Interview: Cheick Sanankoua
What challenges must be overcome to enable growth in the real estate sector?
CHEICK SANANKOUA: Broadly speaking, the real estate sector is growing and becoming increasingly complex, and it now features commercial, industrial and residential properties, along with other subsectors. In terms of residential real estate, for example, supply is dramatically lower than demand, whether we are talking about social housing or luxury homes. A lot of effort has been undertaken to speed up processes on behalf of developers, but major barriers remain.
The first difficulty is accessing capital, for developers as well as buyers. Funding is a major constraint, and while we have seen progress in this area, incentives must be put into place. Mortgages and bank financing are scarce. This factor also limits the number of developers that have access to the market, as it remains hard to obtain adequate funding.
The second limitation is the complex process of land acquisition. Given the growth of the market, we have arrived at a stage where rural land must be transformed into urban or semi-urban plots. At this point, in order to avoid conflicts, which are already arising fairly often, laws and regulations must become more clear and transparent.
It is also important to note that the political instability of the 2000s, as well as the consequent economic instability, is an important factor in the present situation. Confidence is higher today, and national economic growth is strong and should remain that way, so we expect to see changes in the market in the coming years. The bureaucracy has improved in the last four years, and as a developer, we feel a real difference in the speed, efficiency and transparency of operations as compared to 2014.
Regarding the financing challenge, the Investment Promotion Centre in Côte d’Ivoire implemented investment support agreements to facilitate funding, for example, for the development of shopping centres. Developers today can also access a certain number of exemptions, with the goal of incentivising building activity by lowering developers’ risk.
How strong is demand for commercial real estate?
SANANKOUA: Although Abidjan’s infrastructure was originally built to accommodate around 3m people, today the city is home to an estimated 4.5m-5m people. The pressure on infrastructure and public services is high, and it increasingly produces problems like traffic jams, which make it harder for citizens to circulate around the city. This phenomenon is generating stronger local demand, and the challenge is to identify the way to satisfy it.
Globally, trade is moving from informal to more formal structures, and that trend is unfolding right now in Côte d’Ivoire. In this context, the demand for centralised products is growing, and the model built into shopping centres is becoming very attractive domestically. The key is to create spaces where customers can find basic products in an efficient, cost-effective way, then help them to move further up the consumption chain, thanks to other offers available on site. It is imperative to create a positive experience within shopping centres and show that efficiency can be associated with pleasure.
The largest commune of Côte d’Ivoire, Yopougon, or Yop-city, is home to one-quarter of Abidjan’s population, and it is a great example of the trends mentioned above. While Yopougon has a higher consumption volume than all other areas in Abidjan, 90-92% of purchases are made in an informal context. Contrary to popular belief, Yopougon is home to all kinds of social groups. The progress of the retail sector will necessarily entail careful and exhaustive market studies, in order to capture a bigger slice of the pie. The construction of Yopougon’s first shopping centre is now complete and it will help to drive the formalisation of retail, not only in Yop City, but across the country.
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