Although retail activity in Ghana has been historically hampered by the lack of Grade-A retail space and limited purchasing power, a growing middle class and strong demand for top-tier retail options has sparked a number of developments offering new opportunities to international developers and retailers looking to tap into an eager consumer base. Modern retail space attracted 5-10% of overall sales in 2012, with around 90% of transactions occurring in the informal market at the huge variety of street stalls and small shops. The handful of modern malls tend to draw highend retailers catering to a wealthier clientele. As Ghana’s middle class continues to grow, the consumer base is expanding, bringing opportunities for retail projects.

ACCRA BOOM: A&C Square, Ghana’s first modern mall, opened its doors in 2005, with Accra Mall following in 2008. Accra Mall stands at 100% occupancy, with 69 retailers, over 1000 employees, and annual tax revenues of $4.3m as of 2008. Its two anchor tenants, ShopRite and Game, are expected to generate $60m in revenue over the first 10 years of their tenancy. As of May 2012, the mall had a weekly footfall of 135,000 shoppers. In 2012 Actis sold an 85% stake of Accra Mall for $65m to South African property development company Atterbury and insurance firm Sanlam, which plan to expand the mall to 40,000 sq metres, offering new space to South African tenants eager to set up shop in West Africa, and indicating strong investor confidence in Ghana’s burgeoning retail market.

UNDERSUPPLY & DEMAND: Broll Ghana estimates the country will gain an additional 100,000 sq metres of formal retail space in the next 24 months. Supply in Accra stood at 30,000 sq metres in 2012, with occupancy rates close to 100% at A&C Square, as well as at other smaller venues such as Makola and Marina Malls, developed by Burkina Faso’s Marina Group. A new addition, the 5000-sq-metre Oxford Street Mall, which is scheduled to open in late 2013, is already fully leased.

“A top European retailer is looking to open its first store in Accra, and looking at the Accra Mall. It needs just 350 sq metres to open the store, but even that is not available in the current market,” said Moses Luri, head of retail leasing at Broll Ghana. Indeed, despite the spate of new projects that have come on-line in recent years, there is still plenty of scope for growth; two more large-scale developments are under construction: the $33.7m, 27,436-sq-metre Junction Shopping Centre in Nungua, and West Hills Mall, a $93m, 27,300-sq-metre mall on Winneba Road. Both are set to open in 2014. West Hills will have two anchor tenants and 60 additional tenants, while Junction’s anchor tenants have yet to be named.

EXCHANGE: However, the impact of currency depreciation and high construction costs will likely prevent a slew of mega-malls from popping up across the country. With the cedi depreciating nearly 20% against the dollar, the resulting increase in input costs will be passed on to consumers already experiencing high inflation – 10.6% as of April 2013. Developers have felt the impact: in May 2012, Mobus Property Developments suspended work on its upscale Phoenix Mall project due to the cedi’s depreciation.

“It’s going to be risky to build a huge high-end shopping mall. Flying to Dubai for the weekend to shop is more affordable because of prices in Ghana,” Clovis Abi Nader, the area general manager at Mövenpick Hotel developer Man Enterprise, told OBG.

At Broll Ghana, Luri said costs can be passed on to lessees due to high demand for quality retail space.

“Retailers have an expectation of the kind of space they want, which comes at a cost. For the developer to deliver on that spec, a number of things have to be imported. Construction costs are high, but rentals are also high, so developers are still able to profit,” he said.

Although Ghana’s market is not mature enough to support dozens of large shopping centres, small-scale retail spaces are under construction, including the Oxford Street Mall, The Octagon (4000-6000 sq metres) and shopping facilities at the Kempinski Hotel (5000 sq metres), all scheduled to open in the next two years.