Investors in the real estate sector are shunning opportunities in the country due to issues relating to the land tenure system, high interest rates and access to funding and infrastructure, Executive Secretary of the Ghana Real Estate Developers Association (GREDA) Samuel Amegayibor has revealed.
He described the country’s land tenure system as one of the most crucial elements troubling the real estate industry, such as when landowners double-sell their lands to developers.
Speaking in an interview with the B&FT, Mr. Amegayibor explained that even though there have been some programmes introduced over the years to boost the sector, such as the World Bank sponsored project, Land Administrative Project (LAP I &II), the impact was very minimal.
“In Ghana, our land tenure system is one of the most crucial issues when it comes to investors coming into the country. They are very concerned about our land tenure system with regard to documentation, ownership and all the trouble we go through. Even when you have title to the lands, you still get injunctions placed on them. That is one major reason why investors prefer other jurisdictions which have a better land tenure system.
“LAP 1 and LAP 2 are Land Administrative Projects the World Bank embarked on about 16 years ago to try and help Ghana deal with the problem of land registration, but they don’t seem to have worked well over the years,” he noted.
The real estate mogul bemoaned government’s inability to implement the Housing Fund, which was instituted after launch of the National Housing Policy to deal with funding issues for the country’s real estate developers.
This, he said, was just lip-service. In reality, developers borrow from the same commercial markets with high interest rates – just as all other sectors
“When you check the interest rate in Ghana it is extremely high, and so it overburdens us. We all borrow from the commercial market. In 2015 we launched the National Housing Policy, and part of the strategy to deal with funding was to establish a Housing Fund so that people who have housing projects can go and borrow at a very low interest rate to build. But that fund, as I say, is always lip-service.
“Nothing has been established in terms of housing funds for us to have access to this funding, so we are all borrowing from the same commercial market where everybody is borrowing.
“Most funding agencies find real estate a very risky business, and so our ability to access funding right now has become even worse than before,” he said.
Mr. Amegayibor added that about 35 percent of the cost for housing in the country comes from infrastructure-water, roads and light; therefore, if government makes these readily available to developers it will help attract more investments into the industry.
“I don’t know of anything government has done for the real estate sector as we speak now, apart from enacting policies in consultation with stakeholders. As to tangible support for developers, I don’t know of any. They need to do something in that area.
“When we say support, it is not about them giving us money. Since it costs a real estate developer so much to bring infrastructure, government can look at making those things accessible – bring roads, electricity, water close to the lands so that the developer can tap-in from the door and distribute within the estate. But nothing has been done, every cost is borne by the developer,” Mr. Amegayibor noted.
