Economic Update

Rising incomes among the growing middle class are feeding optimism in retail property in Ghana, which currently has one of the continents fastest-expanding economies.

Ghanas GDP is expected to grow by 7.3% this year in real terms, thanks in part to the continuing influx of capital associated with the burgeoning oil and gas sector. Combined with increased urbanisation, this means that the demand for dedicated retail space particularly property that caters to modern retail outlets, which currently accounts for some 5-10% of the overall market is growing rapidly.

The middle-class has really seen growth in their expendable income, and people in Ghana are spending a lot more than before, Edmund K Asamoah, the manager of A&C Square shopping centre in Accra, told OBG. This means that there is definitely a large demand for retail space.

This is backed up by a recent report from South Africas Broll Property Group. Broll, which provides property and real estate services for commercial clients including in Ghana, where through its directly owned subsidiary Broll Ghana it operates two of the largest shopping centres in Ghana, A&C Square and Accra Mall estimates that around 110,000 sq metres of retail space will become available over the next 12 to 24 months, both in Accra and in provincial centres.

Developers are investing in land with the aim of building retail space, though in much of the country, the mall concept is still a very new one. The majority of the malls in Ghana tend to be relatively small at an average size of around 5000 sq metres, and a far cry from the massive landmarks that dominate shopping in the Middle East, where centres such as the UAEs Mall of the Emirates spread over 600,000 sq metres.

Similarly, the vast array of street stalls and small shops means that most transactions tend to happen in the informal or small-scale retail segments, accounting for roughly 90% of all retail activity. As a result, at the moment, the countrys malls tend to draw in high-end retailers and thus have a relatively wealthy clientele; one of the challenges for investors will be broadening Ghanas malls consumer base.

But this is not to say that there is no space for top-end international brands. While there are presently few malls in Ghana, new projects are likely to change the dynamics of the market, according to Kofi Ampong, the CEO of Broll Ghana.

The development of the new mall projects will segment the market more thoroughly, said Ampong. The upcoming projects will probably be a lot more focused on a specific target market. The new malls will take some pressure off Accra Mall and meet demand in certain locations of the city.

Accra Mall, together with A&C Square, dominates the citys retail property market. Accra Mall currently has the highest footfall, attracting around 7m visitors per year, according to Broll. The $34m project, which has 22,900 sq metres of leasable space, was developed by a joint venture between the late Joseph Owusu-Akyaw, a private Ghanaian investor, and Actis, a UK-based private equity firm, and opened in 2008.

A&C Square, formerly known as A&C Mall, was opened in 2005 by local real estate company A&C Development. It has since has undergone a number of expansions, bringing the total size of the development to nearly 10,000 sq metres.

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Economic Update