Dream Realty: Real Estate Developer in Accra, Ghana

Karim Ibrahim gives his assessment on the real estate sector in Ghana from a foreigner’s point of view and mentions some of his projects. One of them is The Octagon, a business center currently under construction, located in the heart of Accra Central.

Interview with Karim Ibrahim, Managing Director of Dream Realty

Karim Ibrahim

Let’s talk about the real estate sector itself. You have an outside perspective because you come from Lebanon. Can you give us your opinion on the sector here?

The Octagon is the first project that we started, it is built on 3 acres, which is about 12,000 to 13,000m2. The location is very impressive, it is literally the roundabout of downtown Accra. We have ventured to begin a huge development consisting of offices, service departments and retail.

The real estate sector here in Ghana is quite new. The first time we came to visit Ghana was in 2007. To be honest with you, there was possibly only two construction sites in Accra. I shall only be talking about Accra because I only work in capital cities. It was a really virgin territory, I remember there was one office building being built along with one residential compound. Demand was increasing quickly for reasons we didn’t really understand at the time. People said that it was due to two factors: one reason was that at that time there was a rapid increase in gold prices and as you know Ghana has huge gold resources, and so people became very interested in Ghana. The other reason was because of the unfortunate events happening in Côte d´Ivoire, which meant that a lot of businesses started to move into Ghana for security reasons. Hence we made the decision to invest here. At the time land prices were very encouraging, so we ventured and purchased in early 2008 three good plots of land in Accra. Then everything changed of course in June 2008 with the announcement of the oil discovery and a few months later the successful elections taking place with no unforeseen events. So we decided to start one of our projects and since then there has been a huge and rapid increase of construction projects in Accra.

I think the market is still somewhat virgin, but I believe eventually all these projects will be absorbed into the market. Currently the sector is still a bit slow. I understand it to be because although there is very rapidly increasing growth, demand is taking its natural course if you like in this country.

Oil was discovered here in 2008 and by the time they started to produce oil it was 2010, which was only 3 years ago. We are still only in the early stages but everybody has very high expectations for the country.

Can you tell us more about your projects, particularly The Octagon?

Dream Realty

The Octagon is the first project that we started, it is built on 3 acres, which is about 12,000 to 13,000m2. The location is very impressive, it is literally the roundabout of downtown Accra. Like in any developing city, most of the development is currently taking place around the airport. We believe that this will take place for a while but in time people will come back to the centre which is where all the Ministries, banking headquarters and courthouses are. We have ventured to begin a huge development consisting of offices, service departments and retail in the centre of Accra. We have been working on the project for the past two and a half years and we still have a year to go before we finish this project.

The second project is a high end residential development on the sea front called The Riviera. It used to be an old hotel during the 50s and 60s called The Riviera Hotel. We bought the land in 2008 and it is going to be our second project. There will be four residential blocks of large sized apartments and there will also be a boutique hotel with 68 rooms and some bungalows on the beach. We are trying to look for a high end boutique style hotel.

The third project is a very large 6 acre plot of land that we have on Independence Avenue, which is the main avenue in Accra. It is close to the airport, just before the Golden Tulip Hotel. It has a large frontage of 130m on the main road. It is going to be a mixture of commercial and residential developments but to be honest we haven’t started plans for it just yet. I want to wait for the market to settle down first to make sure we do the right thing, especially in that area because there are a lot of projects mushrooming up.

What makes The Octagon stand out compared to other projects on the market?

There are different factors. First of all the location; it is a really impressive location in the centre of Accra. Secondly, in the centre of Accra it is the only business centre under construction. Across the street is Novotel, which is an old hotel, there is the Mövenpick hotel that opened last year and there is also the Kempinski hotel. As a business centre we are the only one in downtown.

The scale of this project is very large, as one entity this is the biggest construction in Accra. We have 60,000m2 of sellable area and another 50,000m2 or parking and communal areas, so that is over 110,000m2. It consists of four main components; one of which is the parking, as it is a roundabout we have to create vertical parking; so we have two underground and four over ground car parks, totalling about 1500 car parking spaces. We have 22 very big shops overlooking the three streets as it is a roundabout. There are three main blocks, two of which are for offices and one is serviced apartments. There is also a beautiful 3000m2 garden that connects the three blocks together on the fourth floor. In addition, the serviced apartments are going to bring a lot of interesting elements to the project, there is going to be 1600m2 of conference areas, a helipad on the rooftop, and a rooftop swimming pool with a gym and obviously there are the offices. We have already started to sell units and sales have started to pick up very well. The nice thing about The Octagon is that small companies can take up a minimum office area of 85m2 or they can go up to 2000m2 per floor. Therefore it is really very flexible in terms of what sizes are on offer. I think it is the only project that is offering sales, most commercial office buildings being built are going to be only for rent. We are giving the opportunity for people to buy office space and the prices per m2 relative to what is on offer in town are really encouraging.

real estate Ghana

What are the challenges that you are facing? In what aspects could you do with help be it in terms of technology, resources, investment, etc.? Are you looking for investors?

As I mentioned, we came here in early 2007 and by the time we decided to go ahead with this project it was the end of 2008. At that time the challenges were enormous. The idea of coming to Ghana was to find a very nice piece of land, a very good contractor and to visit the country from time to time. We soon realised that was nearly impossible especially on a scale such as this. So we had to do everything on our own, we had to be our own contractor and to build up a company from scratch to take care of everything from sales, construction, purchasing to management. That was a big challenge at the beginning, but things are changing very quickly; a lot of companies and distributors and a lot of good products are now coming to Ghana. We are starting to find that we don’t have to import everything into this country anymore. Everything that I can think of that relates to construction is opening up in Ghana or has an agent here in Ghana which was not the case at all in 2008. This is the case on the ground.

Financially there is one issue in Ghana and that is the banking and the interest rates. We would have loved to use the banks in Ghana to finance some of this project but the problem is that the interest rates are extremely high, so we had to contact the international banks via the relationships that we have from Beirut and so on. Unfortunately we are not able to work with any local bank. I hope this will change soon.

Another challenge is to educate the market which has never seen a project this size before. We are trying to get every single person interested in this project to come to the construction site and to go on a tour of the site to understand what we are doing and to see the scale of the project and to see the future possibilities that it will offer to the centre of Accra. This has taken a lot of effort but I expected this to be the case and it is why we decided to launch this project first because it is very visible. We felt that this project will be great for us in the future, because as I mentioned we are selling these units so that people can buy them and rent them out themselves and we can use the funds to start the next project.

What is your vision for the company over the next 5 years?

The Octagon

I have work here in Ghana for the next 10 years at least. These are the projects that I am hoping to achieve, after all, as I mentioned this is our first project. If I feel that the project is not profitable enough then I shall finish it and continue to manage it but I shall not start another one. Nevertheless I am hoping to finish this project and to start on the Riviera and then the other 6 acre plot and we also have two other pieces of land to develop. Real estate is a little bit slow as a business which means that I definitely have 10 years of work ahead of me in projects that we already have planned. I hope to finish all these projects and then in 10 years we shall see what happens.

What about your vision for the future of Ghana?

We call Ghana “Africa for Beginners”. This is very true, it is an extremely sub-Saharan country where you definitely get the African experience, but on the other hand it is extremely safe if a little bit slow. Maybe other businesses would rather go to Nigeria where there is faster growth and returns, but if something happens there you cannot put the project on your back and leave. We made the decision to come to Ghana rather than going to a high risk country because this is a long term project that needs four or five years and Ghana is a country where things are done slowly but surely, which is what we look for in real estate.

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