BREAKING THE 90/10 SYNDROME IN RESIDENTIAL REAL ESTATE DEVELOPMENT IN GHANA: THE CAUSES, EFFECTS AND RECOMMENDATIONS Published: April 2025 Author: Daniel Kontie Category: Real Estate Naturally by basic economic theory, a higher demand for a given commodity presents an opportunity to supply same based on the principle of single variable effect; however, the reverse appears to be the case when it comes to real estate investment in Ghana. Many would wonder why real estate investors in Ghana neglect the huge demand for low-end residential properties (social housing) by the over 90% of the Ghanaian population, to concentrate on the less than 10% of the population whose property demands are high-end (luxury). In other words, why the average Ghanaian real estate investor neglects the supply of the over 1million social housing units in demand whilst attention is paid to the development of luxury properties in demand by less than 10% of the population. The purpose of this article is to unravel and bring to bare the existence of the 90/10 syndrome, its causes, effects and to offer recommendations to stakeholders. To put the discussion into context, let me give you a data-driven exploration of the population and income distribution of Ghana. This will give you insight on how we arrived at the 90/10 syndrome; a perfect description in our opinion, of the status quo and the subject of this article. Taking a close look at the Ghana population and income distribution as at December 26, 2024 according to Woldometer, Ghana’s population stood at approximately 34,735,161. Out of this number, about 5% constituted the affluent class (most often, entrepreneurs). This class typically earns more with average net worth or investable assets between USD$100,000 to USD$200,000 or more per annum whilst about 46% constituted the middle class-upper who earns an average income or investable assets between USD$30,000 to USD$50,000 or more per annum, the middle class-lower constituted 24.7% of the population with average income or investible assets between USD$2,400 to USD$3,600 per annum and the poor constituting about 24.3% earning an average income of USD$400 or less per annum. Now, taking a retrospective look at the average prices of luxury properties in Ghana particularly, the capital city Accra, and its surroundings which are normally townhouses that sells averagely between USD$180,000 to USD$500,000 depending on the location, number of rooms or amenities etc and juxtaposing that with the aforementioned population and income distribution statistics, one would have given us credit for being charitable with the description that the percentage of the Ghanaian population that can afford the average luxury property that sells between USD$180,000 to USD$500,000 is 10% or less. Having established this fact, the Africa Continental Engineering & Construction Network conducted a further study to empirically substantiate the existence of the 90/10 syndrome that, real estate investors in Ghana neglect the supply of the over 1million social housing in demand whilst attention is concentrated on luxury development only in demand by less than 10% of the population. In a field study that lasted for one year, we sampled one hundred (100) developers in Accra, both corporate and non-corporate. It is interesting for one to know in our findings that, out of the 100 developers, 95% (95) of them are into high-end property development whilst the remaining 5% (5) does a mix or only social housing. Apart from this, we also went a step further to explore the one hundred and forty (140) members of the Ghana Real Estate Developers Association (GREDA) in good standing as at 2023 (GREDA Real Estate Journal, Issue 6, 2023), whose core businesses are housing (remember, it’s not all GREDA members that build houses) and it also came to our surprise that, there is a gradual and surreptitious swift in the property development portfolio of many of these members in this category from either social housing or mid-end to high-end properties. Now the multi-million dollar question is why will the average profit orientated investor neglect such a huge demand for social housing and focus only on the top 5% of the population. This brings the discussion to where we examine the genesis of this paradox, the causes. The Causes Even though there is a high demand for social housing by the 90%, the sector is neglected by developers because the middle class is unable to make outright payment or significant bulk payments for properties unlike the top 5%, even though they can afford if given a flexible installment payment plan. This has made investing in this sector unattractive because the investor in question will have to complete the property development 100% and sell it out to this class of buyers on an installment payment basis for a reasonable period of time. This development model automatically puts the developer in waiting for several years for him to recoup his investment. The flipside of this also is that, the developer risks losing his capital through exchange rate depreciation or better still inflation if he does not quote the property price in US dollars. Even with the few who may take this risk, chances are that, interest will have to be added to the property price as a hedge against inflation and the fluctuating prices of building materials over the construction period. This eventually prices out the average middle class from acquiring these properties making the property difficult to sell, hence locking up capital of the investor. Mention is not yet made about the high chances of default on payments and project delivery timelines by both parties that may lead to frustrations and legal stalemates. The above and many other factors have made investment in this category unattractive to many real estate investors in Ghana, hence the paradigm shift to luxury residential property development by the mass majority of developers in recent times. Taking the above analysis into consideration, the developer will naturally go for the luxury development where the top 5% category has the affordability to either make outright payment or do significant bulk payments
The Transformative Role of an Integrated African Built Environment THE TRANSFORMATIVE ROLE OF AN INTEGRATED AFRICAN BUILT ENVIRONMENT IN ACHIEVING SUSTAINABLE DEVELOPMENT OF THE CONTINENT: A POSSIBILITY OR A MIRAGE Generally, the concept of integration is basically the process of combining different components into a single unit or system for ease of use, identification, uniformity, economy and most importantly, wider accessibility. The concept has proven to be very effective across industries and professions, eg Engineering, Information Technology, Economics, etc. The information age has made the world a global village making integration no longer an option but a sine qua non for transforming systems, professions, industries etc in all sectors of an economy. The built environment being the engine of growth for every economy across the globe is not an exception to this fundamental fact. The objective of this article is to examine the transformative role an integrated African built environment can play in attaining a socio-economic transformation of the continent. Africa, a continent of vast natural resources and cultural diversity, stands at a critical juncture in its developmental trajectory as rapid urbanization, population growth, and economic diversification reshape its future, the built environment emerges as a cornerstone in this transformation agenda. By integrating the built environments across Africa, we can create a unified framework for socio-economic transformation that addresses the continent’s unique challenges while unlocking its immense potential for global pre-eminence. The built environment has a significant transformative role in the development of a continent citing the European Union as a classic example. In the EU bloc, the construction sector provides 18 million direct jobs and contributes to about 9% of the EU’s GDP. It also creates new jobs, drives economic growth, and provides solutions for social, climate and energy challenges, according to the European Commission (2023). Africa has not been able to realize the full potential of this sector, probably reason for its 97million estimated housing deficit coupled with the wide developmental gap it suffers compared to other peer continents across the globe (African Development Bank (AfDB, 2024). “The built environment is fundamental to accelerate economic development and social prosperity in Africa given its direct benefits and multiplier effects to the economy” (IFC, 2023). To address the African housing challenge, the International Finance Corporation recommended to stakeholders, a sustained commitment and “coordinated approach”. What do they mean by this coordinated approach?. Key among the IFCs recommendation of the need for a coordinated approach is the integration of the African built environment, the subject of this article, and one of the core objectives of the Africa Continental Engineering & Construction Network Ltd. The question now is, can Africa have an integrated built environment such that all professions in the built environment will have a common curriculum for training and professional certification examination for all professionals across the continent?. This will make a certified engineer in Ghana a certified engineer in Kenya, Nigeria, Egypt, Uganda, Rwanda, South Africa, Angola, Morocco, Algeria etc with just one common certification exam. Second, can Africa have a common standard, we may decide to call it the “Afrobuildcode” similar to the eurocode, which will be the universally accepted standard for the African built environment, such that quantities, metric systems etc will all be uniform and accepted among member states such that all building materials for example certified in Ghana by a standard will be accepted in Nigeria, Rwanda, South Africa, Kenya, Uganda, Angola, Morocco, Algeria, etc?. Third, can we have a standard system where all industry practitioners, both corporate and individuals will have same grading and classification system such that a D1 building contractor in Ghana will be recognized same in Nigeria, Kenya, Uganda, Rwanda etc. This will eliminate the existing needless and incompetent trade and professional bureaucracies whilst facilitating a robust cross border built environment trade and professional practice that has the potential of transforming the African built environment. What Would Be the Impact of an Integrated Built Environment on the Development of the Continent? A few among these are: Foster Investment A harmonized policy across member states makes it easier for international investors to navigate markets, promoting investments in housing, commercial real estate, transportation infrastructure and industrial zones et cetera. The ripple effect of this investment will create jobs for the labor-intensive working class of the built environment, and a coordinated approach can generate millions of jobs, especially for Africa’s growing youth population. Collaborative Investment Also, an integrated African built environment can lead to collaborative investments among African states, investors, industry practitioners etc to reduce financial burdens on individual nations. Projects like the Grand Inga Dam in the Democratic Republic of Congo, envisioned to power multiple countries, demonstrate a practical benefit of shared infrastructure through integration. This also has the potential of ensuring equitable distribution of development as underdeveloped areas can benefit from cross-border infrastructure, reducing regional disparities. Skills and Technology Transfer Besides, an integrated built environment will facilitate easy built environment technology transfer across the continent, evening the skills, technology and developmental gaps among member states. Capacity Building Last but most important is capacity building, integrating the built environment will facilitate mergers between industry players, this will lead to bigger and more resilient African construction firms that will have the capacity to undertake complex projects across the continent. This will also change the status quo, the proliferation of multinational firms that have taken over the African built environment over the years. It will also lead to more mutually beneficial collaborative relationships between the African construction firms and their multinational counterparts than it is now. Take for example the capacity we can build if we should have a merger or collaboration between Dutum Construction Company of Nigeria, Joshob Construction in Ghana and Trencon Construction in South Africa. The synergy created can grow into giant African built environment consortiums across the continent. Conclusion In conclusion, sight is not lost of a few possible challenges of this integration agenda, however, that will be dealt with in subsequent editions. But the bottom line remains that, the
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