Ghana’s real estate sector has seen significant growth in the past few years. This has been spurred by growth in demand for both residential and industrial property.
There exists unmet demand leading to growth opportunities in the areas of construction and real estate development and management. Ghana’s property market is dominated by residential and commercial developments.
The residential market is the most active, registering an estimated 85 000 transactions per annum over the past decade. Commercial property is the second-largest segment in the market and includes office accommodation and retail space.
The industrial segment is significantly smaller in size than the commercial market, while recreational and civic or cultural property development is virtually non-existent. The housing deficit in Ghana is estimated to be in excess of one million homes. To address this deficit, there is a need to deliver approximately 150 000 housing units per annum for the next 20 years.
To make this possible, the government is embarking on a housing programme to build over 300,000 housing units over the next five years, with the strong participation of the private sector through public-private partnerships.
Real estate companies with approval from the Ministry of Works and Housing are eligible for a five-year corporate income tax holiday in relation to the construction of low-cost/affordable housing.
New developments in the housing market are currently being driven by new apartment block complexes. These complexes are being funded by foreign investors from territories such as Turkey, South Africa and the Middle East, catering for increased demand that has resulted from new oil discoveries.
For example, Sekondi-Takoradi, the Western regional capital, is benefitting from the effects of recent oil discoveries in the form of increased demand for residential property. Demand is driven by both foreign and local employees directly connected with oil exploration, together with members of the local economy providing goods and services to this new market.
Increased residential demand has been met with high-end apartment developments funded by foreign investment.
The Accra Mall for example is dominating the retail landscape in the country. The mall attracts nearly four million visitors per year and further retail developments have been built to meet this high demand. These include the West Hills Mall, the Osu Mall, the A & C Mall, and the Junction Mall.
The West Hills Mall development is a joint project between Delico Property Developments, owned by South Africa’s Atterbury Africa, and Ghana’s pension fund. The success of A&C Square in East Legon also confirms the need for neighborhood retail centres in Accra. Melcom Ltd and Maxmart Ltd, both local general merchant retail stores, have capitalized on this emerging demand by opening stores in almost all the major areas of Ghana.
On a regional level, Kumasi and Takoradi, the next two most populous cities in Ghana, have limited formal retail centres; Kumasi recently saw the establishment of a mall with a retail floor area of 18,000 square metres. Opportunities exist for further regional developments. According to Broll Ghana, developers will more than double the amount of retail space available in the country’s capital in the coming years.
Prime office space in Ghana may be of interest to real estate investors. Office space rental values are up to US$35 to US$40/m2 per month, with a prime yield of around 10%. High demand for offices are emanating from activities such as the banking, telecommunication, professional and diplomatic or aid sectors and other service activities.
New office space in Accra is delivered to a ‘shell and core’ finish, although tenants may now demand fit-out as part of lease negotiation as more office developments are released to the market and competition for new tenants’ increases.
Ghana has a less restrictive business environment and progressive macroeconomic policies. Strong protection of civil liberties improves Ghana’s investment attractiveness, as does the country’s developed legal and regulatory framework.
Ghana’s labor market is efficient and the country’s laws make it relatively easy to appoint or retrench employees.
The outlook for the real estate or property development sector remains positive as the Ghanaian economy general shows great signs of resilience with an impressive growth rate of 8% in 2017 and a downward trajectory of inflation. It is expected that investors will continue to show great interest in the sector in order to diversify their investment portfolios in the economy.
Real Estate, Building the future of Africa. The Oxford Business Group “The Report, Ghana 2017”