An old school friend once told me in 1999 that Ghana would one day become the ‘Jewel in the Crown’ of West Africa. At the time I thought nothing of this passing comment, but as Ghana’s GDP growth rate has averaged 7.72 percent from 2000-2013, several international investors during this period have taken note and have seen Ghana’s potential.
Initial Perspectives of International Real Estate Investors
In 2006, whilst I was working for a US law firm, I had just finished a meeting with one of my clients, a leading Real Estate Investment firm. I was speaking with the CEO about his firm’s strategy and I noted that West Africa and in particular Ghana appeared to be an interesting proposition. The CEO responded that his firm had never considered West Africa as an investment proposition and instead were focusing on the Middle-East, in particular Dubai and Abu Dhabi. This was not an uncommon response as several other real estate clients I spoke to seemed to have little interest in West Africa and were intending on expanding their portfolios and investments into the Far-East and Middle-East.
Francis Ayisi, former Vice President of Bank of Tokyo-Mitsubishi UFJ’s African desk in London and current Head of Business Banking at Standard Bank believes “Ghana was not initially seen as an attractive proposition to international real estate investors, the returns were fairly small and the appetite from the international real estate investor was not there, this view however has been changed since the discovery of oil in Ghana in 2007 which has lead to a boom in the real estate market.”
The Changing Perspectives of International Real Estate Investors
In 2007, in the deep waters off the coast of Ghana, a U.S. based oil Exploration Company, Kosmos Energy, discovered a substantial reservoir of oil now known as the Jubilee Oil Field. The finding was among West Africa’s largest, promising to change the fortunes of Ghana and its people.
Samir Jain, a former banker and CEO of Phikanet, a Strategy Consulting firm in the UAE notes “Ghana is seen as a politically stable economy and with the oil discoveries, this has lead to several large powerful property developers in Dubai and Abu Dhabi to seek to form joint ventures with local developers in Ghana and to undertake large scale residential and commercial developments.” This view is also supported by Tetyana Lementarova the Managing Partner of the FEOD Group, a leading law firm based in the Ukraine, who notes that, “since the discovery of oil in Ghana and in particular over the past few years, we have found that our clients in Russia and Ukraine have been looking at real estate investment opportunities as they believe the returns on real estate in Ghana far exceeds those found domestically.”
It is clear why international real estate investors are keen to obtain a foothold in the Ghanaian market. A recent report from the Housing Data Centre which collates information from the real estate and housing sector in Ghana, believe that house prices are likely to go up by at least 50 percent this year alone and The Ministry of Water Resources, Works and Housing believes the housing deficit in Ghana stands at around 1.7 million units. At the end of 2013, it was also reported that the average retail rent in Accra had risen by around 50 per cent to between $60 to $65 per square meter since 2012.
Companies and law firms based in Ghana are also seeing with interest the change in the types of investors coming into Ghana. Elikem Nutifafa Kuenyehia, founder, of Oxford & Beaumont, a firm headquartered in Accra, has seen the change in profile of foreign real estate investors and notes “In the ten years that I have been in Ghana, there has been a significant increase in foreign direct investment. One consequence has been demand for commercial and residential properties driven by foreign investors. It is no surprise there is the high level of construction going on and pricing (as well as returns) have increased significantly. Historically, the demand has been from our traditional trading partners – The US and Western Europe. However increasingly there is a lot more demand from other African countries – Nigeria in particular as well as the Middle East and Eastern Europe.” Kevin Dadzie, the Group Head of the CH Group of Companies in Ghana also believes that he has seen changes domestically “as investors in the Middle-East and Russia are now comfortable with Ghana and are investing and expanding their operations in the country both on the commercial and residential real estate side, and this can only be good for Ghana.”
It is clear that both international companies and local companies in Ghana support the view that there has not only been a change in the perspective of international real estate investors. The profile of international real estate investors has also changed with an influx of Russia, Ukraine and the Middle-East investors seeking opportunities. Some of my real estate clients at Aspen Morris Solicitors have revised their business plans with Ghana being seen as the gateway to breaking into the lucrative West African market.
The high demand for housing and prime office space and the potential returns and political stability coupled with the discovery of oil has fuelled their appetite even further. It appears that the change of perspective is here to stay and the more investment coming into the country can only be beneficial for Ghana and its people.
By Peter Petrou, Aspen Morris Solicitors (Managing Partner) & Lawyer at FEOD Group
January 21, 2015