Broll Ghana Ltd., the West African nation’s largest property manager, said developers will more than double the amount of retail space available in the capital within two years, pushing down prices as companies from Shoprite Holdings Ltd. to Edcon Holdings (Pty) Ltd. open stores.
The company, a unit of Johannesburg-based Broll Property Group, will seek to manage about 70 percent of the 100,000 square meters (1.1 million square feet) that will be built, Eric Abu, a portfolio executive, said in an interview on Nov. 21 in Accra, the capital. There are 93,000 square meters of retail space in the capital, he said.
The average retail rent rose about 50 percent to $60 to $65 per square meter since last year for Accra, he said. That’s higher than the $31 in Namibia and less than the $80 in Lagos, Nigeria, according to a Broll report.
“We have seen an upsurge in development for both retail and residential,” Abu said. “We anticipate the market will soften and prices will ultimately come down.”
Companies from Samsung Electronics Co. Ltd. to Edcon, South Africa’s largest clothing retailer, are opening stores in West Africa’s second-biggest economy to lure consumers in to the oil exporter. Gross domestic product has expanded at a faster pace than the average for sub-Saharan Africa for the past 10 years. Edcon, controlled by Boston-based Bain Capital Partners LLC, said it will open a store in Ghana in the second half of 2014.
Workers from Nigeria, South Africa, Europe and the U.S. are fueling demand for office space and expatriate housing as well, Abu said. The population in the Greater Accra region surged 38 percent to 4 million in the decade to 2010, according to the statistics agency’s census published last year.
The property manager will consider listing on the Ghana Stock Exchange within three years, Abu said. State-owned Social Security and National Insurance Trust owns 32 percent and Accra-based SIC Insurance Co. owns 17 percent of the local unit, he said. Broll Property owns the rest. The company is the local affiliate of Los Angeles-based CBRE Group Inc., which manages more than $90 billion of property assets globally.
Broll started in 2006 managing SSNIT and SIC Insurance towers. The company manages the Accra Mall, the first major shopping center in Ghana, and will manage West Hills Mall, which will be the nation’s largest when it opens next year.
Broll controls about 88,000 square meters of office space, 30,000 square meters of retail and 26,000 square meters of residential. The average price for office space is $35 to $40 per square meter, more than double the price in the Central Business District of Johannesburg and Sandton in Johannesburg, according to Broll data. Companies are showing more interest in building their own offices instead of renting, Abu said.
Residential rental space for expatriates will double in the next two to three years, Abu said. Rental prices for expatriates has increased steadily over the past five years, triggering a 60 percent increase in supply in Accra, he said.
Average annual rent for expatriates three-bedroom homes ranges from $42,000 to $50,000, while rents in the western port town of Takoradi rose to as much as $7,000 per month after the offshore Jubilee oil field was discovered, according to data compiled by Broll. In Manhattan, three-bedroom rents are an average $46,344 a year. Developers will build 1,800 of these units in the next year, doubling the amount of units available in Accra, he said.
“Demand has so far always outstripped supply but we’re gradually entering a phase where we might see oversupply in the next three years,” Abu said.