Meridian Group: Radwan Dakmak Discusses Real Estate Development in Ghana and Presents Atlantic Tower

Interview with Radwan Dakmak, CEO of Meridian Group

How have you been faring during the pandemic?

Unfortunately, there is a lot of uncertainty going around. You cannot really predict what is going to happen next week. Every day you hear stories about the vaccine, that the AstraZeneca is not working for some parts of the world, and the implications of people not being able to travel. There are a lot of things which really affect our business. Now, in my case, travel directly affects my operation, because we have both sides: commercial and residential. Our residential project is directly targeted to the expats and once the expats cannot travel, it really hits us very hard. Our business is down 50% in terms of the residential. We did very well with the accommodation side because most of the deals were signed before the pandemic.

What is your assessment of the residential sector?

Concerning the residential market, it has been down ever since the pandemic started with a lockdown due to the fact that a lot of expatriates left Ghana. Our market is directly related to the presence of the expatriate community. So, it directly affects us. Things have normalized a bit, but the demand is still low. It will take a while for the situation to restore back to pre-pandemic status. The oil and gas sector was highly affected due to the drop in the price of oil. At some time during the pandemic, the oil price went negative. This means they would pay you to take oil, which has never happened in the history of the oil business. The oil and gas, which is our main client, and the related services have all been hard hit due to the pandemic and the consequence of the drop in the oil price. Prices have improved a little now for the oil and gas, but the companies are very speculative. Nobody has a clear vision of what is going to happen in the very near future. For that even, they do not bring in more expats. So, there are a lot of consequences of the pandemic.

Is the office side following the same trend? What is the status of the sector?

Even the commercial sector has been affected. We have 100% occupancy of Atlantic Tower in Accra and this is mainly due to the fact that it is a new building, it is a grade A building, and compared to all the buildings around us, we are at an advantage simply because we have done it top spec. The unfortunate part of the business is that there are no new clients. We have been able to fill up but we filled up from existing clients. This means it was a very competitive market. People wanted to downsize, people wanted to change offices for so many reasons, and it was an opportunity that Atlantic Tower had just been completed. I have to compete with the current situation. Our prices should have been much higher than what we were able to achieve, but again, due to the pandemic, and even prior to the pandemic, the market was slow. With that dropped price, a new building, good location, good facilities combined, we were able to fill the occupancy. But generally speaking, the market is still very slow even in the commercial side. I can see that my neighbors around most of the properties are really struggling – some because they are old, some because they are not flexible in terms of payment, some because some clients wanted to relocate and downsize, etc.

Do you feel this will change with the vaccine rollouts? How will the sector look in the future?

In Atlantic One, we were awarded an EDGE (Excellence in Design for Greater Efficiencies) certification which is supported by the IFC and the World Bank, which represents excellence in development. We were the first building in Ghana to be EDGE certified.

Eventually, we have to live with this situation and life has to come back to normal as much as possible. So, people will start coming back and investing. Ghana has a strategic location in the West African region in the sense that we are politically mature. It is one of the safest places to do business in West Africa if you compare it to Côte d’Ivoire and Nigeria, so this always puts us at an advantage. We need to commend His Excellency, the President Nana Akufo-Addo, for pushing for the Free African Trade. Ghana being the Secretariat will also boost investment in the country, especially in the industrial sector, because now anything that is produced in Ghana could be supplied to the whole of Africa without any taxes. Another one of the contributions to the improvement of our economy is that we have the biggest harbor port, Tema Harbor, in Africa, which also puts Ghana in a strategic position for exporting goods. We have good policies being implemented and a safe environment politically. We always look at the political stability for investors to come down here. We call Ghana home and Africa is home. But a lot of European investors or foreign investment are skeptical and are careful of where to invest. Luckily, Ghana is one of the good places to invest. This combined with the political stability and Ghana being positioned as the Secretariat for the Free African Trade will encourage a lot of investors and I look at it positively. There is hope that things will bounce back, especially in Ghana and in the region.

You are launching a new phase for the commercial building. Can you describe the project? What will be the key aspects, the competitive advantage of this new project?

Because we are full with Atlantic Tower Phase One or Block A, we are planning to commence the finishing of Block Two. The structure is already up. The plan was to have a hotel apartment concept. But for now, it is being changed to another office block. There is demand and we are hoping for an improvement in the business environment. Location, quality, and flexibility with our tenants makes us always the first place to call. We are targeting end of the year to very early next year to begin renting.

Are there any projects coming for the residential side?

At the moment, we have slowed down. There were a lot of projects in the pipeline. I had two projects that we were working on. But for now, we need to pause a little and see how the market dynamics change and then based on that we can move accordingly. We need to be very careful. Real estate is a very interesting and critical sector. It is so capital intensive to buy the land and develop. These are multi-million dollar projects. So, you need to be extremely careful, especially nowadays where banks are also skeptical in lending money and the price of lending is becoming even more expensive.

How do you integrate the environmental aspect into your projects?

In Atlantic One, we were awarded an EDGE (Excellence in Design for Greater Efficiencies) certification which is supported by the IFC and the World Bank, which represents excellence in development. We were the first building in Ghana to be EDGE certified. This is a big thing for going green. The material we have used is very efficient in terms of energy and water consumption. Tenants are very happy. The tenants now can see a big difference in the amount of power they used to consume compared to what they consume currently. Even if you quantify the consumption per square meter, it is much lower than any other existing property on the market. We intend to follow the same concept by doing energy efficient finishing material, especially with the ACs to reduce the power consumption, with the water consumption, and glazing which is where you have a double glazed glass to reduce the heat from entering into the offices. Nowadays, I do not see any sense in not implementing those factors because everyone wants to save energy and be efficient. This is also a marketing tool to encourage clients to come into your building when they know they can save quite a substantial amount of money on their utility bills.

What is your vision for in the next two to three years, the medium term? How do you see yourself and how do you see the company? What is your ambition for the company?

During our last interview, I told you that hopefully the next time we have the interview, Atlantic Tower will be the talk of the town and we will be one of the top office buildings in Accra. Now, we have 100% occupancy. In those days, the market was tough, but I had a lot of optimism in what we were doing due to the fact that things were predictable. Now, I cannot predict and no one can predict what will happen. Our hope is that the pandemic will be over and we will embark on new projects to continue striving in our industry. But, we need to also be realistic in that it is a very difficult market. If a new strain of the virus comes up again, it can throw all our plans and all our optimism away. So, we are hoping that the vaccine is successful and that by the end of summer, the majority of the population in Europe, in America, in the Far East will be vaccinated. Thank God here in Africa we are less impacted, medically speaking. We have been affected from the indirect consequence of the world, but in Ghana, specifically, the rates are reasonable compared to other parts of the world. But it is a global village. Now, everything affects everyone. Honestly, I am very skeptical. I am very careful about my optimism. We need to always hope for the best. My hope, my wish, is that we can survive this pandemic safely. It would be a good achievement.

What has been your inspiration? What drives you to do what you do?

I have a philosophy: you can never own success, you can only rent it. And rent is due every single day. I have framed it and I want to hang it in my office. This is something that I read almost every week and preach to my staff because this is what pushes us to maintain the standard and achievements that we have reached for. It is very important. This is my motto, I would say, for the following years. Yes, I succeeded in doing Meridian, I have succeeded in doing Atlantic, but I always remind my staff and remind myself that you can never own success. This means that you need to always work towards doing a good job to maintain where you have reached. You can never relax in any business. You always need to step up, do what is needed, and adapt. The most important thing nowadays is to adapt to whatever the situation is. We went through crisis. 2020, surprisingly, even to myself, was our best year ever, in spite of the pandemic, simply because we had the right product at the right time. We were flexible in our terms and conditions. What I agree to now I would not have agreed to earlier in terms of flexibility, in terms of payment, being more accommodating to the client’s need. It is supply and demand. My main objective and what I always believe in is adapting to the situation you are in. This is the key to any business’s success. I gave a lot of rent free periods to my clients during the pandemic, which I know some real estate developers refused to do. This contributed to being understanding to the demands or the problems of your client. It is not only the money that you want from your client. Your client should be making money to be able to pay you. We have foregone a lot of profits to be able to help our clients at a time where banks had no mercy. Unfortunately, the banks had no mercy on us as well. We had to continue to pay our interest to the banks, in spite of the pandemic. The best they could do was to defer payment. I have not heard of a bank who would give interest free periods like we the developers have done for our clients. But this is the situation we find ourselves in and we need to adapt. 2020 was our best year ever in the company, but the profits went down. We got bigger revenues, bigger income, but less profit because certain fixed costs did not change, specifically, the interest that we have to pay to the banks. But again, you need to look at it in a positive way. We have been able to cruise out of the pandemic hopefully until now, and then we always look for better times in the future. This is just one or two years in the history of your career or life. It is a big thing to talk about while you are in the situation and it is very critical to handle it. But once you cruise out, I hope and pray, we look back and remember that those difficult days are in the past. Personally, I am an optimist and I always look to the positive side of things. I hope things will improve. It is all speculative and it all depends on conditions that are beyond our control.

Surely the clients will remember how you have helped them during this time.

Self-satisfaction and morale are very important – when you have done something, you have achieved an objective, you have succeeded in what you are doing. But whatever situation we find ourselves in is out of our control. Personally, I would say in my company, I have achieved what I wanted to achieve in terms of occupancy, in terms of completion, in terms of delivery to my clients. Now, the other part of it was not in my control. I had to drop the prices, I had to sacrifice some free rent periods that I cannot control, so I blame to force majeure and unforeseen consequences. Generally speaking, I have succeeded in what I am doing. What happens next year? Nobody knows.

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