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16Apr’25
EXPLORING THE SHELL HOUSING DEVELOPMENT MODEL AS A COMPLIMENTARY TOOL TO BRIDGING GHANA’S PERENIAL HOUSING CRISES
EXPLORING THE SHELL HOUSING DEVELOPMENT MODEL AS A COMPLIMENTARY TOOL TO BRIDGING GHANA’S PERENIAL HOUSING CRISES Published: April 2025 Author: Daniel Kontie Category: Real Estate In attempt to provide alternative expert’s perspective on how we can tackle the perennial housing crises in Ghana, I have written and published quite a number of articles on alternative development models that we can adopt as a state to help mitigate if not bridge the housing gap entirely. It is common knowledge that several state interventions have been implemented in the past, but it appears the solution to this housing crisis still remains far from reach. It is sad to know however that, our approach to solving the housing crises in the past has been so prosaic. We keep operating a one-sided model repeatedly, yet expecting different results. Government upon government have come and gone, tried to build affordable housing units for the citizenry particularly the low to middle income class of society, whilst private developers are making supernormal gains on the flipside and skillfully avoiding taxes under the pretext of providing affordable housing to Ghanaians. But the truth is, until we stop the pretense, the pork barrel politics and the theatrical approach to dealing with the issue, the crises may remain same or deteriorate further with time. I know I may have subjected myself to a barrage for making this statement but that is the truth and I am ready to face the consequences if that is what it will take to provoke a second thought and a national conversation on our methodology in solving the housing crisis that has become a national concern for some time now. Without bothering you with lengthy literature, between 2000 and 2008, the John Agyekum Kuffour, Aliu Mahama led administration initiated the affordable housing estate in Accra, Tema Community 24 and 26 and in Kumasi Asokore Mampong in the Ashanti region. Fast forward, the John Evans Atta Mills, John Dramani Mahama led administration also introduced the Saglemi affordable housing estate between 2008 and 2016. But the combined effect of this could not have any significant impact on the national housing crises. This is because the development concept for both regimes and previous interventions in my opinion was not well thought through and did not serve the intended purpose for which it was designed. I am beginning to think that broader stakeholder consultation was not done before the implementation of the concept. The thinking that a multi-storey building concept maximizes land use with the aim of cutting development cost to make the properties affordable for the low to middle income class is a mirage. The reason is that, by the time these houses are ready in fully completed units for sale; prices might have skyrocketed beyond the reach of the ordinary low income earner. Take the Tema Development Company (TDC) affordable housing Estate in Community 26 for example, the price of a completed 2bedroom apartment was sold at USD$28,000 as at 2023. This price in its cedi equivalent using the prevailing exchange rate of USD$15.50 today March 12, 2025 will be Ghs 434,000 which falls far out of the affordability of the low to middle income class. Consequentially, many of these apartments found their way into the hands of top politicians, partisan political party apparatchiks and the wealthy in society, acquiring these properties in large numbers for investment purposes which are now being resold or rented out at fantastically high prices. So, in trying to compare this multi-storey or finished building model to the shell housing development concept in solving the housing crises, we did a comparative cost estimation and analysis between the two using a 2bedroom house as a case study. The hypothetical 2 bedroom shell house in question here is only the structure of the house which comprised of the walls, roof, doors, windows and burglar-proof, using the 2025 first quarter average building material prices. It will interest you to know that the average cost of putting up this shell house was Ghs 198,000 excluding cost of land. By inferential analysis having done the arithmetic, it was crystal clear that the Ghs 434,000 which is the price of the 2bedroom apartment in the multi-storey building in the TDC estate in Community 26, can build 2 units of shell houses on a 70ft x 100ft plot of land in locations such as Applonia, Saglemi, Shai Hills, Dodowa etc and still have a balance that can take care of the cost of the land, all things being equal. I am very much aware of the argument that shell housing could occupy large land size compared to multi-storey buildings, that is true but the question is, what will be the wisdom in building completed units of normal or multi-storey buildings that the masses cannot raise the lump sums required to purchase them. Again, I am also conscious of the fact that, shell houses may be more expensive after completing considering the incremental construction method involved. But here again, the same question, what will be the wisdom in constructing finished housing units at a cost that the masses cannot raise the lump sums required to acquire them. Isn’t it better to offer or adopt a concept that comes with the least upfront cost possible to enable the masses have access, even though it may cost slightly higher in price after completion in the future?. Anyway, that is still subject to debate in subsequent articles, you may send us your views via the email address provided in this article. But whatever the case may be, it is important for us to understand that broader stakeholder consultation is fundamental in finding a lasting solution to this crisis. Now, the question one would ask is, what would I have advised if I were consulted on these government affordable housing projects as an industry thought leader. Today’s article seeks to explore shell housing development model as one that has the potential to reduce significantly, the cost of homeownership and making
15Apr’25
HARNESSING THE POTENTIAL OF THE OFF-PLAN REAL ESTATE DEVELOPMENT MODEL TO MITIGATE THE HOUSING CRISES IN GHANA: EXPLORING THE OPPORTUNITIES, ASSOCIATED RISKS AND RECOMMENDATIONS
HARNESSING THE POTENTIAL OF THE OFF-PLAN REAL ESTATE DEVELOPMENT MODEL TO MITIGATE THE HOUSING CRISES IN GHANA: EXPLORING THE OPPORTUNITIES, ASSOCIATED RISKS AND RECOMMENDATIONS Published: June 2024 Author: Daniel Kontie Category: Real Estate In our previous article “Breaking the 90/10 Syndrome in Residential Real Estate Development in Ghana”, the concept of Off-plan Development Model was mentioned as one of the key recommendations that investors could use to acquire decent properties for either personal use or for investment purposes. Today, we are treating off-plan as a full topic, but before I go into the intricacies of this all important subject, let me first recommend that you subscribe to the Business & Financial Times Newspaper (B&FT), Africa’s leading Business and Financial Media platform.This will keep you posted on new industry trends as you follow and read our articles in the “Construction & Real Estate Digest”, whilst taking advantage of other equally resourceful business and investment information for your personal growth.Now, coming back to the substance of our discussion, what then is the Off-plan Development Model?. It is a real estate development or financing model where a developer sells properties at discounted prices to prospective buyers before the properties are developed. The properties are most often marketed using brochures, 3D renderings, virtual impressions etc. The concept is such that the developer allocates the land or work-in-progress of the property to the prospective buyer together with an agreed flexible payment plan and a project delivery schedule. So as the buyer is making the installment payment, the developer develops the property for as long as it may take to complete depending on the agreement between the two. The model though difficult to attribute its origination to any specific individual, available literature reveals that, it has its root from the United Arab Emirates (UEA) in the 1980s where it was used to finance large-scale real estate projects. The model gained popularity in the 2000s as it allows developers to secure funding for projects without relying on the traditional bank financing. Today, off-plan development model is widely used across the globe in jurisdictions such as Dubai, London and New York, where the demand for properties often outpaces the available supply from luxury residential properties to large-scale commercial developments. It is also heartwarming to announce that, the concept has gained root not only in Ghana in the African continent but also in Nigeria and other African countries, putting shelter over the heads of many in a dispensation where skyrocketing property prices becomes the order of the day. In the Ghanaian context, the field and historical information we gathered between the year 2000 to 2023 suggests that, many of the real estate developers used this concept to grow into the big brands we know in the real estate space today. I would have loved to mention a few empirical Ghanaian success stories in this regard, but will let it slide for want of time and space. But it is important to say this on authority that, many of the millionaire Ghanaian developers are products of the Off-plan Development Model until its abuse in recent times. The purpose of this article is to explore this profound concept with special focus on the key the opportunity it presents, the challenges or risks factors associated with it and to offer recommendations to stakeholders, starting with the opportunities the Off-plan Development Model presents. Opportunities of the Off-plan Development Model Just like all other models, the off-plan development model presents opportunities to all stakeholders same as it does with its challenges. Developers The off-plan development model offers several opportunities to developers, principal among these are one, Capital Financing; with this concept, developers are able use the early-bird sales concept and the discounted pricing strategy that often comes with the off-plan model to secure funding by selling units before construction is completed. This provides them with the capital needed to fund the project, eliminating the reliance on bank credit facilities or other financing methods that often come with huge cost of borrowing. Apart from this, developers enjoy considerable Risk Mitigation that may have been caused as a result of unsold inventory. This is made possible because it offers them the opportunity to gauge market demands to adjust strategies that reflects current market needs as the development progresses over time. Moreover, the developer has higher chances of raking-in huge returns on investment (ROI) or increased profitability selling off-plan properties at premium prices compared to post-construction sales. Buyers or Investors Buyers enjoy concessionary purchase prices because, off-plan properties are often sold below market rates compared to completed properties. Apart from this, buyers enjoy flexible payment plans over an extended period of time that eases pressure on their finances. Investors also take advantage of these discounted price offerings to acquire many units as investment to avoid the negative effect of cash depreciation as liquid cash depreciates faster compared to landed properties. In addition, buyers have the flexibility to customize or make modifications to the property as the construction work progresses: This enables the buyers to choose finishes, layouts, design features etc, allowing them to personalize their property to suit their current or future needs or both as may be dictated by modern or market demand, before the property is completed. Also, the model offers buyers the opportunity to enjoy capital appreciation on the property as the construction progresses. The market value of off-plan properties may rise significantly which most often is the case. Buyers therefore benefit from capital gains by purchasing a property at a discounted price and seeing its value appreciate reasonably at the time the project is completed. Major Challenges or Risks Associated with the Off-Plan Model Having known the opportunities this model presents, it is also important to be mindful of the risks associated with it; Developers Construction delays are common with off-plan. It may be as a result of general economic recession making buyers unable to honor their payment obligations according to plan or it may be as a result of the developer diverting funds into other projects at the expense of buyers. This may cause significant delays that can cause dissatisfaction among buyers. If construction takes longer than expected, developers may lose interest as a result of price increases in building
15Apr’25
DEMYSTIFYING THE DYNAMICS OF LUXURY RESIDENTIAL PROPERTY DEVELOPMENT IN GHANA: A PREREQUISITE TO A SUSTAINABLE REAL ESTATE WEALTH CREATION
DEMYSTIFYING THE DYNAMICS OF LUXURY RESIDENTIAL PROPERTY DEVELOPMENT IN GHANA: A PREREQUISITE TO A SUSTAINABLE REAL ESTATE WEALTH CREATION Published: April 2025 Author: Daniel Kontie Category: Real Estate Last week I had a telephone call from a potential investor from the United States of America and this was what ensued. “Daniel, I want you to get a land that can build at least 100 luxury homes in a gated community at a prime area in Accra. I have a 3million dollar investment to cash out to start with, and will top up to complete the construction of all the hundred (100) units before we start selling” he said. I laughed in my mind and was wondering if this man is really serious. He was so enthused with the real estate investment opportunities he discovered after reading my article titled “Breaking the 90/10 Syndrome in Residential Real Estate Development in Ghana”. He was so excited to the extent that he could not even introduce himself before going into the business of day. I could feel how passionate he was and his readiness to seize this investment opportunity. But honestly, I became worried for him because I noticed two fundamental errors in his statement about luxury residential property investment which actually informed today’s article on this subject. First and foremost, to build a one hundred (100) luxury homes in a gated community is a fundamental error, it won’t sell. Second, to build luxury homes to 100% completion before you begin to sell is another fundamental error, that won’t sell either. So, the question now is, why are these considered fundamental errors?. Do not go away; stay tuned as we demystify the dynamics or behavioral characteristics of the class of persons who patronize luxury residential properties in Ghana. The purpose is to help prospective investors or developers who are nurturing interest in venturing into this particular niche in the real estate market to enable them make informed investment decisions. But before we go into the substantive dynamics, let me first deal with the aforementioned fundamental errors raised in connection with my engagement with this prospective investor. The number one reason why it is not ideal to build luxury homes to a 100% completion before you begin to sell is this; people who buy these properties are high net worth individuals. This class of buyers has special tastes and preferences which may not have been contemplated or captured by the designer at the conceptualization or design stage of the property. These luxury property buyers are particular about their taste and preferences and will always dictate what they want in the property and what they don’t. So building your custom design that may not factor in the exact features that aligns with their tastes and preferences makes it extremely difficult for them to patronize the properties. High net worth individuals are people who have made their money and will go in for a property that has their preferred features and they don’t mind paying any price for it. Second, these are buyers who are exclusivity conscious. They do not want to live in mass gated communities. They believe that the wealthy are few in society and they will want to associate with their fellow few wealthy compatriots. Apart from the essentials of life, they believe that anything in mass supply is not for the wealthy. This is the reason why in affluent communities such as Cantonment, East Legon, Labone, Roman Ridge etc, you hardly find gated communities and even the few one may find, do not contain up to ten (10) properties. Isn’t this weird and interesting about this class of buyers, but anyway that is the reality any prospective developer or investor has to come to terms with if only they want to maximize returns on their investment playing in this segment of the real estate market in Ghana. Having said this, let us now go into the details, mind you, the religious implementation of these dynamics will make your luxury properties sell even before the construction process begin, all things being equal. We shall be examining seven (7) behavioral characteristics among which are these; class consciousness, location consciousness, space lovers, pleasure consciousness, privacy, safety and security consciousness, exclusivity consciousness and above all, environmental and sustainability consciousness. We shall be taking these one after the other. Class Consciousness It is important to let you understand that buyers of luxury properties are high net worth individuals and money is not really their problem. They are not just looking for a place to lay their head; rather their focus is on prestige. They will always like to acquire properties that stand out reflecting their perceived success and wealth for as long as it outstanding and located in an area known to be elite vicinity. So majority of these wealthy people seek homes in affluent, well-known neighbourhoods just for them to feel belonged. This is the reason why properties built in areas such as Cantonment, Labone, East Legon, Roman Ridge; North Ridge etc will sell at any price yet will still get buyers within the shortest possible time. Location Consciousness Again these high net worth individuals are very conscious about the location of the property. They will always prefer properties that are in proximity to major and top-notch amenities and facilities. For instance, these are frequent travellers and will always ask, how many kilometres is the location of the property in question to the airport, or to other amenities such as top medical facilities, schools, police stations, fire stations, the courts of law, state-of-the-art shopping malls, universal banks, forex bureaus, cimas, passport office just to mention a few. That is why one can easily find all these facilities and even more around vicinities where these people live for instance East Legon, Cantonment, Labone, Roman Ridge, North Ridge etc. Space Lovers This class of buyers like to have big houses. They like townhouses or mansions with spacious compounds to park at least between 4
15Apr’25
10 COMPELLING REASONS WHY INVESTING IN A GATED COMMUNITY IS THE MOST LUCRATIVE REAL ESTATE INVESTMENT IN GHANA
10 COMPELLING REASONS WHY INVESTING IN A GATED COMMUNITY IS THE MOST LUCRATIVE REAL ESTATE INVESTMENT IN GHANA Published: April 2025 Author: Daniel Kontie Category: Real Estate In my previous article on alternative financing options for real estate development published on February 23, 2025, I made a figurative remark about the real estate investment prospects in Ghana. I am pretty sure many might have taken it lightly and for granted. But the truth is, despite the industry’s unique challenges, it still remains one of the most promising sectors for investment in the Ghanaian economy. However, one’s success depends to a very large extent on the level of industry information one has, the choice of the type of real estate investment to undertake, and most importantly, one’s strategy which must not be anything less than a tactically superior blueprint that can deliver prompt results. The purpose of today’s article is give you a brief historical review of the rise to prominence and demand for gated communities in Ghana, the factors driving this demand and what makes it the most lucrative investment option in the real estate sector. To begin with, the rise in demand for gated communities started back in the 90s when the Ghanaian economy experienced a dramatic expansion as a result of the policies of the neoliberal regime. The regime witnessed a mass exodus of people into urban centers such as Accra, Kumasi, Tokoradi etc. This development led to a rise in demand for upscale housing options. So as the economy expanded so did the middle class who sought secure and exclusive living spaces as safe havens from the congested, noisy and crime-ridden urban central areas. So, gated communities thrived as a response to this demand, offering private and secure homes with modern amenities, perimeter walls, electronically controlled access gates, advanced CCTV surveillance systems, enhanced telecommunication services such as broadband internet connectivity, home land lines etc. Today gated communities have evolved significantly beyond just the provision of security and exclusivity; they offer a blend of security and luxury state-of-the-art amenities such as swimming pools, gymnasiums, supermarkets, medical centers, pharmacies, recreational facilities et cetera. These communities have suddenly become symbols of prestige, reflecting one’s perceived success and affluence in society. Now come with us as we walk you through the ten (10) compelling factors driving this demand for gated communities and how developers have leveraged on this demand to amass wealth for themselves, as we show you also, how one can take advantage of this demand whilst the opportunity still exist. These factors includes but not limited to the following; the growing need for security as insecurity grows, the growing need for privacy, the increasing need for class in society, the consistent middle class growth, the increasing need for peace of mind and serenity, land litigation and encroachment, value appreciation and investment appeal, easy access to social amenities, family values priority, sanitation and sustainability consciousness etc. The Growing need for Security Security has been a major concern and priority to many Ghanaians even though the national crime statistics looks good from a global perspective. This state of security consciousness has led to individuals trying to explore housing options that provide some level of security leading to the high demand for gated communities. I must admit that despite the challenges associated with gated communities; it is still by far the best option when it comes to security assurance for residence. The provision of the perimeter walls with man guard at the gates and in some cases, CCTV surveillance systems are key to maintaining some level of security in gated communities. There are even some communities where visitors will have to be interviewed at the gate and subsequently a telephone call placed on the resident in question to confirm knowledge about the visitor before he is allowed in. The provision of these security measures made gated communities comparatively safer, thereby causing a consistently high demand for gated communities since its inception in the housing sector in Ghana. Growing need for Privacy It is important to know that the paradigm shift from the African extended family system to the western nuclear family style has a significant impact on the demand for certain type of housing. People are more particular about their nuclear family and its privacy and the concept of gated communities is the only concept that appears to provide this level of privacy. In gated communities, hardly will you find stray dogs, goats etc loitering around or surprise visits from extended family members, friends, creditors, spies, intruders etc. It is sometimes even difficult for you to know your next door neighbor in gated communities. This shows the level of privacy one can have living in a gated community. Gated communities offer a high sense of exclusivity which appeals to those who value their privacy and would want to distinguish themselves from the rest of society. Today our society is full of people who are privacy oriented hence, the high demand for gated communities in Ghana. Growing need for Social class In Ghana, living in a gated community is perceived a symbol of high social class reflecting wealth and success. This is the more reason why most often, prices of goods and services in or around gated communities are expensive compared to the regular community. Prices charged for goods and services are high because of the perception that people living in gated communities are wealthy. So, in order to have that sense of being classified as wealthy and influential, people will go the extra-mile to rent or acquire homes in gated communities, contributing to the persistent increase in demand for gated communities. Consistent Middle Class Growth Majority of Ghana’s gated communities are a mix of low-end and mid-end properties which fell within the affordability of the middle class. Therefore, a consistent growing middle class will naturally lead to higher demand for these properties as this class is in desperate need of security, exclusivity and serenity. Ghana’s middle class has
15Apr’25
ALTERNATIVE FINANCING MODELS FOR REAL ESTATE DEVELOPMENT: EXPLORING OPPORTUNITIES IN THE UNCONVENTIONAL YET SIGNIFICANT MODELS
ALTERNATIVE FINANCING MODELS FOR REAL ESTATE DEVELOPMENT: EXPLORING OPPORTUNITIES IN THE UNCONVENTIONAL YET SIGNIFICANT MODELS Published: March 2025 Author: Daniel Kontie Category: Real Estate Apart from the mining and energy sectors, real estate is known to be the next most lucrative sector one can trust for investment in Ghana. As an industry practitioner and thought leader, I have personally witnessed persons who entered into this sector from humble beginnings at one sunset and woke up the next morning as multimillionaires, figuratively speaking. That is to tell you that, despite the industry’s unique challenges like any other industry, it provides an opportunity for a rapid transition of average individuals from low net worth to high net worth within a shortest possible time. Interestingly, entry into this sector is not as cumbersome as the mining and energy sectors that are highly regulated and requires huge upfront capital to start. All it requires is the land, a little capital, reasonable industry insight and your off-takers. But to let you appreciate the enormity of the opportunities in this sector, I will like to run you through a brief but the most recent real estate investment prospects without bothering you with too much literature and historical data. According to Statista (2024), Ghana’s real estate market value is set to reach a staggering value of USD$533.4billion, with residential properties expected to dominate at a projected market volume of USD$456.11billion in 2025. Meanwhile, the long run market growth is also expected to experience a consistent growth rate (CAGR 2025 – 2029) of 3.44% and a cumulative projected market of USD$610.56billion by year end 2029. The above projections demonstrates the opportunity for investment in the sector this 2025 and beyond, validating the usual and consistent annual investment prospects the sector presented over the past decades even though the housing deficit still remains considerably high. This deficit has been with us since 1950, reached a peak of 2.8million in 2010 and took a nosedive to 1.8million in 2021 during the real estate boom. However, the financing of real estate development has historically posed significant challenges for stakeholders especially in a market characterized by limited access to funding, volatile exchange rate and high cost of borrowing etc. The purpose of this article is to provide expert’s perspective on some of the most innovative financing alternatives currently reshaping Ghana’s real estate development landscape. We shall be looking at not the popular but the unconventional models that do not make the news headlines yet, can be very instrumental in changing the narrative in the real estate financing sector in Ghana, keeping in cognitive faculty, the following for today, for want of time and space; Construction Financing, Off-plan Financing, Joint Venture Financing and Barter Financing. Construction Financing Model Construction financing refers to a type of short-term loan facility extended to a developer usually within the project’s scope to develop a property. The developer uses the funds to cover the cost of construction from inception to completion. Unlike the traditional loans and mortgages, construction financing are specifically designed to meet the needs of the construction process and are normally disbursed in stages as the project progresses. The funds are paid to the borrower in tranches based on the completion of specific construction targets, such as substructure, superstructure, roofs and fittings installations etc. Each tranche is paid based on a satisfactory assessment report conducted by the creditor. Construction finance can be obtained for all types of property development provided the project is commercially viable. The borrower is only required to pay interest during the construction period, and the principal is repaid once the property is completed and commercialized. It presents several advantages particularly for new industry entrants that may have viable property proposals but do not have the necessary funding. It enables developers to initiate their projects without having to secure all the capital upfront. It also helps to keep a consistent funding flow from start of the construction to finishing of the project, ensuring that developers can complete their work while minimizing cash flow difficulties. This helps eliminate the incidence of abandoned projects which has been a common industry phenomenon. Besides, the facility can also be converted into a permanent mortgage once the construction is completed, easing the short-term loan repayment pressure on the borrower. However, one disadvantage the developer faces is the possibility of the lender repossessing the partially completed project in the event of a project failure, because the project in question is most often used as the collateral for the credit facility However, it is important for one to note that, construction financing can easily be obtained when one is able to convince lenders that the project can generate revenue to repay the lender as quick as possible. For this reason it may be difficult to obtain even though it is one of the best financing options. Banking institutions resident in Ghana known to have played a significant role in granting construction financing facilities over the years are First National Bank, the Republic Bank, Zenith Bank etc. The Off-plan Financing Model It is a real estate development or financing model where a developer sells properties at discounted prices to prospective buyers before the properties are developed. The properties are most often marketed using brochures and 3D virtual impressions. The concept is such that the developer allocates the land or work-in-progress of the property to the prospective buyer together with an agreed flexible payment plan and a project delivery schedule. So as the buyer is making the installment payment, the developer develops the property for as long as it may take to complete depending on the project schedule and timelines. This financing option has been used strategically by many Ghanaian developers and gains made satisfactorily by parties involved. The off-plan financing model presents many advantages for developers because one gets the opportunity to use other people’s money to make more money whilst the buyers who do not have the bulk sum to purchase complete property gets the opportunity
22Mar’25
BREAKING THE 90/10 SYNDROME IN RESIDENTIAL REAL ESTATE DEVELOPMENT IN GHANA: THE CAUSES, EFFECTS AND RECOMMENDATIONS
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
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