Tuesday, December 10, 2019 / 6:20PM / Northcourt Real Estate / Header Image Credit: Todaynewsgh.com
Ghana's real estate market has grown considerable in the last 10 years on the back of consistent political stability, rising equality and economic prosperity as well as an urbanization rate that is one of the fastest on the continent. These and many other positive factors have seen the gold coast become one of the most transparent economies and real estate markets in Africa, though the real estate transparency levels still have much room for improvement. This concise report, highlights the major activities and trends in the main real estate sub-sectors in Ghana and provides pint-size insight into their performance.
Ghana's residential market averages an estimated 87,000 sale and lease transactions annually. Accra, Kumasi and Takoradi lead by volume and value of transactions. Political and economic stability has supported the growth of the middle-class. According to the IMF, Ghana's economy is predicted to become the world's fastest growing this year, with its GDP moving up by 8.8%. This has enhanced the ability to spend on better homes. This has contributed to rapid urbanisation and demand in inching up in the luxury market. Population estimates are put at 30M, with an annual growth rate of 2.14%. construction ongoing.
Average Monthly Rentals ('000/$)
Airport Residential area, Cantonments, East Legon, West Legon, and Roman Ridge are upper class suburbs within the capital city of Accra. Like most third world economies, there is a demand for affordable housing. The United Nations Office for Project Services (UNOPS) is financing the construction of 100,000 units across the country. The project will span 5 - 8 years and completed units will be priced at $27,500. The first phase of 6,500 units started in Afiama, in the Western Accra region.
Thanks to the active mortgage sector in the country, houses can be paid for over 30 years. The Ghana Homes Loans Bank (GHL) and Housing Finance Company Bank (HFC) are leading providers. Individuals acquiring housing units make a minimum initial payment of 15%. The mortgage lender provides the balance 85%. GHL secured $60M from the Overseas Private Investment Corporation (OPIC) to address the demand for affordable housing by providing finance for constructing homes at Appolonia City. In addition, the government has started $190M mortgage and housing finance window with a kick-off amount of US $19M every year for the next 5 years.
The government began constructing 250,000 affordable housing units across the country to reduce the 1.7M housing unit deficit. This is part of an 8-year project. The government of Ghana is constructing housing units in partnership with Hungarian firm, Solin. To ensure speedy delivery, To encourage private developers, there is a five-year corporate income tax holiday for the construction of affordable housing.
1-3 Bedroom Sale Prices, Accra ('000/$)
indicated in Q1 2019 their intention to reduce their presence in sub-Saharan Africa. AttAfrica Limited, (which is owned 37.5% by Hyprop) concluded an agreement to dispose of its interest in Achimota retail centre - to reduce its USD debt. West Hills mall is having to struggle with due to the exit of international brands as The Foschini group, Woolworths and Edgars. The Woolworth Group, which owns over five stores in Ghana, including one at West Hills, has announced its exit. Edgars is equally winding up this in Q4 after almost five years in operation.
Grade A Retail Supply (Sqm)
Source: Northcourt / Company Files
The discovery of oil is opening up the city to foreign investment. Its closeness to residential neighborhoods, hotels and the Takoradi Airport further supports retail activities. Mixed-use development pipelines projects are expected to add to the retail market include The Octagon, Exchange and One Airport Square are bringing 12,000sqm, 11,000sqm and 2,000sqm of retail space to the market. Retailers - Game, Shoprite, Levi, and Mango lead the market with
presence in the Grade A malls. Accra Mall, Achimota and Junction Shopping malls have yields of 10.5%. Occupancy rates are 98.7% on average, in part because of the ambience and accessibility of the malls. Lease periods last for 5 years on average.
Average Rent psm ($)
Source: Northcourt / Company Publications
Monthly Grade A office spaces rents average $30 - $45/sqm while Grade B rentals are priced at $18 - $25/sqm. The office market in Accra is concentrated around the Central Business District (CBD) and the Airport area. Vacancy rates average 25% for Grade A and B offices while rents escalate 2% - 5%. With the number of pipelines projects approaching completion, this is likely to increase due to excess demand in the short term. The market is expected to pick up in the long term. This leaves the Grade A office spaces with less vacancies than that of Grade B. Investors are likely to take up Grade A spaces leaving the lesser grades for the Start-ups and SMEs.
Grade A Office by Size (sqm)
On aggregate, demand for office spaces has declined over the years. The increased stock coupled with increase in supply of both new office buildings and dedicated offices has forced a reduction in prices. Demand for office space is highest from the technology and professional services sectors.
Green features are important considerations in the office space market â€“ especially by international tenants. The One Airport Square office development obtained a 4-star energy performance certificate from the Green Building Council of South Africa (GBCSA) and the Standard Chartered Head Office Building achieving the Leadership in Energy and Environmental Design (LEED) Gold certification in energy and water efficiency.
Major providers of serviced offices include Avery Scott, Horizons Offices, Regus Offices and ABP Accra Office. Demand is also representative from Consumer electronics (LG Electronics) and Technology (Microsoft) to Business news (Bloomberg) and Real Estate (Swift and Laurus Development Partners).
The Ghana real estate market generally improving supported by economic and political stability, and the influx of diaspora Ghanaians and foreign homebuyers. The outlook for the country is good, especially when compared with other West African countries, except for Cote D'Ivoire which currently outperforms the subject market in some regard.