9 Challenges Facing Real Estate Development in Ghana

We were really excited to have the opportunity to attend the Launch of the 5th Multi TV Habitat Fair on Thursday, June 26, 2014. The Special Guest of Honor was the Honorable Sampson Ahi-Deputy, Minister of Water Resources, Works and Housing. The Executive Secretary of the Ghana Real Estate Developers Association (GREDA), Sammy Amegayibor, gave the speech on behalf of guests during the launch and has given us permission to share parts of his speech with readers of this blog. We have decided to break the post into several parts, starting with the major challenges he feels the housing industry in Ghana is facing. We have reproduced the beginning of his speech below:

Permit me to say a big ‘Ayekoo’ to all Real Estate Developers spread across the country…for their immense contribution to the housing stock in spite of the enormous challenges that confront them in the course of their business. These challenges are not new except that we have not done enough to address them, noteworthy amongst them are:

  1. Land acquisition ([for there is a] long cumbersome registration process)
  2. Lack of state-funded basic infrastructure and the cost to developers if they have to bear the cost alone.
  3. High cost of building materials (70% importation of building component[s])
  4. Lack of long-term financing and high-interest rate[s]
  5. Local indigenous companies competing with foreign companies for housing projects
  6. Inadequate support for… local industries to produce quality materials locally to feed the building and construction industry.
  7. Ghanaians increasing appetite for foreign taste[s] ([the]gradual drift towards a foreign taste for everything has also crept into housing).
  8. 17.5% Value Added Tax (VAT) (Which [is] considered a setback in the affordable housing [industry]….). This is an additional cost to prospective homeowners and will also have [a] serious negative impact on the industry. GREDA has petitioned [the] Government since 28th January to withdraw the newly enacted VAT Law and [has] subsequently submitted a counterproposal as of the 2nd May for Government consideration. Despondently, GREDA has yet to receive a response.
  9. Lack of Data on housing.

While I join His Excellency the President John Mahama to appeal to Ghanaians to appreciate and patronize made in Ghana goods, I at the same time wish to caution the local manufacturers to ensure quality in the delivery of their products.
[These] challenges have left us with a huge housing deficit which has accumulated since independence [and is] still growing by the day because we have done very little to confront the challenges. Available data suggest that if we have to do something significant to reduce the deficit, we would be required to build about 200,000 units annually for the next ten (10) years (thus without assessment of the effective demand). Currently, we are doing about 45,000 annually…

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