Discussing Real Estate in Ghana and Nigeria with Kojo Ansah Mensah of Mobus Property

Interview with Kojo Ansah Mensah, CEO of Mobus Property Limited

What is your general assessment of the real estate sector in Ghana and Nigeria?

The real estate sector in Ghana, similar to Nigeria, is loosely structured. We have a sector which has gone through some evolution starting from people traditionally building to occupy which has been the trend for a while. But now, we have seen the entry into the market by companies. Now as investment assets, we have seen a lot more of purchases for rental or for returns which is growing significantly in the market. In the residential sector, there has been some consistent growth, especially in the high end section where there are a lot more cash buyers where people who have access to liquidity are buying second and third properties for rental. A significant number of those buyers are Ghanaians living abroad or people returning home who are looking to have properties that they can come back home to, especially as we have seen Africa becoming a more attractive investment destination. In the commercial space, especially the office spaces, over the past 10 years we saw a big boom. But, because of the general global economic trends now, rental rates are dropping. So, there is a surplus of office spaces in the market which is not going to do well for the short term until the global economy fully opens up and there are more companies coming into the country. We are certainly seeing progress and growth, but the industry is still loosely structured. When most buyers are cash buyers, you do not get to benefit from the multiplier effect of the real estate sector where you can have real estate investment trust listed assets in secondary markets where people can trade to bring additional liquidity into the market. The residential space is going to continue to see some growth, but we are yet to see how things will pan out once we get past COVID and a lot more people are traveling, a lot of people are moving around, and business starts opening up.

What is your scope of business? What is your key competitive advantage and how do you bring that to your projects?

In the residential sector, there has been some consistent growth, especially in the high end section where there are a lot more cash buyers where people who have access to liquidity are buying second and third properties for rental.

Since inception, we have always looked to be ahead of our competitors by offering our clients more than what the average developer would offer. Our focus is more in the residential space, apartments, and now townhomes. If you compare our projects and the competition in that geographical area and in the market in general, you can see that we try to give more than what our competitors are offering. We started off as a high end developer, so most of our properties that we developed – Knight Court in Cantonments, Capella Place in East Legon, Phoenix Villas in Cantonments – are targeted towards the high end. But then, we decided to take a step into the middle income section. We brought that same expertise we have developed from providing quality homes, such as in Richfield Lifestyle Estate in East Legon Hills, where we give more value to clients even though we were doing a middle income property. In terms of office space, we have partnered with Group Five to develop Capital Place. Given the state of the market now, our focus is more on residential development. We have done similar work in Nigeria using that same culture of providing more quality than what is in the market now to our clients, such as with our project in River Park Estate that stands out amongst the competition. Park Apartments is our current project under construction. It is in Cantonments, which is one of the high end areas in Accra. Park Apartments is 52 units of studios, one bedroom, two bedroom, and three bedroom high end apartments. The construction is about 40% to 50% completed. We are looking to complete this project by the end of the first quarter next year. In terms of the kind of luxury that we are offering, it is much more than what our competitors are offering. That is our competitive advantage that we bring to market. You get more for the same price that you pay with another developer.

Do you work on your own or with partners? Are you looking to develop relationships with investors?

The company evolved out of our parent company, which is a private equity firm from which we have gradually grown the assets of the company. We did this with the view to position the company in a state where we will be able to attract investment. Typically, when we do a project, we start with our own equity and when we get to a certain stage, we bring in some form of debt funding. If we would able to attract the right capital or the right partner, there is a lot more that we could do in terms of growth. We want to position the company for growth to meet the needs of some of the projects that we have in the pipeline. We have assets and land banks that we want to develop and we believe that we can create good projects, but due to the limited ability to raise funding, we are working at a comfortable pace, now. We want to position ourselves to attract the right partners to let us grow quickly and take advantage of the opportunities that we are seeing in the market.

What are some success stories you have achieved since the company’s inception?

Capital Place was our first office park development in Accra, which we developed with Group Five and completed in 2016. That was a major success for us. We have received recognitions from international organizations and other awards. The testimony is in the value of our brand and how people accept our projects. We have a philosophy of doing a certain level of pre sales before we commence any project and the brand that we have developed has been generally accepted so we are quite successful. The biggest achievement for us is that we have built a solid brand.

Do you use environmentally friendly materials in the development of your properties? Are there innovations that you bring to the market regarding this?

Certainly, we are becoming more environmentally conscious. In the market that we find ourselves in now, cost management is very critical. Until now, some of these technologies and methods came at a very high cost and the market has not gotten to the stage where it compensates for this. Given the nature of the competition, it is a cautious approach to be able to employ some of these technologies. In terms of the evolution of solar in Ghana, for example, about two or three years ago, it was a very expensive enterprise. But, we are gradually seeing the development of solar and costs are coming down. In our last project, for instance, we introduced some aspects of solar to reduce the footprint, the dependence on the grid, and also the management cost. The benefit of going green or being environmentally conscious is a long term game but we are still working on reconciling this. We are going to continue to incorporate all these applications into our developments, but we are also mindful of the cost implications so that we do not price ourselves out of the market.

What is your international reach and your interaction with the diaspora? Are you looking for other markets?

Mobus belongs to a group which is quite pan African. Our parent company, Jonah Capital, is present in Liberia, Zambia, South Africa, so we certainly want to go out into those areas. Our parent company had interest in Nigeria so we went to River Park Estate where we have quite an extensive project and we are looking at more opportunities. We have explored other African countries that we would like to expand to and we want to expand further into Nigeria as well. With COVID and local economic issues across the continent, we need to be more strategic with some of these internal expansions. Nigeria is quite a big market so we still have some growth potential here. We are looking to roll out a new project in Nigeria before the end of the year. When we entered the Nigerian market, we entered in the affordable housing space. Now, we want to also replicate what we are doing in Accra in Nigeria with a high end development. By the end of the year, we hope to have started another project in that direction. As far as our engagement with the diaspora is concerned, about 60% to 70% of our buyers are diasporans that have been abroad. It is a function of the cash base economy or sector which needs to change or grow. Quite a large number of our sales come from the diaspora. We are consistently engaging and working with partners to go to housing shows and doing social media activations to reach some of these markets. As local as we are, we have a broad and wide perspective.

What are your current priorities?

The priority for us now is to be very engaged with our clients. We are not oblivious of the level of competition in the market and we are not arrogant enough to dismiss it. We have similar companies doing the same thing that we are doing, so our focus now is how we sharpen our marketing efforts to bring in more buyers to the company. Our projects are getting to the stage where we have to start bringing in debt funding. We are being very aggressive on sales which is the topmost priority at the moment.

What is your vision for the company in the medium term, three years’ time? What would you like to have achieved?

For the past year, we have been working on a five year plan of where we want to see the company. Certainly, we want to be doing more of what we are doing now but on a bigger scale. Most importantly, we want to create a portfolio of assets that generate recurring income for the company. For instance, in projects in Nigeria, we are looking at building a number of houses and people are buying these houses, but we need to have an asset base of income generating assets. We have looked at building a restaurant in our development. We have the opportunity to build a secondary school in that project, as well. We want to not just be a construction company where we build properties and sell them; rather, we want to have an asset base where a third party investor can invest because the income levels that are being generated are attractive. Within the next three to five years, every project that we are going to be doing is going to be on a bigger scale because we want them to become investable assets where you can reference that portfolio and say we have X asset base that generates Y level of income per annum.

What is your inspiration? What drives you to do what you do?

First and foremost, I definitely draw a lot of inspiration from my Chairman, Sam Jonah. He has accomplished quite a lot and he is also versed in the role, so it gives me the necessary opportunity to grow. Certainly, with coming into the company at the time that did and going to Nigeria to start the operations there and grow the business, for me, it is about doing the best that you can in whatever situation that you find yourself. It has been my guiding principle that we have to do whatever we need to do to get the job done. We had to go through a very tough growing curve in Nigeria, which is a very different market, but failure was not an option. That is for me at the core of everything.

What have been the effects of the COVID pandemic on your business and the sector?

COVID has really changed the dynamics of doing business globally. I am quite optimistic that Ghana and Africa are going to bounce back. I am looking forward to what is going to happen within the next six to twelve months because Ghana was on a fast growth path right before COVID hit. The whole world was coming to Ghana which was going to give us tremendous economic gains, but because of COVID everything had to shut down and slow down. There is still a lot of pent up energy that Ghana is going to benefit from once things open up. I am very optimistic that Ghana is going to be a strong investment destination. We are positioning ourselves as a company to be able to take advantage of some of this growth that we expect to see. Even with the COVID period, we still were able to maintain a plateaued growth. There is a lot of confidence in the country and we are still seeing a lot of interest coming from abroad. I am really looking forward to when COVID is over and the effect that it will have on our economy.

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