Former CEO of Stanbic Bank Ghana, Dr. Alhassan Andani has urged real estate developers to manage their capital to enable them survive this turbulent economic times.
According to Dr. Andani, it will not be profitable for developers to borrow money to invest in their projects considering the current economic crises and the incessant rise in the prices of materials.
This, he said during the Annual CEOs breakfast meeting of the Ghana Real Estate Developers, organized by the Association in Accra, yesterday, Tuesday, February 28, 2023.
“…The current economic environment is characterized by very high interest rates, high exchange rates, a lot of governmental pressure because, this economy is driven largely by government activity.
“I think anybody in the real estate sector must be taking some time to refocus their business, preserve their capital, ensure that they can let go of certain high market margins and cover whatever capital sits in their current assets and look at how to plan for the future. This is because, it will be difficult now to borrow and or import anything…So I will advise that most of the developers rather re-engage and look at how they can manage their capital.”
Dr. Andani
Ghana’s housing deficit is estimated to total about 1.8 million housing units. Despite what may seem like a construction boom, there’s still a huge demand for housing to shelter a population that now has more than 50% of people living in urban areas. Adding to this demand for real estate has been Ghana’s emergence as a destination for people in the diaspora, seeking to establish some form of permanent presence in the country. This healthy demand has ensured that despite the economic downturn, real estate prices have remained on the ascendancy, delivering healthy returns to investors.
The ascendancy in the prices of real estate in recent times tend to affect the demand for housing as individuals and businesses will struggle for or not at all be able to patronize homes or offices for themselves, despite constantly growing demand for housing every day. On the other hand, should this happen, developers will also be losing out.
Speaking at the Annual CEOs Breakfast Meeting, Francis Asenso-Boakye, Minister of Works and Housing, noted that the present global economic crisis has affected the real estate market and subsequently home buyers.
For instance, he mentioned that the current depreciation of the cedi against the major foreign currencies is a development which had resulted in increase in the cost of building materials. This, he said has adversely affected aspiring homeowners and builders in the country.
Meanwhile, government intends to engage the leadership of Ghana Real Estate Developers Association (GREDA) on how best to cushion its members to absorb the economic shocks which are negatively impacting their businesses.
Government is working to provide support to real estate developers
Touching on the theme, ‘Overcoming The Turbulence In The Current Financial Crisis’ – The impact on the real estate industry, Mr. Asenso-Boakye revealed that government was working out a solution to help support real estate developers.
Just as did the Former CEO of Stanbic Bank Ghana, Mr. Asenso-Boakye also challenged developers to look within for cheaper building materials to help reduce their cost.
“We think that it is time for developers to look at the various import mix and shift their attention towards more local materials for building and construction.”
Mr. Asenso-Boakye
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