Mr Kofi Ampong, the Chief Executive Officer of Broll Ghana, has underscored the need for local investors to promote retail development based on the competitive income and capital returns from that sector.
He said retail facilities such as Shopping Malls had enormous potentials and had come to stay in Ghana, making foreign investors enjoy whopping upside potential in the market.
Speaking on the theme “financial Institutions and Retail Development,” at a gathering of CEOs in Accra on Thursday, Mr Ampong declared “today it seems the vast development opportunities offered by a rapidly growing African population can no longer be ignored.”
‘‘The question is, if these investors are trooping into Ghana and other countries, why can’t we pool resources and/or syndicate capital to finance retail development in Ghana’’, Mr Ampong asked and suggested, “let us collectively take advantage of this.”
Fixed income securities
According to Mr Ampong, many financial institutions in the country invest heavily in fixed income securities such as Government Bonds and Treasury Bills, because these are thought of as safe investment with minimal risk and perhaps assumed to provide a decent rate of return. However, in his view, there are other forms of investments locally that are relatively lucrative, but local investors have not paid particular attention to them.
He pointed out that the prospects in retail developments are good as the rental rates and yields are far better than offices/industrial properties.
He observed that the retail market was well structured based on international standard, introduction of turnover rents and better lease clauses also helped to protect the investor while tenants provided better information to landlords.
He further argued that developers were well informed and were performing better as there was due diligence on tenants to minimise risk.
Local Investors
Mr Ampong said up until the late 2004, investors had focused more on residential and office developments than retail development and it was gratifying to state that there had been a paradigm shift of late.
He said that though demand for land for residential developments was relatively high in growth, the last few years had seen great progress and strong demand for land for commercial property developments, especially in most major cities in Ghana.
The real estate market
Mr Ampong said that the Real Estate Market was realising increasing investment in retail properties in Ghana.
This, he explained, had been influenced by a number of factors including improved economic and high GDP growth, emerging middle income class, luxury taste developed by shoppers and well researched designs and layouts.
Others he said were the experience retailers and developers wanted to offer shoppers, the influx of foreign developers and investors, improved tenants mix, maturing of the property market, Ghana’s young and upwardly mobile population, spurred by the rising appetite of shoppers, expansion of International brands and the liberal government policies such as Clause 27 of the ‘’Ghana Investment Promotion Council Act’’, which guarantees unconditional transferability of dividends or net profits attributable to the investments, payments in respect of loan servicing where foreign loan had been obtained.
No shopping malls
According to Mr Ampong, more than 10 years ago, there were no shopping malls in most West and East African cities.
“Now cities such as Nairobi, Dakar, Accra and Lagos boast Western style Shopping Centres, thanks to property developers from South Africa and United Kingdom (UK),” he told the gathering.
Accra Mall
He said that the opening of the Accra Mall in 2007 changed the retail provision in Ghana.
“The Accra Mall epitomises a typical Community Shopping Centre – in terms of International Standards however, its household demographics extends beyond its immediate neighbourhood to regional fronts,” he stated.
Currently, this Shopping Centre is one of the largest fully enclosed Shopping Centres in West Africa with a gross lettable area of 20,000m2.
Selected key retail developments
He cited a number of existing retail development such as the A&C Square (10,000m2), previously A&C Shopping Mall, Oxford Street Mall, West Hills Mall, Junction Mall, located near Maritime Academy Nungua
Other retail developments being planned include the Achimota Mall and Meridian Mall in Tema.
He said three Malls are currently being planned for Kumasi. These are Sunshine City Mall, Garden City Mall, and the 27,000m2 Kumasi Mall and plans were also far advanced to commence the development of the 19,000m2 Takoradi Mall.
He said Ghana is also experiencing an increase in mixed–use developments such as Marina Mall located at the Airport City, Stanbic Heights,the One Airport Square (18,000 m2 +), the Octagon, the Exchange – Airport – among others.
Funding of retail facilities/ developers
Five years ago, Mr Ampong said many countries on the African continent were widely regarded as no-go areas for South African developers, listed real estate funds and institutions.
He said concerns over political instability, corruption, logistical challenges, ownership rights and currency risk kept most would-be property investors at bay.
“Today it seems the vast development opportunities offered by a rapidly growing African population can no longer be ignored,” he stated.
The question is, if these investors are trooping into Ghana and other countries, why can’t we pool resources and/or syndicate capital to finance retail developments in Ghana? Mr Ampong asked.
In Nigeria, he observed that Real Estate Developers, Private Equity Investors and some banks had pooled syndicated loans to finance some retail developments in choice locations.