID-19 situation persists worldwide and even in Africa, we may begin to see declining investment into real estate projects especially as remittances into the country deprioritizes projects which most of the times are real estate related.
Some economists are suggesting that we may experience another recession in the coming quarters resulting in high inflation rates and depressed disposable income. If this holds true, we may witness a rise in vacancy factor across the industry and perhaps assets disposal in a bid to sanitize balance sheets or as a result of post COVID-19 strategies where remote working have increased.
Therefore, in the long term, you may see increase in co-location situation for offices, reduced rents, and perhaps interesting real estate deals.
Companies will need to be more cost efficient as inflation rises and challenges margins. Certainly also, investment in technology will spike and the use of technology will become a new norm as clients who had hitherto not embraced the idea will be more opened to such situations.
Tekedia: Now, let’s examine the impacts on employees. FM solutions provision requires a lot of people in a developing market such as Nigeria. One of the impacts of the virus on operational activities is asking employees to work from home. If your company is using this approach, how effective is it?
Ukeme Peters: Working from home situation is working very well for us in Alpha Mead. Interestingly, these are strategies our organization had already considered although on a more conservative scale. Therefore, we have had investments within the last 2years now in preparation for that. However, we see challenges in internet cost, internet quality (although I might say is better than I personally expected) and power situations which is a problem in the country.
So, the experience for our staff have been mixed as some still do have to report on site – amid stringent health, security and safety protocol – to continue to provide essential services especially for residential and Corporate Real Estate clients on essential duties in the banking, telecoms, and tech sectors.
Tekedia: As one of the key players in the industry, what have been your contributions towards the containment of the virus since Nigeria records her first case on February 27, 2020?
Ukeme Peters: As I mentioned earlier, we were one of the few companies that recognized the risk involved in large gatherings around offices and had taken the decision to shut our head office even before the federal government order came in.
We have also issued quite a number of publications and guidelines to our customers, partners and the general public on how they can continue to maintain social distance and handle safety, security and environmental protocols during this period.
In terms of capacity development, as a player in the REFM industry with the goal of improving quality of talents across the industry, we have opened up our online learning channels for practitioners to take a few free training courses that can enhance their skill during this lockdown season so that they can be better equipped when normal business resumes. We are also constantly evaluating ways we can further use our resources to continue to partner with authorities to bring an end to this pandemic.
Tekedia: How would you describe government’s efforts and people’s response to the various measures for the containment of the virus?
Ukeme Peters: I would particularly commend the federal government for its handling of the situation. We must note that this is an unusual time, hence not all decisions will be right. But we have seen how the government has been refining the protocols and policies as new developments arise.
The Lagos and Ogun State governments must also be commended for the pro-activeness they have shown this period of the pandemic. Their prompt actions and infrastructure delivery has helped the country so much.
The NCDC is also doing well and we are hoping that test capacity can be improve in the coming days. In all, the governments need to do better in terms of profiling and offering support at this time to the people and businesses. If this is not done well, it will be difficult to enforce the lockdown for the necessary period to drive the desired result of containing and bringing the pandemic under control.