Growth in Ghana's construction sector to continue into 2019


Ghana’s real estate sector has gone through peaks and troughs over the past decade, mirroring the economy’s turn from the oil boom in 2010 to the mid-decade slowdown. The market started to tick upwards in 2018 thanks to a robust economy and the government’s reform programme, and various segments, from highend residential real estate to industrial and logistics property, are performing strongly. Economic and demographic factors should continue to drive growth through 2019, though investors are keeping an eye out for downside risks and segments in which there is oversupply. The market is becoming more geographically diversified, with outer areas of Accra and regional centres attracting increasing attention.

“The market is cautiously optimistic,” Joseph Amo-Mensah, CEO of real estate company Broll Ghana, told OBG. “However, for those who serve large-scale businesses or build industrial parks, this is the time to invest. Real estate supply vis-à-vis demand has a lag time of 18 months to two years in Ghana, and our aim is to match demand by 2021 as the market peaks.”

Residential Property

Since 2008, with the Ghanaian cedi depreciating sharply, inflation climbing and capital markets developing at a slow pace, residential real estate has become an increasingly popular investment asset class for well-off Ghanaians. Demographic growth has helped support demand while a previously short supply of higher and upper middle-end property has kept rents and yields high.

In 2017, the latest year for which data is available, the average rental yield on high-end apartments in Accra was 8.4% while capital appreciation averaged 6.7% annually, giving an overall return of 15.1%, according to Cytonn Real Estate, a real estate developer owned by a Kenyan private equity fund.

For detached houses of three to six bedrooms, yields averaged 5.6% while capital appreciation averaged 8.6%, giving a total return of 14.2%. Total returns were as high as 16.7% for five-bedroom detached homes.

Supply & Demand

While yields remained high, 2017 was a slower year for the property sector, which persisted into early 2018. A number of macroeconomic factors dampened demand while on the supply side rising costs meant that new units became more expensive, putting a squeeze on the market as a whole.

“Costs rose thanks to the depreciation of the cedi against the dollar,” Kelvin Nyame, CEO of local real estate company MeQasa, told OBG. “This pushed up the costs of building materials, which was passed onto the endbuyer. Bad debts increased, leading to foreclosures.”

Nonetheless, a turnaround was apparent by mid-2018. The strength of the economy and lower inflation led to growing demand, and lower interest rates made borrowing more affordable and investment less expensive. In July 2018 global real estate company JLL said that Ghana could be one of the most interesting markets in Africa for investors, citing the country’s high economic growth, resource wealth and strong services sector. It pointed out that even during the market slowdown, high-quality assets mostly remained fully leased, and that, though real estate demand usually lagged behind economic growth, an upturn was in the offing. Moreover, JLL cited Ghana’s housing shortfall of 1.7m units in 2018 as a major demand factor. Accra’s location and potential as a West African business centre also support the medium-term outlook while Ghana’s political and economic stability give it an edge over other West African markets.

A further boost is expected to come from the impending introduction of publicly traded real estate investment trusts (REITs), which will both provide the sector with a new source of capital, and broaden its accessibility to all kinds of investors without the need for them to acquire bricks and mortar. Currently, the only Ghanaian REIT is operated by the Home Finance Company, which was renamed Republic Bank in April 2018. The capital markets regulator, the Securities and Exchange Commission (SEC), published draft guidelines on amendments to regulations in July 2018 that would allow the creation of listed REITs on the Ghana Stock Exchange. The SEC is confident that this will help increase investment in the real estate sector and provide generous returns for investors.

Nonetheless, downsides to the market come from Ghana’s sensitivity to global commodity prices, as well as domestic structural issues. Land ownership is complicated by traditional systems of communal ownership and disputes over title deeds, which can take a long time to resolve. “Although there appears to be governmental action in this direction, the issue of contested land rights remains a problem,” Dragica Todorovic-Letica, managing director of Energoprojekt Ghana, a Serbian construction company, told OBG. “Plots are always contested, and this adds a serious legal and bureaucratic hurdle in the way of construction projects.”


Online real estate consultant MeQasa and other industry players noted rising interest in small compounds and higher-end condominiums in late 2018, as well as a renewed interest in investment in areas around Accra. However, development in outer areas of Greater Accra face challenges in terms of infrastructure and utilities. In some cases, developers are left to build their own basic infrastructure, including roads and water piping for their new projects, further pushing up costs in a price-sensitive market. Over the longer term development of Accra’s proposed light rail transit system would prove a significant boost to outer areas. “Land prices remain very high in Accra, and hence there is a trend for building upwards, as well as pressure on the outskirts on the city,” Kwasi Offei Owusu, managing director of local ADK Consortium, told OBG. “Indeed, this pressure on the suburbs is to accommodate the urban sprawl, but there is no developed infrastructure to facilitate effective commuting patterns, further compounding price issues in the centre. A railway system would make transport easier and cheaper, increasing the size of the commuter belt.”

Mortgage Market

One of the biggest factors holding back the growth of the residential real estate market is the underdeveloped mortgage market. With commercial interest rates in double figures, incomes relatively low, and collateral complicated by uncertain ownership and informal housing, mortgages have been slow to develop as a mass market in Ghana.

“Due to the macroeconomic reality of high interest rates and inflation, mortgages are an underdeveloped financial service,” Amo-Mensah told OBG. “In addition, liquid savings and asset collateral have not been historically consistent enough to support a widespread mortgage market. Interestingly, these conditions are changing, and there is a pent-up demand that has the potential to come on-line in the mid-term.”

However, as part of the government’s wide-ranging reform programme, concrete progress is being made on broadening access to mortgages, and thus to modern housing. In November 2018 the government completed preparatory work on a pilot phase of the Mortgage and Housing Finance Market Scheme announced in the 2018 budget. The scheme was allocated GHS40m ($8.6m) from government funds and an additional GHS40m ($8.6m) from private sector sources, including pensions and insurance funds.

In the 2019 budget statement, the government committed another GHS1bn ($216.1m) to the mortgage scheme, seeded with a minimum of GHS100m ($21.6m) every fiscal year over the following five years. The funds are designed to support the private sector in expanding access to housing and growing the mortgage market, with an end goal of broadening home ownership to a larger part of the population. Initiatives include lower mortgage interest rates, rent-to-own programmes and reduced construction costs. “The mortgage market needs to be boosted,” Bright Owusu-Amofah, CEO of local mixed-used developer Appolonia, told OBG. “People need flexibility, as they have unpredictable incomes.” According to Owusu-Amofah, up to 80% of those who have taken mortgages are able to repay them within five years. This suggests that they are largely the preserve of the affluent, including those who can afford to invest in property and rent it for high yields.


As of November 2018 Accra had 230,000 sq metres of modern shopping mall space, with anchor tenants typically paying $400-600 per sq metre per year, and line shops less than $950 per sq metre, according to JLL. Major malls in the capital include Accra Mall, which was the first to open in Ghana, in 2008, and has 20,000 sq metres of retail space; and West Hills Mall, which opened in 2014 with 27,000 sq metres, making it the largest in West Africa. Vacancy rates vary widely, from 5% to 50%, depending on the location and popularity of the mall. The significant supply has led to a shift towards a tenants’ market, with landlords willing to accept shorter advanced payment terms.

The retail real estate sector endured a tough period in 2017 and in the first half of 2018, despite resurgent economic growth. This was partly due to a high supply of modern retail property, following a series of investment over the past decade. Reasons for the slowdown include the government’s fiscal consolidation efforts, which trimmed public sector incomes and had a drag effect on the economy as a whole. The weakness of the cedi against the US dollar also affected modern retailers, who earn largely in cedis but pay rent in dollars. Despite the cedi stabilising, the impact of its depreciation in past years continued to feed through. Meanwhile, inflation remained above double digits until the second quarter of 2018, with rising prices further squeezing Ghanaians’ disposable income. A slowdown in oil sector growth may have also led to lower spending by expatriates and business visitors, a significant source of income for some modern retail outlets.

Market Uptick

However, by mid-2018 the market started to pick up again, as growth continued while inflation continued to drop, and the government’s fiscal policy strengthened confidence in the outlook. In the third quarter of 2018 Broll Ghana reported that interest in mall space in the secondary retail market was increasing, effectively meaning that retailers not previously present in certain malls were looking to lease space in them. As the company noted, the retail sector’s performance is closely tied to that of the economy as a whole, and with growth expected to be robust in 2019, inflation trending downwards, and the cedi stable, this bodes well for the industry.

Investment in modern retail space is thus accelerating. In December 2018 Takoradi Mall opened its doors, bringing nearly 20,000 sq metres of gross leasable area to the port city, which is the centre of Ghana’s oil industry and one of the country’s fastest-growing urban areas. The mall has a catchment area population of around 600,000 and was built by Ghanaian oil and gas services company Amaja Oil Fields with an investment of $40m. South African retailer Shoprite is the anchor tenant, as it is in a number of malls in Ghana and elsewhere in Africa. JLL estimated that there is 30,000 to 40,000 sq metres of additional retail centre development in the pipeline for Accra.


Activity in the commercial real estate sector was relatively steady in 2017 and the first half of 2018, following a slow year in 2016 thanks to the economic environment. Nonetheless, the market has started to pick up towards the end of 2018 and early 2019. As Broll Ghana noted in late 2018, areas of Accra such as Ridge and Airport City continue to perform strongly, thanks to their competitive advantages in location and facilities. More than 41,000 sq metres of additional space came onto the market in 2018 in locations such as Atlantic Towers, SCB Towers and 335 Place, with rents remaining stable despite the growing supply.

The central business district and Airport Residential Area were achieving rents of $30 to $45 per sq metre as of late 2018, according to JLL, though vacancies ranged between 10% and 20%.


By the second half of 2018 the Ghanaian real estate market was showing clear signs of an upturn, following the country’s robust economic performance. Structural competitive advantages in stability, location and demographics are encouraging demand. Meanwhile, government support for the development of the mortgage market and the introduction of REITs are in the offing, which is expected to help improve the sector’s maturity and boost its investment profile.


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The Report: Ghana 2019

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