The Octagon: Offices, Commercial Space and Five-Star Hotel in Accra by Karim Ibrahim

Interview with Karim Jamil Ibrahim, Managing Director of Dream Realty

You are quite active in the real estate sector in Ghana. You have your major project, the Octagon, office spaces in the corporate segment, the commercial segment, your hotel apartments project that has now turned into a full hotel. What is your assessment of the real estate sector in 2018? What are the current trends?

2018 was a slow year in Ghana. The new government came in over two years ago with a new vision. They are working on fixing the macroeconomic problems that this country was facing. They are doing a great job and we cannot wait to see the result of these decisions and strategies they are implementing. Unfortunately, we knew with such a shift in economic policy that there would be a slowdown inside the country. Working on the macroeconomic level of a country will automatically, in the short term, result in a deceleration in the economy, and we saw this in the real estate sector in Ghana. It always takes some time for the new policies on the macroeconomic level to reflect internally and to be seen and felt in the microeconomics, of which the real estate sector is also a part. We are all hoping that in early 2019 or the end of 2018, we will start to see a big change. I expect that by mid or end of 2019, we will see another real estate boom in Accra. Four or five years ago, there was a lot of supply in real estate, both in the residential segment and the commercial segment. We saw a lot of development take place in Accra, which was great for the city, but it took time, which is normal, for it to be digested by the market. Today, big companies or big developers are also in a wait and see situation. They are waiting to make sure that these new policies are going to reflect positively into the market so that they will engage in new projects. Meanwhile, the projects that were built during the past four or five years are being sold and rented, but at a slow pace. Therefore, we are very optimistic for the very near future. In the past six months, the last two quarters, we have seen some action in the real estate sector. We have new companies that are coming in looking for offices, but not as much on the retail side yet. Retail did not pick up as it was supposed to. Many shopping malls mushroomed around the city and the result was not great. Ghana needed time for it to become more sensitive regarding commercial and retail, especially. A lot of big companies tried to come and open big retail shops, but they did not succeed. They have to go at a bit of a slower pace. Now, they have stabilized, and they are looking at the real opportunities and the real market in Accra. What is the demand like, exactly? In my business and the project that we did in Accra central, the Octagon, we have mainly offices and showrooms. The showrooms are all corporate: banks, insurance companies, etc. We did not get retail companies such as clothing, accessories, and so on, because people are still cautious regarding this kind of investment in the country. In the past six months, we saw the market starting to move again. The beginning of the year, the first two quarters, was difficult and 2017 was not easy either. But since March or April of 2018, things have started picking up. The real jump and the real influx of demand and international and local companies making more adventurous investments in the country will take place in 2018 and early 2019 we hope.

Do you see a lot of competition from other companies and other players because of this slow influx?

Four or five years ago, a lot of development came in and a lot of buildings started mushrooming up. It takes time in an economy like Ghana for it to dissolve into the market, to be sold or rented. A lot of companies invested in office buildings, for example, but these are funds and they only rent. We gave the opportunity to people to buy offices as well. This is how we differentiate ourselves from competitors. Today, we see that these buildings are starting to fill up. Big companies are coming in and taking a whole building or half a building or a whole floor, but this of course takes time.

What are your competitive advantages?

The Octagon project is a 130,000 m² development. It is really a massive project. The Octagon consists of offices, hotel space, and commercial space.

What we offer in the Octagon project, first of all, is the location of the project. It is in Accra center and it is very close to all the Ministries and the best hotels in town. Because it is in the commercial sector of the city, which is downtown like any other city in the world, there are few competitors in the vicinity. Secondly, is the scale of the project. The Octagon, as a singular entity, is one of the biggest projects in all of West Africa. Once fully occupied, it will host between 3,000 and 4,000 people. So, businesses will attract each other into that building and into that project. Most of the office buildings that were built in Accra were only offering office space for rent. We gave the opportunity for small companies, medium sized companies, and large companies to buy their own space in the project and actually own it instead of paying rent. This is what differentiates us from others.

What kinds of clients do you have now, for example in your showrooms? Are you looking for specific ones or are you trying to replicate what you have already?

We are in the middle of all the Ministries and walking distance from the courts, the best hotels in town, and the Central Bank. Retail, such as clothing or jewelry shops or small retailers, were not interested in this area. They would rather go more into shopping malls. Also, our showrooms are very big. We do not have small shops. So, it had to be a big company that would come in. So far, we only have mainly banks and insurance companies. We have a pharmacy that will open up soon and a very interesting investment that took place in the Octagon which is a clinic on the ground floor that is doing wonderfully.

What are some of the projects that you are doing?

There has been a bit of a slowdown and we are finishing the building. The first tenants came into the building over a year and a half ago, but it is such a big development that there were still some works to be finished. Last year, we concentrated our efforts on the new City Hall of Accra, which is adjacent to the Octagon. Dream Realty took it upon its own expense to build the Accra City Hall, which was non-existent before. The AMA, which is the municipality of Accra, had some old offices very close by on High Street. But we saw the need that a city like Accra did not have a city hall which was not elegant enough for the city. After some negotiations with AMA and the government, we came up to an understanding and as a result, we built this facility with over 4,000 m² of office space, fully furnished, with an amphitheater of 300 seats, a library, and more. We just submitted it to the municipality last week. They are now in the process of moving in and the President will commission the building sometime in September. This is something that we are really proud of doing for the city of Accra and we hope that they will maintain it well. We also hope that it will promote change in that most government agency buildings in Accra have been worn out and are not up to the level of the city that they should be. So now, this is an example of what they should do. We are very happy with the collaboration we had with AMA, and we hope the new building will be very useful for them. It will probably be announced in the news in September.

Will this lead you to other projects with the government?

We are developers, we are not contractors. We do not work for a second party. We develop our own projects only. This was a gesture on our part and the new City Hall building was a part of the deal with the Octagon. This was not done to attract government projects at all. This is prestigious for the company by itself and was done to leave a mark on the city.

Do you have other projects coming up?

Yes, we do have different projects in Accra. At a certain point last year, we were hoping to start a new project called the Riviera. The Riviera is on High Street. It is a beautiful seafront project that was supposed to be two residential buildings and a boutique hotel in the middle. The government came in and took over the entire area where the land of the Riviera would have been. This is a new vision from this government. The project is called Marine Drive. The Marine Drive is basically the same as what was done in the Airport City a few years ago. They want to incentivize people to build on the seafront. As Dream Realty, we had our vision since 2007 when we actually bought the Riviera land and was in principal what we wanted to start with. Then, the Octagon came up and it was a bigger challenge, so we had to concentrate on that. As the government put its hand on the entire area which today is the Marine Drive, we are in a situation where we are negotiating with the government to see when we can start the project. Now, they are working on the infrastructure and they have brought in international architects to advise on how this project should be built. They also have a technical committee that was just put into place. The project itself is still not one hundred percent ready, but we are ready. The Ministry of Tourism is heading the project and most government agencies from the Presidency down are very much pushing for this project to happen. It will take time, of course, but we are part of it and the Riviera is part of it. Therefore, for now, we are holding back until we know exactly what this project is, what it contains in terms of residential, commercial, restaurants, and so forth. Once they have everything ready, then we will also be ready to be part of this project and develop the Riviera as planned. Now, with the new architecture and so on, we might have to change the functionality or the architecture of the building somewhat. We are still waiting for the Ministry of Tourism to get back to us to see how we will be part of the Marine Drive project.

When do you expect the Marine Drive project to be completed?

I have met the contractor that is handling the infrastructure work there, and they will be starting very soon. The infrastructure work will take between one and two years. Once that is done, they will be offering plots for sale. I also met with one of the technicians that is part of the project and they are taking their time. That is good for the entire project because they are trying to separate the commercial from the residential. They are trying to build it in a way where most buildings will have a very nice view of the ocean and the high rises will be in the back. We will see how the Riviera will fit into that project. We have been promised by the Ministry of Tourism that we are key to that project and they have seen the result of our work and the commitment Dream Realty has for development in Accra. So, for now, that project is on hold. We also have another project close to the airport. We have six acres of land there which will be a mixed-use project similar to the Octagon. But that is a big project, three or four times the size of the Octagon. It is still early for such a project to come in to town. So, we are also holding back. A third project that we have is a pure residential project also on the seafront in Labadi. By 2019, if we feel that the economic situation is getting better and the real estate demand is increasing, that would be our next step. It is two to three-bedroom apartments, all with full sea views, with a swimming pool, gym, etc. We are hoping it will kickstart mid-2019.

You are focusing a lot on Ghana. Is it risky to be only in one country? What is your international experience?

I am responsible for West Africa. Our owner is looking at Côte d’Ivoire, Liberia, and other surrounding countries. If we see an opportunity there, we will not miss it. For now, our concentration is on the Octagon itself. But in early 2019, we will be making decisions on where to go next.

Can you tell us more about the Octagon project?

The Octagon project, as I mentioned in earlier interviews, is a 130,000 m² development. It is really a massive project. The Octagon consists of offices, hotel space, and commercial space. And of course, to service all of that, and one of the biggest costs of the Octagon, is the parking. The latest study done by AMA showed that the total amount of parking in all of Accra, indoor parking specifically, is about 3,300, of which 1,500 are in the Octagon building. For now, we have two office blocks and the hotel. We were developing the hotel ourselves as a serviced apartment hotel, but last year, we got the opportunity to sell it to a local group and they have just started the finishing works. It is not actually going to be a serviced apartment building anymore, it will now be a five-star hotel with a big name to manage it. This is great for the Octagon. Having a 200 room, five-star hotel in the project is a very big plus for everybody. As for the offices, one of the blocks is sold out and we are starting now to fill the other block. Some have been sold, some have been rented. Sales consist of about 70% of that block of our tenants and the rest are rentals. As for the showrooms on the ground floor, about 60% have been sold or rented out already. We are concentrating our efforts now to try to fill up the building. Hopefully, by next year, the hotel will be done, and the rest of the office space will be occupied. Then, we will have time to move into developing a new project. We are, at the end of the day, a family business. Dream Realty is a merger between Jamil Ibrahim Establishment from Lebanon and Interplast in Ghana. And as it is a personal investment, we would really like to see the Octagon financially up on its feet before moving onto another project. We are very close to achieving that. We hope by the end of the year we will achieve this goal.

Are you facing any major challenges?

As always, we hope the interest rate will go down because this will generate more customers and people can take out easier loans from banks to afford buying an office or an apartment or a car. Interest rates are still too high in Ghana. I do not follow politics much, so I do not know if the government is trying to do something about it. The country has faced some challenges in the past few months with banks that had real problems. We understand from the news that these problems have been tackled and should not occur again. It is not good for Ghana as a country to hear that five banks collapsed within only a few months. I do not know whose fault it was, but I hope that the government is doing something about it. I hope that more initiatives will be taken to bring interest rates down so that people like us do not need to go abroad to get finances for development, so that we can use local banks, and let everything connect and the economy continue growing as it should be. We should let the government keep doing what they are doing. They are on the right track. Eventually, these policies will reflect internally, and we will see a nice boom in 2019 and before 2020. Unfortunately, in West Africa and every country, if there is an election, the country dies that year economically. Most countries in West Africa are going into an election year in 2020. So, let’s hope for the best.

FAIR USE POLICY
This material (including media content) may not be published, broadcasted, rewritten, or redistributed. However, linking directly to the page (including the source, i.e. Marcopolis.net) is permitted and encouraged.