Appolonia City, A Mixed-Use Development Project in Ghana by Rendeavour

Bright Owusu-Amofah talks about mixed-use developments in Africa and presents Appolonia Development Company, a parent company of Rendeavour, which is the largest urban land developer in Sub-Saharan Africa. He also shares his vision for the future of Appolonia City.

Interview with Bright Owusu-Amofah, CEO of Appolonia City

Bright Owusu-Amofah, CEO of Appolonia City

What is the concept of mixed-use development? What are the challenges that mixed-use development faces in Africa?

In a number of African countries, there is a lack of planning, especially in the capital cities, from Accra to Nairobi to Lagos, and this causes heavy traffic. People migrate from the living areas to the working areas in the mornings and the same thing happens after working hours. Mixed-use is a concept where you have a live, work, and play environment that connects and enhances all those facets. It works very well in Africa simply because of the lack of planning and the distance that people need to travel. We need to start looking at how we plan our developments so that people can walk or cycle to work or shopping. It is quite new and makes our development quite unique. We came into a market where there were a lot of residential developers. Sometimes, we even find that it is a bit difficult to explain what exactly we do because they are comparing what makes us different from other residential developers. Most of what these other developers do is just build residential projects and they are not really tackling the use or the need or the wider problem in the market. If you build a nice residential community, people still have to leave it and take their cars to go and buy bread or travel two or three hours to get to their office. In Accra for example, most people leave their homes at 5 am to get to their office by 8 or 9 am. For us, this is not the right way of doing things, nor is it sustainable. We have planned 2,325 acres of land into a satellite city which will have various uses. There will be social infrastructure such as schools, clinics, and hospitals within the same vicinity, a business park, industrial park, and both residential and commercial areas. The commercial areas in Appolonia will become the next Airport City.

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Why is mixed-use development not booming all over Africa? What are the challenges in Africa to create more developments of this kind?

We have very good planning, investment, and infrastructure, and most importantly, urban planning and enforcement which will be one of our hallmarks to make sure that we maintain a certain standard.

Your traditional African developers tend to be quite small. Most developers are doing on the average ten units a year with land banks of 20 to 50 acres. There are very few that are doing the level of development and scale that we at Rendeavour have. In other markets, like South Africa and Europe, you tend to see redevelopment of the existing CBD areas, but these tend to be a bit difficult in existing cities in sub-Saharan Africa. You need skill, a large piece of contiguous land, and you need capital to develop. All of these factors, if you know Africa quite well, mean that large-scale projects are not necessarily the easiest to take on here. The current system does not make it easy to acquire land. The macroeconomic and financing regime does not make it easy to obtain cheap financing. Finally, there is the market itself. Not many businesses are going into this area, which frankly, we need to start considering. Another way to potentially address this is to start having PPPs with the government, where the government can provide the land and provide developers with a commitment to put in the infrastructure. They do the planning and developers can just come in to partner with government and develop top structures. In the absence of that, private companies like Rendeavour are the ones who need to step in and support the process. As Africa continues to develop there is an increasing need to provide these kinds of models.

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What is the social impact of these mixed-use projects in Africa?

There is a significant social impact. In a project such as ours, each project requires typically about $250 million investment in the infrastructure alone. Comparing this to other sectors such as oil and gas and other extractive industries, traditionally, these investments are geared towards exporting African commodities. In oil and gas, you are taking oil out of the ground. With gold or diamonds, you are taking something out of the ground. Whereas with this type of development, you are actually putting infrastructure on the ground. Roads you cannot take away. Putting electricity in Appolonia, we have built a substation to distribute power, which you cannot take away. Putting in water, which is a basic requirement, you cannot take that way. And putting in housing, which is addressing the social need, cannot be taken away. These projects typically create a lot of jobs. Our developments easily catalyse a further 1 to 2 billion dollars in investment. In Kenya, for example, we have a development called Tatu City where we have attracted the likes of Unilever. Unilever is now about to build its largest operations and distribution center in Kenya and they will potentially spend millions of dollars. Appolonia has attracted the Total company and they will fill our service stations which will each cost not less than 3 or 4 million dollars. By providing them with the land, they are spending about 5 million dollars in FDI, job creation, while creating a service to fulfill an ever present need. Because of the nature of our development, we always form a very strong partnership with the surrounding communities and original land owners. One of the key things that we make sure we instill in all of our contracts is local content. All of the first jobs created go back to the surrounding community. The value that the projects bring to the uplift immediately translates to all the surrounding land. Communities around us have seen their lands appreciate in excess of 100%. The communities benefit through job creation and more disposable income that they have to invest in more social infrastructure. We develop schools, hospitals, clinics, all these aggregate in order to enhance social needs in the communities as a whole.

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Can you describe the group itself? Which countries are you present in? What differentiates you from other groups and what are your competitive advantages?

I am the CEO of Appolonia Development Company. Our parent company is Rendeavour, which is the largest urban land developer in Sub-Saharan Africa. We have a portfolio of seven projects across five jurisdictions, Ghana, Nigeria, DRC, Kenya, and Zambia. We have in excess of 30,000 acres of land that have been acquired and re-zoned into mixed-use developments. We are unique in that we have yet to see any company in Sub-Saharan Africa that is doing what we are doing on the scale with which we do it. We are helping to address and solve a situation that exists in a number of African countries, which is lack of planning and urban infrastructure. Across most of our jurisdictions, we saw this and we realised the opportunity. As much as there is a commercial element to it, our shareholders are the sort of people who are very committed to Africa and want to see that whatever investment or dollar they are spending will translate into addressing the social needs of the countries in which we operate.. We are trying to help plan these cities in partnership with the jurisdictions and governments we operate in. We also hope this model can be replicated in other parts of the countries where we are present.

What stage is Appolonia in today in 2018? What is available to the public?

The project itself started with the acquisition process, going through extensive due diligence in 2012. By mid-2014, we completed the planning process, got all the necessary approvals, and fulfilled the conditions precedent to be able to draw down on funding, the key one being land title. So, we now have title on the entire piece of land. Since then, we have invested heavily in our urban infrastructure. Today, we have brought power from 18 km via high tension cables, and have built a substation for distribution. We have connected the site to water, which we bought underground from 14 km away which will be distributed to our residents. Currently, we are rolling out all the internal infrastructure. Two years ago, we started coming up with products for the market. For instance, we have a development called Nova Ridge, which is a gated community concept. These are quite popular in Africa because they provide a sense of security, living in an environment with likeminded neighbours, and a good level of development and planning control. You will not wake up one day and see a church right next to you with shouting and drumming and dancing 24 hours a day. We are also selling plots of land from 350 m² to 1,000 m². It is actually our most popular product to date, and we have sold over 350 plots. We also have homes for middle income customers which retail from about $80,000 to $150,000. Today, there are 70 units under various levels of completion. Last year, we attracted a British investor who bought about 30 of these units. We have sufficient interest this year from foreign investors that are looking to invest in housing. We have been able to attract key tenants that are coming into the park, such as a major Greek company called Alusynco that manufactures aluminum products like windows, balustrades and doors, We have Total, Puma Energy, another local player called Crown House, and many more. The development is beginning to take on a life of its own. We are in the advanced stages of discussions with Association of Ghana Industries (AGI), which is the largest and major body for industry in the country. We partnered with them on the industrial park to attract their members as well and we have signed an MOU with them to move this forward. On the social side, there is a school already under construction and it is expected to open its doors to the public in September this year. We have transactions with churches looking to come in as well. We have recently started significant discussions with retailers. Since the residential side is now beginning to reach critical mass, retailers are also showing interest in coming in. In the next 12 months, there could potentially be a shopping center under construction.

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In two to three years’ time, what will Appolonia City be?

In another two to three years, I see Appolonia City becoming the next East Legon. East Legon is a well thriving community for mainly middle to high income Ghanaians north of Accra. It developed very quickly and became an attractive area that was able to attract most of the affluent and high net worth individuals in Accra. The sad thing about East Legon, is that it was not planned out. Today, you see property worth millions right next to a kiosk or shop. Most of the major streets are now becoming an eyesore. We have learnt from examples such as this and Appolonia City will be done properly. We have very good planning, investment, and infrastructure, and most importantly, urban planning and enforcement which will be one of our hallmarks to make sure that we maintain a certain standard. To do this, we are working closely with the government to ensure that Appolonia City becomes a truly mixed-use community. On the back of jobs created as well as potential jobs to be created in the area by attracting more companies and FDI, we have been working with government to designate Appolonia City as a Special Economic Zone. Within the site, we have control and investment to realise the infrastructure, but we also need assistance from the government to ensure that surrounding infrastructure coming to the site is improved and we are currently in discussions concerning this. Once we have all these milestones achieved in the next two to three years, I would imagine that Appolonia City will be a better version of East Legon that Ghanaians can be very proud of.

 

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