Mr. Patrick Ebo Bonful, the President of the Ghana Real Estate Developers Association (GREDA), has expressed worry over lack of affordable land and suitable locations for development in the country.
Addressing the annual CEO’s Breakfast Meeting in 2024 in Accra, Mr.Bonful, said the scarcity of affordable land and suitable locations for development, coupled with inadequate housing construction finance and home mortgage financing, emerged as primary challenges.facing real estate developers in the country.
To counteract these challenges, GREDA has introduced GREDA Investment Limited to address the supply-side challenges by assisting members with land acquisition and basic infrastructure needs. Simultaneously, plans for the GREDA Real Estate Investment Trust (GREIT) are underway, aiming to fill the demand-side gap caused by insufficient home mortgage financing.
The urban and peri-urban areas face additional challenges, including the high cost of land, land litigation, and limited space, making it arduous to provide affordable housing for low and middle-income individuals. Factors like escalating building material and labor costs further complicate the delivery of affordable, adequate, and sustainable housing options.
In examining the broader context of housing delivery, there exists a critical interplay of opportunities and challenges. Innovative and sustainable design and construction practices offer a chance to create cost-effective, environmentally friendly, and energy-efficient housing options. Leveraging technology, such as green building solutions and incorporating local building materials, can contribute to a more sustainable housing construction mix.
A significant portion of the employed population in Ghana engages in non-agricultural self-employed activities in the informal sector, with the real estate sector serving as the highest source of employment within this context. Real estate developers contribute not only to economic growth but also create vibrant, clean communities that address communal, socio-economic, and socio-cultural needs in a comprehensive manner.
However, amidst these opportunities, challenges persist. The lack of affordable land and suitable development locations, coupled with inadequate housing construction finance, remains a hurdle. Governments often prioritize other issues over housing, leading to insufficient funding.
Nonetheless, the real estate sector contributed significantly to Ghana’s GDP, reaching GHS 11 billion ($1.9 billion) in 2020.
Mr. Bonful said GREDA is actively pursuing a review of the Home Mortgage Finance Act of 2008, advocating for the inclusion of non-bank financial institutions and non-deposit taking corporate organizations in providing home mortgage financing.
This initiative aims to foster competition and innovation, enhancing the demand-side financing paradigm.
While mortgage statistics in 2024 reveal that home mortgage loans represent 70.2% of consumer debt in the U.S., Ghana’s mortgage market remains underdeveloped, with a low mortgage debt to GDP ratio of 0.32% as of 2021. This can be attributed to weak legal and regulatory frameworks, economic challenges, and the absence of long-term funds.
The President of GREDA again stressed the need for a Ghanaian equivalent of ‘Fannie Mae’ to stimulate the secondary home mortgage market through the securitization of home mortgage loans. This strategy would allow lenders to reinvest in more home mortgage financing products.
He urged.proactive solutions to meet the demand for luxury housing and the need for affordable and sustainable housing options.
Source : African Property Magazine. -Joyceln Magazine