Dr. James Orleans-Lindsay, the Executive Chairman of JL Holdings, a leading conglomerate with a strong presence in Ghana’s real estate sector, has proposed a bold solution to address the country’s affordable housing crisis. Speaking at the Chartered Institute of Management Ghana’s (CIMG) lecture series on the topic “Marketing in the Real Estate Sector: Pricing and Affordability,” Dr. Orleans-Lindsay called on the government to establish a construction levy to create an equity fund dedicated to real estate development.
A Construction Levy for Affordable Housing
Dr. Orleans-Lindsay suggested that the construction levy could function similarly to the energy sector levy, which is used to defray legacy debts. He explained, “The government should set up a levy that will pool revenue into an equity fund for real estate developers. This will enable developers to access cheaper, long-term funds to build houses at affordable rates for Ghanaians.”
He emphasized that real estate development is highly capital-intensive, requiring significant borrowing from developers and mortgages for homebuyers. However, Ghana’s lending rates, which range from 19% to 28% per annum, make debt financing prohibitively expensive. These conditions, he noted, hinder private developers from building affordable homes and limit growth in the housing sector.
The Pricing Dilemma
During his presentation, Dr. Orleans-Lindsay highlighted the key factors influencing residential property pricing: location, number of bedrooms, design, and quality of materials. Residential properties in Ghana are typically categorized into high-end, mid-end, and low-end markets.
He revealed that 80% of urban households in Ghana cannot afford a mortgage for even the cheapest developer-built homes. “Our research shows that the least-priced two-bedroom house costs approximately $28,000. When the annual carrying cost of a home exceeds 30% of a household’s income, it is considered unaffordable,” he explained.
Challenges Facing the Real Estate Sector
The Ghana Real Estate Developers Association (GREDA), representing about 160 member companies, has long engaged the government in efforts to find sustainable solutions for affordable housing. However, progress has been slow due to several challenges:
- High Costs of Funding: The prevailing high-interest rates make affordable real estate development unviable for private developers.
- Inflation and Currency Instability: Fluctuations in the cedi-to-dollar exchange rate further complicate the financing of housing projects.
- Cost of Building Materials: Rising material costs significantly increase the overall cost of construction.
- Land Tenure Issues: Multiple land ownership claims and litigation remain significant barriers.
Dr. Orleans-Lindsay noted that these conditions make it virtually impossible for private developers to provide affordable housing for the masses without strategic intervention.
Ghana’s Housing Deficit
With a population of approximately 30 million people growing at a rate of 2.18% annually, Ghana faces an ever-expanding demand for housing, particularly in urban areas where 53.9% of the population resides. This urbanization trend drives the need for residential, commercial, and industrial spaces, directly correlating with the expansion of the real estate industry.Unfortunately, data shows that only about 20% of the formal labor force earns a monthly income of GH₵ 5,000 or more, which is insufficient to afford a home under current market conditions. The remaining 70% of the population is largely excluded from Ghana’s real estate market.
A Call to Action
Dr. Orleans-Lindsay concluded by urging the government and real estate developers to work together to include the majority of Ghanaians in the housing market. He stressed that affordable housing is critical for national development, and innovative solutions, such as the proposed construction levy, are necessary to make homeownership accessible to the masses.
By addressing systemic issues like high-interest rates, inflation, and land tenure challenges, Ghana can unlock the potential of its real estate market to serve not just the affluent but the wider population. Dr. Orleans-Lindsay’s proposal for a construction levy is a step in the right direction toward achieving this goal.
Written by
Ernest Bako Wubonto
