Post-pandemic growth prospects in Ghana's real estate sector

The effects of the Covid-19 pandemic have been felt more acutely in some segments of Ghana’s property market than in others. Therefore, sector recovery and growth will likely be fragmented as all areas adapt to medium- and long-term shifts in market dynamics.

Office Space

In 2019 demand for grade-A office space increased, yet it was significantly outstripped by supply. Average rents that year were $30 per sq metre per month – their lowest level in seven years – and vacancy stood at 25%, according to real estate consultancy Broll. Rental prices remained at a similar level throughout 2020, but the unprecedented demands of the pandemic forced landlords to waive payment for extended periods as most companies adopted a work-from-home model. Many businesses have continued with that format and are revising down their space requirements, placing additional pressure on office rents. By July 2021 the average monthly price per sq metre for grade-A space was $25-28 as demand continued to decline. Ghana is currently estimated to have in excess of 1m sq metres of total office space. Demand and rents for grade-B stock have remained relatively stable throughout the pandemic and could help to prop up the commercial office segment as some companies that choose to bring employees back to the office may opt to downgrade to cut costs as they absorb the financial ramifications of the pandemic.

Looking further ahead, Ghana’s perceived political stability and increasingly favourable business environment is likely to attract international corporations back to its prime office spaces as the effects of the health crisis lessen. Growth will likely be slow, however, with many companies expected to adopt a blended remote and office-based blueprint, and rents will continue to reflect the reality of lower demand and high supply – the latter owing to the completion of various office developments that began prior to the pandemic.

Retail

The slowdown in retail activity brought on by lockdowns and social-distancing measures was less pronounced in Ghana than in many other countries. This was due largely to the Ghanaian government’s swift response to the outbreak and subsequent relative containment of the virus. Following the downturn that was unavoidable in 2020, demand for retail space has risen steadily throughout 2021, while supply has remained steady year-on-year.

The increase in demand is expected to continue as international tourists return. In September 2021 Fitch Solutions forecast that visitor arrivals would grow by 47% that year and by 28.4% in 2022. Fitch also foresees consumer spending power returning to pre-pandemic levels by the end of 2021. Together, these factors should see a steady rise in retail trade, with positive knock-on effects for landlords as higher footfall will likely translate to higher occupancy. Average prime retail rents ranged between $20 and $40 per sq metre per month in the first half of 2021, and while rents may eventually rise, landlords are likely to focus on occupancy in the short term.

Industrial

The industrial segment of Ghana’s real estate sector has traditionally been less dynamic than others, but demand for industrial space has increased throughout the pandemic due to the greater uptake of online shopping and food deliveries, which necessitated more logistics facilities. Beyond that, the One District, One Factory initiative should stimulate a significant increase in demand for industrial land and buildings as construction of its constituent factories gathers pace, bringing about the need for complementary storage real estate (see Construction analysis).

Likewise, the January 2021 activation of the African Continental Free Trade Area, which has its headquarters located in Accra, is intended to spur national industries and cross-border trade on the continent. This could see demand for commercial premises in Ghana take off, given that a cornerstone of the government’s overarching industrial strategy is to position the country as a strategic logistics centre in West Africa.