Suddenly, the skyline of the city of Accra is changing. Accra is becoming a hub of real estate construction activity. Old lorry parks are being abandoned for huge office blocks. Dilapidated colonial government bungalows that served the colonial masters so well are being torn down for beautiful residential estates. Real estate developers are rushing to buy huge tracts of land on the outskirts of Accra at bargain basement prices, to hold in their portfolios for future real estate development. Drive from Accra Central on Independence Avenue all the way to Tetteh Quarshie and see the huge billboards announcing all kinds of real estate projects currently under construction.
Even the beaches would not be spared in this mad rush to build and sell property. Suddenly, someone thought Labadi Beach could one day become something similar to the beaches of Waikiki Hawaii, Palm Beach, Florida or Rio de Janeiro. Viola! a new project is born by the name, appropriately, La Beach Towers! This 18-story apartment complex is being built in three phases. Phase 1 alone has 66 units and beach lovers are rushing to stake their turf.
It is the area of Accra called Airport City that truly reflects the amount of investment dollars, from both local and foreign sources, pouring into real estate development activity in Accra. The dizzying speed at which construction projects are taking off in this part of Accra is simply amazing. Marina Mall, a shopping mall and office complex owned by the Marina Group of Burkina Faso, was completed barely two years ago. Not long after, here comes South Africa’s RMB Westport, who has just completed their flagship mixed-use property named Icon House in the same Airport City, already taken by Stanbic Bank as anchor tenant. Does that give credence to the saying: Just build it, they will come? Next door is Nester Square, another mixed-use office tower and retail development, being built for Ernest Chemists by the same construction firm, DeSimone Ltd. A walking distance away is Atlantic Tower, a 13-story modern architectural office edifice, currently under construction on a 2.05 acre land by the Meridian Group. The newest hotel in town, the African Sun Hotel, has just been completed by Trassaco in this same enclave, and there is a lot of anticipation about its official opening this 2014. Other name brand international hotels are gunning for space in this same area because of its proximity to the Kotoka International Airport.
In the Oxford Street area of Osu on Kuku Hill, a 1.2-acre land is being turned into a 120-unit apartment complex called Chateau Towers. The project is being developed by Hollywood International Developers, their very first project in Ghana. Preceding this development, GLAHCO had just completed this beautiful 13-story shopping mall and hotel complex on Oxford Street called The Oxford Street Mall, whose anchor tenant is Shoprite, a supermarket brand from South Africa.
Not to be outdone, the Central Business District of Accra itself is the hub of a lot of construction activity. The huge, sprawling 13-story Octagon Business Center in the heart of Accra is still under construction. Dubbed as one of the most expansive and opulent business centers in West Africa, this ambitious project by Dream Realty is a mixed-use property consisting of luxury office suites, hotel suites and retail space, all providing leisure, food, business and hospitality. The Center consists of a 200 hotel room block, 13 floors of office space, five floors of parking space, a food court, five cinema theaters, world-famous branded shops and supermarkets, and space for clinics, banks and world-class tenants. Next door at the former Accra Race Course, Kempinski Hotel Gold Coast City is about to open its brand new five-star 269-room hotel to compete with the Movenpic Ambassador and Novotel in the vicinity.
The banking industry will not be left out of the fray either. ADB (Agricultural Development Bank) is busily putting up its new corporate headquarters next door to the Movenpic Ambassador, while Societe-General has just moved into its brand new headquarters building along the Ring Road, a walking distance from the famous Busy-Internet. Other banking structures are coming up and it is definitely a sign of the positive economic trends evolving in our country today. The very first office park project in Ghana, Capital Place, is currently being built by Mobus Property Development in the Airport Residential Area. An office park is a cluster of buildings containing multiple offices offering various professional services in a commercial park setting.
It is in the Cantonments, Airport Residential and Ridge areas that the fiercest competition for high-end residential real estate development is currently taking place. Being the most desirable parts of Accra, particularly where foreigners prefer to live, apartment, condominium and town-home projects are fiercely shaping up. The rush to build in these areas is not surprising, considering the high rents properties command here. Expect to buy a 3- to 4-bedroom apartment in these areas from $450,000 to $600,000, and rent them for $3500 to $4500 unfurnished. A one-acre land in these areas costs $2.5 million to $3 million and a developer could only build apartments or condos sky-high to make a profit. Meridian Apartments II, Kwarleyz, Sloan House and Villaggio Vista are currently under construction at the Airport Residential area, while the Switchback Park Project, Aurora Apartments, Goldkey Properties and Devtraco are building residential properties in the Cantonments and Ridge areas. It may surprise many people to know that it is possible to find a $2 million penthouse apartment to buy in today’s Ghana. Visit the Villaggio Vista and La Beach Towers to find out!
It is obvious from the foregoing that the demand for office, hotel and retail space is extremely high in our country today, just as demand for high-end residential real estate continues to be brisk. Accra Mall, A&C Mall, Marina Mall and Oxford Street Mall are not enough to satisfy the growing demand for retail space in a city with a population of 4.2 million. More malls and neighborhood shopping centers are needed in our cities to satisfy the huge demand. More office space is needed for our growing economy. More warehouses are needed to store imports and exports as a result of the expansion of our ports and harbors. This is one sector literally begging for investors to come and explore.
Even though demand for middle-income and low-end residential real estate is extraordinarily high, supply in this sector is extraordinarily short because of the lack of construction financing. Property developers in this sector have to settle for the practice called “build-on-request”, in which houses are only built when a request is made by a potential buyer: the buyer pays for the house in installments as construction progresses. Seriously, how many houses can a developer build in a year if he has to wait for a buyer’s request before each house is built? So the industry practice here is for builders to go and buy large tracts of land, subdivide and sell as “serviced plots”, from which they derive income to start the build-on-request process. Apart from Regimmanuel Gray Ltd, RSS Developers, Devtraco and a handful of others, several members of the Ghana Real Estate Developers Association (GREDA) can only survive in business mainly through building on request, due to the reluctance of local banks to grant them construction loans. This lack of construction financing has created such a huge gap between demand and supply in the middle-income and low-end residential real estate sector. Consequently, it is in this area that foreign investor participation is most needed.
Sweltering under a housing deficit of 1.7 million housing units announced by the President, John Dramani Mahama, during this year’s State of the Nation address, the government itself recognizes the need for a paradigm shift to arrest the situation. The government has arms wide open to welcome foreign investors into the housing sector. The huge concessions granted by government to the South Korean investor STX to build 200,000 houses, before the project collapsed under boardroom wrangling, is ample evidence of the open-door policy of government to attract foreign participation in this sector. This policy is given an acronym PPP (Public Private Partnership) and foreign companies like Brazilian Construtora OAS, Nairobi based Shelter Afrique and the Addoha Construction Company of Morocco are already taking advantage of this huge opportunity. President Mahama himself, on his first anniversary address to the media in January, promised to seek advice from financiers and mortgage providers on how to deepen the mortgage market in Ghana in order to support housing delivery to the teeming population.
Fortunately, as I write this piece, a new concept to tap into this huge opportunity created by the Ghana real estate market is being introduced into the country. It is called Fractionals. Fractional ownership is an old concept in the West, practiced mostly in the US, Canada and the UK. Unlike whole ownership, fractional ownership enables you to own a fraction of a property but still get the opportunity to enjoy all the benefits of whole ownership at any time convenient for you and your family. Owning a fraction means you spend less money to buy but get to enjoy all the benefits of whole ownership. This idea would help the thousands of Ghanaians living abroad who do not have a place of their own to perch when they come home for a visit. They would have a beautiful house, apartment, condo or townhome to spend their vacations anytime they are here in Ghana. This would open up a huge buying opportunity for those Ghanaians who cannot afford the relatively high prices of whole ownership in the real estate market today. The guru of Fractionals in the USA himself, Mr. David Dissick, and his Ghanaian counterpart, Mr. Alwyn Nartey, are leading the fractional effort into Ghana (www.daedaluxgroup.com).
I have concentrated this article on real estate activity in Accra, our capital city, to demonstrate what the rest of the country desperately needs today in the real estate sector. You can replicate these needs in Takoradi, our oil city, Kumasi, our garden city, Sunyani, Tamale, Ho, Cape Coast, etc, etc. With a vibrant economy, a growing population, a sophisticated and well-educated professional class, demand for all kinds of real estate development largely outstrips supply. It is a sector desperately waiting to be explored, and the Ghana Investment Promotion Center (GIPC) is doing everything humanly possible to attract foreign investment into this sector. If you are an investor with a shopping list of emerging countries to plough your investment dollars, Ghana should be on the top of that list!
For a country widely acknowledged to have moved from low-income to lower middle-income status (according to World Bank classifications), with a reputation for economic and political stability, Ghana is slowly turning into the go-to investment destination and a springboard for investors from all over the world, seeking a safe haven to put their investment dollars on the African continent. If this trend continues, the confidence, peace and tranquility our country has chalked over the years should bring in more investment dollars, some of which should trickle into the real estate sector. I can safely bet on this one because this trend has happened in so many other countries all over the world, the US being a classic example. Can the investor community stay away from a country like Ghana with a 1.7 million housing deficit?
I doubt it!
Peter Atsu Tsikata
CEO, Millennium Properties Ltd
A full-service real estate brokerage and property management company.