There is a sustained high demand for housing in Ghana, particularly in Accra as evidence by the speed with which new housing unit projects are being developed in new residential areas. Kofi Ahovi takes a look at how HFC REALTY is helping to bridge the housing gap.
Ghana has a large stock of unmet demand for housing, especially in Accra and the other major cities. The huge gap between the growing demand and much slower growing supply offers good prospects for investors in the housing sector. The prospect for the sector largely derives from the improved macro-economic climate in Ghana that has transformed the country into an investment hub in the sub-region.
Demand for decent housing remains vibrant and provides significant impetus for investors in the housing industry.
Ghana has an accumulated residential housing backlog of about 700,000 units. The current annual demand of about 140,000 housing units and the accumulated backlog of 700,000 indicate that over 60% of national housing requirements are unmet.
The market for houses in the country is therefore enormous and has potential for further high growth.
It is in the light of this that HFC Realty Company Limited (HFC REALTY)was established by the HFC group to provide decent housing to meet the needs of this fast growing market.
HFC Realty Company Limited, which is the property investment and management subsidiary of HFC Bank, is wholly owned by the bank, and was incorporated as a private limited liability company in May 2003.
It develops, maintains and markets houses and also provides a wide range of services including property management, valuation, real estate consultancy and project management.
HFC Realty is run by a team of professionals whose experience and expertise include property development, marketing and the sale of property, property valuation, project and estate management, property documentation, finance and accounting.
HFC REALTY is a member of Ghana Real Estate Developers Association (GREDA), which has over 460 members.
The housing gap offers HFC REALTY an opportunity to develop residential and commercial estate properties in near prime locations for a wide range of customer; both resident and non-resident, Ghanaian or Foreign nationals.
HFC REALTY is being driven by the desire to contribute to the socio-economic development of the nation through the provision of high quality residential and commercial developments for the high end of the housing market within the newly developing areas. The provision of new, well planned up-market residential developments would not only be attractive but also necessary because of the high demand for housing concentrated in the middle and high-end of the market.
Looking beyond Ghana itself, the Company is positioning itself to be the preferred real estate company in West Africa for the provision of good quality housing solutions. As part of its efforts to achieve this, it is in talks with some strategic partners to extend its business to other countries in the sub-region. Projects undertaken by HFC REALTY are mainly concentrated in Accra and Tema. Last year, it constructed a total of 56 residential buildings in the Tema Community 25 which have already been sold. This year, it has built about 42 residential houses and others are under construction as well.
The Company is able to put up houses in record time using new building technology to improve its housing delivery
HFC REALTY has partnered Manet Housing Limited to build 125 semi-detached housing units. Currently, it is in partnership with another private institution to produce 110,000 residential houses.
The company also bought land from the Tema Development Corporation (TDC) to put up 52 bungalows within the Tema Communities 18 and 20.
HFC REALTY expects to start the construction of a commercial complex at the Kwame Nkrumah University of Science and Technology (KNUST) in Kumasi by June this year at an estimated cost of US$3million. The complex makes provision for banking halls, super markets, eateries, conference rooms, offices, shops among others.
It has already completed the first phase of the construction of a complex jointly owned by the University of Ghana and HFC located at Ridge in Accra. The second phase is expected to commence next year at the cost of approximately US$32 million.
The company plans to construct affordable residential buildings for the middle class at Tema Communities 23 and 24. According to the General Manager of HFC REALTY, Nana Andoh Asaam, the project will take off soon.
HFC REALTY is in the process of acquiring a land bank of approximately 671 acres at Kobekro located in between Tema Community 22 and Akatamanso on the Tema-Akosombo road.
It is also conducting feasibility studies in other regions of the country for future investments.
There is a high level of competition in the housing sector in the country, which has had a major influence on pricing as buyers normally draw comparisons.
Most developers have created a niche market and all the houses being developed have ready buyers. Expectedly, over the long term, sustained increase in supply will lead to a high level of competition in the sector, resulting in downward pressures on prices.
To own a building from HFC Realty Limited, one needs to pay 40% of the total cost before or during construction and additional 40% when the building is in the roofing stage. The remaining 20% is paid during finishing.
However, if a customer is paying through an HFC Bank mortgage, the bank will provide 80% of the price in a form of a long term loan while the customer pays the remaining 20% upfront. It takes between 10-20 years to repay the mortgage.
Most of the buildings that HFC Realty Limited builds for its middle income clients are expandable two-bedroom semi-detached which go for US$66,500 and three-bedroom detached that sell at US$90,000. The company also caters for special needs of its customers by way of customization.
The biggest problem facing the supply of the real estate industry in Ghana is lack of long term-financing considering the fact that real estate involves long-term investment and therefore requires long term financing, which is hard to come by. The main form of financing available is short to medium term which has very high commercial interest rates.; this, the GM says is having a toll on the industry although fortunately for HFC Realty Limited, it has HFC Bank behind it to provide funds when the going gets tough.
Access to land together with processing of land title documents is another major challenge facing developers; these result in very long delays which impact negatively on the development process.
The GM opined that one sure way of improving housing delivery is the availability of skilled labour in the building industry beside those of the creation of land banks and long-term financing.
He believes the industry is still buoyant and given the support could help bridge the housing deficit in Ghana.
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