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InterviewsOctober 11, 2023
Exploring Ghana’s Real Estate Potential: An Interview with Jude Kwapong, COO of Othniel Ghana
Jude Kwapong, Chief Operating Officer at Othniel Ghana
- Written by Sandra Francisco
- Published: October 11, 2023
Interview with Jude Kwapong, Chief Operating Officer at Othniel Ghana
What is your perspective on the current trends and the state of the real estate industry in Ghana?
I believe there is substantial untapped potential within the real estate sector in Ghana. To put it in context, if the government acknowledges a housing deficit of over 2 million units, it is clear that we have only just scratched the surface. I do not think we have even addressed 100,000 of these units yet. Looking back at previous years, I came across a report indicating that we were constructing approximately eight to ten thousand homes annually. Given this pace, it will take us many years to address the issue, unless we see a significant influx of people. So, there is undoubtedly a wealth of opportunities to be seized in this sector.
What factors are impeding these opportunities? Can you elaborate on the challenges or circumstances affecting the real estate sector?
Fundamentally, it is related to land availability, infrastructure, funding, and additional duties. Most of the materials we require are not produced locally, even though we have been performing well. Nowadays, we do have talented manufacturers in the Western region. However, Ghanaian preferences have evolved, and they now have a strong inclination towards foreign tastes and products for their homes. This means that lowering our standards will not satisfy them; they still want the same quality but at more affordable prices. And until we see improvements in exchange rate stability, pricing will continue to be a challenge.
We have observed that the real estate industry has become highly competitive, with numerous companies and developers entering the market. Could you share your approach to navigating this challenging business landscape?
We have strategically positioned ourselves by focusing on prime city locations such as North Labone, Kanda, and Roman Ridge. Our uniqueness takes various forms. We prioritize developing smaller communities, apartments, and townhome projects. This approach allows for a more exclusive experience, with fewer residents sharing the facilities. It is not to say that those catering to larger numbers are not excellent as they have their own clientele. It is similar to choosing between a boutique hotel and a bustling one when you travel; each has its advantages depending on the individual's preferences.
For instance, our initial North Labone project features 17 apartments, including studios, one-bedroom, two-bedroom, and three-bedroom units. In Kanda, we have 24 apartments consisting of studios, two-bedroom, and three-bedroom configurations. Additionally, our two other projects in Roman Ridge each comprise eight homes within a community. This approach defines our current strategy.
Looking ahead, we plan to launch a project next year with a higher number of units due to the increasing demand in a bustling community, which is becoming akin to the new Airport Residential area. Rising land prices mean we need to build taller structures. However, for now, our focus remains on our existing approach, which has proven successful.
The COVID-19 pandemic brought about significant changes. Some individuals are now more cautious about where they choose to live, considering the possibility of another pandemic. Having fewer people in a given space provides a sense of safety. We have noticed a growing interest from older individuals who are nearing retirement and prefer to avoid crowded living situations. This is how we are navigating this evolving landscape.
Could you provide us with a brief overview of Othniel Ghana, its inception, and its current status?
Othniel officially commenced operations in September 2015. Our initial plan was to focus on mass affordable housing, and we kickstarted by acquiring 90 acres of land in Dodowa. We had intentions to acquire more land in the Eastern Region and other areas, with the goal of providing affordable housing options for all. However, things took a turn in 2017. We explored various avenues, including discussions with banks and government agencies, but the challenge we encountered was pricing. Everyone wanted lower prices and extended payment terms, such as 10 to 15 years. This model did not align with our position as a startup, and we could not commit substantial funds to a project and wait for such extended repayment periods. Consequently, we had to reconsider our entire vision.
We recognized an opportunity in the city development space, where people were ready to buy and willing to accept payment terms ranging from 24 to 36 months, which was more feasible for us. Before this shift, we also attempted an affordable government housing project, but it did not progress as expected. We built some small-scale developments and engaged in real estate consultancy with a Chinese firm, which aimed to enter the affordable housing market alongside us. Unfortunately, that collaboration did not materialize, leading us to shift our focus to city development.
In 2020, we acquired land in the city and commenced active construction in mid-2021 after obtaining the necessary permits. Prior to this, we successfully completed a project with the 37 Military Hospital, which included eight ATM farms. This project served as a visible demonstration of our capabilities, boosting our confidence to take on more city-based projects.
Currently, we are in the final stages of completing our first city development project, named The Zach, with the show unit completed and construction finished. We have also broken ground for the Kanda project, known as The Zebedee, which comprises 24 apartments, including studios, two-bedroom, and three-bedroom units. Additionally, we have projects in Roman Ridge. The city has generated significant interest and activity compared to the outskirts, but we have not abandoned our plans for peripheral development. We are planning to acquire 100 acres in Adukrom, located just 10 minutes from Safari Valley. Our aim is to build retirement homes with payment options that accommodate provident funds or social security, making it less burdensome for our clients. We are also excited about a recent contract we secured to construct the Catholic Business Tower, which will be the tallest building in the northern region. This demonstrates our commitment to both estate development and construction, and we are currently managing these aspects concurrently.
It is evident that there is a wide range of activities happening within your company. Beyond general construction, do you offer any other services?
We have established several subsidiaries primarily to manage our projects, at least for the time being, before we expand them into full-scale commercial operations. One such subsidiary is dedicated to facilities management, which oversees the maintenance of all the apartments we construct. Additionally, our construction arm, known as Suwk Construction, handles all our construction projects. If we secure bids for external projects, it is Suwk Construction that takes charge of executing those developments.
You have mentioned the importance of your target audience having purchasing power, which is indeed crucial. Could you elaborate on the specific demographic you have in mind when it comes to your clientele? Are you primarily catering to a particular group, such as retirees?
Our properties are accessible to a wide range of individuals. We even offer in-house financial counseling to assist potential buyers. In the case of our Kanda project, for instance, we had a group of friends who pooled their resources to purchase a unit for the purpose of renting it out and generating income collectively. I found this concept brilliant, and if I had the means, I would certainly consider it. Teachers from one of the international schools approached us with a similar idea – they wanted to own a unit and earn rental income from it. We engaged in thorough discussions with them, and I am confident we will be hearing from them soon.
Apart from viewing property ownership as a place to call home, we encourage people to see it as an avenue to generate substantial income. Crowdfunding is a concept that we are keen on promoting. I believe that we lack such initiatives in our region, especially for housing and infrastructure projects that require significant funding. There is potential for individuals to come together, much like shares being floated, and contribute to these projects while earning returns. We are open to discussions, and our properties are available to anyone and everyone. Whether it is a family, friends, or a group of individuals, we want to make property ownership and investment accessible to a diverse range of people.
Can you discuss your investment approach? You mentioned seeking investment, so what types of investment opportunities are you exploring?
We are actively seeking partnerships and collaborations, especially for projects that require pre-financing. Our aim is to engage verifiable and credible financial partners, including individual investors, who can participate in various phases of the project. This approach allows for transparency, with clear timelines and payment structures. We are very open to these opportunities and have successfully engaged with friends and peers from our networks, some of whom may not be able to fund entire projects individually. However, by coming together, we can pool resources, kick start these projects, and establish a sharing mechanism once revenue starts flowing. This collaborative approach ensures the safety and success of our endeavors.
Are you the sole owner of the company, or are there other stakeholders or shareholders involved?
For the company itself, I own 100% of it. However, I do work with other directors who assist me. But when it comes to specific projects, we often enter into partnerships. In such cases, we engage lawyers to draft solid agreements, and we are ready to proceed.
Let's shift our focus to the construction of your developments. Can you provide an overview of the developments you have undertaken in the past five years?
Over the past five years, we have completed several projects. We started with the construction of four-bedroom homes in Teiman. Additionally, we finished developments in the Teiman area. Our initial vision, which was later modified, centered on building in the outskirts of Accra. This was our starting point, and it took some time to establish ourselves there.
We then secured a contract to construct eight ATM farms within the compound of the 37 Military Hospital, located at the entrance area. This project brought us closer to opportunities for land deals in the area. However, obtaining permits for projects in the city proved to be more time-consuming. While in the outskirts, the local assembly could provide approvals quickly within a week. In the city, every detail requires thorough scrutiny and it takes a longer time, especially when dealing with multistory buildings.
One of the challenges we encountered was related to land ownership. When land falls under the jurisdiction of the Estate Housing Company, we are required to submit all engineering drawings to both the Estate Housing and the local assembly. We need permits from both entities before commencing construction. In contrast, when the land falls under the Lands Commission, we only need to provide one set of engineering drawings to the local assembly. This dual approval process tends to extend the timeline.
Eventually, we obtained the necessary permits and commenced construction in September. As of now, we have completed all 17 units and are in the process of painting, fitting the kitchen, and addressing a few other finishing touches before handing over the keys to tenants.
What is your vision for the upcoming years, and what are your key goals?
Our vision entails achieving significant development in Chado. Currently, we are in the process of acquiring land, and all the necessary designs are in place. Our goal is to be fully prepared so that within six months, we can commence construction once we obtain the required permits. Additionally, we are exploring the concept of retirement homes, with the aspiration of having approximately eight to ten units available for viewing. These units will be situated in the outskirts of town or in the Eastern Region and will predominantly consist of one and two-bedroom homes. We recognize that as individuals age and possibly live with a partner, they may prefer a more compact living space. Consequently, we are actively exploring various construction methods to make these homes more cost-effective. Our aim is to ensure that, in the event that SSNIT approves your retirement funds, it can adequately cover the cost of the eco-homes we plan to construct. Currently, we are in the planning phase for these particular projects, and we anticipate completing all our townhomes and the Kanda project by next year.
Is there anything in particular you would like to address that we have not touched upon?
We are actively seeking additional partnerships, particularly in the realm of construction, encompassing both debt and equity financing for our projects. This approach would enable us to expedite the completion of certain projects, as opposed to solely relying on internal fundraising efforts. We are aware that foreign funds, depending on their origin, often come with more favorable terms than domestic funds, including attractive moratorium periods. Therefore, we are actively exploring opportunities to collaborate with investors to further our construction initiatives and expand our project portfolio.
What led you to venture into real estate, considering its competitiveness and allure? Were there specific reasons behind your decision to pursue this particular field?
I originally pursued a career in banking after completing my education. I worked as a forex trader for a few months. However, it soon became apparent that the job market in Ghana at that time had limited options, and your first permanent job often sets the course for your career in the next decade or two. Personally, I felt a strong desire to explore something different from the banking sector.
My father had worked with Taysec Construction, which was a significant player in its time. He often shared stories about the construction industry with me. While I did not have formal engineering training, I was eager to learn from him. Whenever he saw me at home, he would engage me in conversations about construction, emphasizing that it was both challenging and exciting. He explained that with the right team and guidance, I could succeed in this field. I decided to give it a try, with his guidance and encouragement.
Construction, as any Ghanaian business owner would tell you, requires your presence on the ground. You must be passionate enough to endure long hours in the scorching sun, working alongside the laborers until the day's tasks are completed. I took this to heart and began to understand the intricacies of construction, from its initial stages to assembling the right team.
I delved deeper into the industry by researching its future, which led me to the concept of affordable housing. While it may sound straightforward, it is a complex endeavor. We had to adjust our strategies along the way, but I am confident that we will achieve our goals. My father has been a significant source of inspiration on this journey.
I have grown to love what I do now, and I am actively involved in the field. I find myself at the construction sites most days, even on Sundays. I enjoy being in the thick of things, interacting with the workers, ensuring that everything is done to perfection. I am constantly learning and adapting to the evolving industry trends, such as making buildings lighter. So, you can often find me on site, even on Sundays; overseeing our projects.
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