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Affordable housing

Affordable housing

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Affordable housing

Compare IOA
Country
Ghana
Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Infrastructure
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Real Estate
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
20% - 25% (in IRR)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Medium Term (5–10 years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
Ghana suffers a housing deficit of 1.7 million units.
Direct Impact
Describes the primary SDG(s) the IOA addresses.
No Poverty (SDG 1) Sustainable Cities and Communities (SDG 11)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Good health and well-being (SDG 3) Clean water and sanitation (SDG 6) Reduced Inequalities (SDG 10)

Business Model Description

Deliver affordable housing for low and middle income households in suburban areas.

Expected Impact

Improved citizen wellbeing and support urban planning though affordable housing.

How is this information gathered?

Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.

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Disclaimer

UNDP, the Private Finance for the SDGs, and their affiliates (collectively “UNDP”) do not seek or solicit investment for programmes, projects, or opportunities described on this site (collectively “Programmes”) or any other Programmes, and nothing on this page should constitute a solicitation for investment. The actors listed on this site are not partners of UNDP, and their inclusion should not be construed as an endorsement or recommendation by UNDP for any relationship or investment.

The descriptions on this page are provided for informational purposes only. Only companies and enterprises that appear under the case study tab have been validated and vetted through UNDP programmes such as the Growth Stage Impact Ventures (GSIV), Business Call to Action (BCtA), or through other UN agencies. Even then, under no circumstances should their appearance on this website be construed as an endorsement for any relationship or investment. UNDP assumes no liability for investment losses directly or indirectly resulting from recommendations made, implied, or inferred by its research. Likewise, UNDP assumes no claim to investment gains directly or indirectly resulting from trading profits, investment management, or advisory fees obtained by following investment recommendations made, implied, or inferred by its research.

Investment involves risk, and all investments should be made with the supervision of a professional investment manager or advisor. The materials on the website are not an offer to sell or a solicitation of an offer to buy any investment, security, or commodity, nor shall any security be offered or sold to any person, in any jurisdiction in which such offer would be unlawful under the securities laws of such jurisdiction.

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Country & Regions

Explore the country and target locations of the investment opportunity.
Country
Ghana
Region
  • Ghana: Ashanti
  • Ghana: Western Region
  • Ghana: Northern
  • Ghana: Greater Accra
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Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

Infrastructure

Development need
SDG 6 - Clean Water and Sanitation and SDG 9 - Industry, Innovation and Infrastructure are reported to be major challenges and only moderately improving. Two out of five SDG 6 indicators and three out of six SDG 9 indicators are marked as major challenges.(II)

Policy priority
The government aims to increase the availability of water and sanitation. By 2021 Ghana wants basic water access to be over 80%, safely managed water access to be 36%, improved liquid waste management to be 30% and solid waste management to be 80%.(III) Roads are also a high priority with the target of 50% of good quality roads, 75,000 km of roads and over 67% of road maintained.(III) The government created the enabling environment for house construction, making the sector more attractive for investors.(IV) The Medium-Term Plan III forecasts the number of houses to reach 3.6 million in 2021.(III)

Investment opportunities
The country’s infrastructure sector recorded significant growth the past 20 years, which supported Ghana’s development. With a booming urban population (3.3% growth in 2019) (I), there are opportunities for the private sector to invest in housing, water and sanitation, roads and waste management.

Key bottlenecks
The main sector challenges include: liquidity problems for some ongoing projects, transmission problems, a lack of conservation, a weak regulatory environment, a lack of patient capital, difficult access to land, a lack of related services and the high cost of materials.

Industry

Home Builders

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Pipeline Opportunity

Discover the investment opportunity and its corresponding business model.
Investment Opportunity Area

Affordable housing

Business Model

Deliver affordable housing for low and middle income households in suburban areas.

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Business Case

Learn about the investment opportunity’s business metrics and market risks.

Market Size and Environment

Critical IOA Unit
Describes a complementary market sizing measure exemplifying the opportunities with the IOA.

Ghana suffers a housing deficit of 1.7 million units.

In Ghana, the real estate subsector accounts for 2.7% of gross domestic product (GDP) and recorded 20% growth in 2019. The construction subsector accounted for 6.4% of GDP over the same period.(10)

The estimated housing deficit is more than 1.7 million units. Annual demand for houses is projected to be 100,000 units, but only 35% of this number is supplied.(5)

In 2019 57% of Ghana's 30.4 million people lived in cities. Further, in 2018, 30.4% of the urban population lived in informal settlements.(I)

Indicative Return

IRR
Describes an expected annual rate of growth of the IOA investment.

20% - 25%

The expected return profile depends on the type and size of the projects. Regional benchmark examples indicated an internal rate of return of 23%-26%.(1)

At large, Ghana's real estate subsector recorded a return on investment of 18% in 2017.(5)

A private equity investor active across Africa achieved an internal rate of return of 25.2% on constructing affordable housing.(2)

Investment Timeframe

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

Medium Term (5–10 years)

Stakeholders expect to achieve positive returns on affordable house construction in around 10 years.(12)

A leading investor in Ghana takes an average of 5 to 15 years to see positive returns on affordable housing projects completed by a small-scale contractor.(11)

Market Risks & Scale Obstacles

Capital - CapEx Intensive

Construction materials are often costly because they are imported.(7)

Market - Highly Regulated

The current policy and land regulations make it difficult and costly to acquire land.(7)

Business - Supply Chain Constraints

The sector used to have poor access to market data which is crucial for investment.(IV)
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Impact Case

Read about impact metrics and social and environmental risks of the investment opportunity.

Sustainable Development Need

Ghanaians can often afford houses, but these houses are usually overcrowded. Around 50% of households occupy a single room and a further 27% has two rooms. Given the average family has 4 people, this situation poses serious threats to health and privacy challenges.(6)

Construction lending rates are high (around 28% in 2019), as are construction costs. Materials costs are high because around 80% of materials are imported. These two factors create challenges in developing and buying houses. Further, the lengthy land title registration process extends the whole process.(5)

Gender & Marginalisation

Low income communities have the least access to suitable living conditions.

Expected Development Outcome

Improve living conditions and quality of life, improve livelihoods of populations living in poverty

Ameliorate affordability of housing, decrease inequalities in access to housing for low and middle income families

Ameliorate affordability of housing, decrease inequalities in access to housing for low and middle income families

Gender & Marginalisation

Better living conditions that provide greater options for women to realise opportunities and support entire households

Primary SDGs addressed

No Poverty (SDG 1)
1 - No Poverty

1.2.1 Proportion of population living below the national poverty line, by sex and age

1.4.1 Proportion of population living in households with access to basic services

Sustainable Cities and Communities (SDG 11)
11 - Sustainable Cities and Communities

11.1.1 Proportion of urban population living in informal, informal settlements or inadequate housing

11.3.1 Ratio of land consumption rate to population growth rate

Secondary SDGs addressed

3 - Good Health and Well-Being
6 - Clean water and sanitation
10 - Reduced Inequalities

Directly impacted stakeholders

People

Low and middle income households, people living in informal settlements

Gender inequality and/or marginalization

Children growing up in safer and more suitable conditions

Planet

Environment due to more controlled construction and living conditions

Corporates

Construction services providers, construction materials manufacturers, mortgage providers

Indirectly impacted stakeholders

Public sector

Local authorities benefitting from more urban planning opportunities

Outcome Risks

Constructing new houses can affect the value of already existing buildings in the surrounding areas.(16)

House construction causes soil sealing which contributes to possible land degradation and changes in groundwater.(14)

Impact Risks

Housing construction changes land use and may threaten wildlife by interfering with its natural habitat.

Impact Classification

C—Contribute to Solutions

What

Investing in the construction and development of affordable housing is likely to have a positive impact because it is solving accommodation challenges and can increase the wellbeing of citizens.

Risk

The model is market proven, but there is a risk that the lack of materials and high interest rates can limit up-scaling of investment. Without proper city and regional planning, exponential growth of the sector can negatively affect the environment.

Impact Thesis

Improved citizen wellbeing and support urban planning though affordable housing.

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Enabling Environment

Explore policy, regulatory and financial factors relevant for the investment opportunity.

Policy Environment

National Housing Policy 2015: This policy presents an overall strategy for affordable housing development. It aims at "creating an enabling environment to encourage the private sector to participate in housing delivery".(7)

Affordable Housing Project 2019: This project aims to provide 250,000 housing units annually over the next 8 years through public-private partnerships.(5)

Financial Environment

Financial incentives: Strategic investments over USD 50 million and in core sectors can negotiate specific incentives with the Ghana Investment Promotion Center.(3)

Fiscal incentives: In Ghana companies offering affordable housing approved by Ministry of Works and Housing are levied a 1% corporate income tax rate (instead of 25%) for the first 5 years.(3) A reduced value added tax of 5% applies to developers providing real estate for dwellings (instead of 12.5%).(13)

Other incentives: To facilitate housing construction, the government set up a National Housing and Mortgage Fund valued at around USD 180 million. The fund aims to leverage private funding and long-term capital to subsidize and refinance mortgages.(5)

Regulatory Environment

The government is processing the Real Estate Bill 2020, which will shape the sector when implemented.(12) The Ghana Building Code 2018 provides standards and recommendations for planning, management and building practices.(5)

Home Mortgage Finance Act No. 770 of 2008: This Act regulates mortgages and house financing, ensures customer protection and regulates the process of foreclosure in case of default.(5)

Land Use and Spatial Planning Act No. 925 of 2016 eased the land planning process. The Local Governance Act No. 936 of 2016 passed administration responsibility to local governments. The Land Bill of 2017 aimed at providing sustainable land administration.(5)

The Ministry of Works and Housing is the main regulatory body governing Ghana's construction sector in Ghana.(17) The Ghana Standards Authority sets engineering, building and basic standards.(18)

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Marketplace Participants

Discover examples of public and private stakeholders active in this investment opportunity that were identified through secondary research and consultations.

Private Sector

Devtraco, Trasacco, Regimanuel Estates, Clifton Homes and CPL Developers, National Housing and Mortgage Fund

Government

Ministry of Works and Housing, Ghana Standards Authority

Multilaterals

World Bank, United Nations Office for Project Services (UNOPS)

Public-Private Partnership

Ghana Real Estate Developers Association, Government Affordable Housing Project, Centre for Affordable Housing Finance Africa

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Target Locations

See what country regions are most suitable for the investment opportunity. All references to Kosovo shall be understood to be in the context of the Security Council Resolution 1244 (1999)
country static map
urban

Ghana: Ashanti

The highest need for affordable housing is in big cities, such as Accra, Tema-Ashaiman, Kumasi, Tamale and Takoradi.(III) The highest concentration of population occurs in Kumasi, Sekondi-Takoradi and Accra. These southern cities hold more than 28% of the country’s population.(11)
urban

Ghana: Western Region

The highest need for affordable housing is in big cities, such as Accra, Tema-Ashaiman, Kumasi, Tamale and Takoradi.(III) The highest concentration of population occurs in Kumasi, Sekondi-Takoradi and Accra. These southern cities hold more than 28% of the country’s population.(11)
urban

Ghana: Northern

The highest need for affordable housing is in big cities, such as Accra, Tema-Ashaiman, Kumasi, Tamale and Takoradi.(III) The highest concentration of population occurs in Kumasi, Sekondi-Takoradi and Accra. These southern cities hold more than 28% of the country’s population.(11)
urban

Ghana: Greater Accra

The highest need for affordable housing is in big cities, such as Accra, Tema-Ashaiman, Kumasi, Tamale and Takoradi.(III) The highest concentration of population occurs in Kumasi, Sekondi-Takoradi and Accra. These southern cities hold more than 28% of the country’s population.(11)
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References

See what sources were used to establish the investment opportunity’s data and find resources that could be consulted to explore more.
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