With a growing middle class and rapid urbanisation, the need for large retail outlets that vend products from around the world to meet the changing taste and preferences of consumers for high-end goods is driving the construction of shopping malls across the country.
Developments in the economy, which has resulted in the emergence of a middle income class, taste of luxury goods, influx of foreign investors and a maturing property market has opened the window for investment opportunities in retail developments; a craze the Chief Executive of Broll Ghana, Kofi Ampong, believes makes shopping malls one of the lucrative investment schemes that financial institutions and Ghanaian investors must pay attention to by pooling resources.
Since the establishment of the Accra Mall, the largest of its kind in the country at the time of opening, many more malls have been built and are operational mostly in the capital Accra– with some others under construction in Kumasi.
Accra-Tema play host to the Accra Mall, the Junction Mall, West Hills Mall, Achimota Mall, Marina Mall, the Osu Mall, SIC Life Mall, Melcom Plus and other medium-sized malls.
President John Dramani Mahama recently noted that the increasing number of shopping malls is a sign of growing investor confidence in the Ghanaian economy.
Indeed, the growth of shopping malls, so to say, is not peculiar to Ghana. It is a reflection of an energised retail sector fuelled by economic growth and an emerging shopping culture in Africa.
The 2015 Africa Retail Development Index notes that Sub-Saharan Africa is still the ‘Next Big Thing’ and will likely continue to be for the next several decades.
The report notes that Africa is one of few markets with annual Gross Domestic Product (GDP) growth of more than 5 percent and that the continent’s young and connected middle class is growing fast and still deciding on its favourite brands.
In short, it is brimming with potential.
A.T. Kearney’s 2015 African Retail Development Index (ARDI) also affirmed the potential of many nations throughout Africa—not just oft-discussed markets like Nigeria and Ghana, but also small, dynamic markets such as Gabon, the ARDI’s top-ranked market and home to Sub-Saharan Africa’s highest GDP per capita, and mid-sized but fast-growing countries like third-ranked Angola.
The MasterCard African Cities Growth Index has also identified Accra as the sub-Saharan African city with the highest potential for growth over the next five years.
This, Mr. Ampong noted will continue for awhile since the prospects of shopping malls are good as the rental rates and yields are far better than Offices/Industrial Properties saying: “It is for this reason that I speak of the other investment opportunities in shopping malls.”
“Our direct involvement in retail broking services and retail management has brought to the fore enormous opportunities that majority of us are not taking advantage of and which we would like to recommend to the financial institutions.”
According to Mr. Ampong, retail properties in Ghana are commanding rental rates of between $7.00 – $25.00/m2 per month exclusive of service charge.
He said prime retail properties in Accra which are principally neighborhood and Community Shopping Centres, however command the higher bracket of rental rates of between $25.00 – $55.00/m2 per month with service charges for retail properties ranging between 10% to 20% of rental rates.
However, the increasing trend of shopping mall development and investment has elicited concerns among policymakers and civil society organizations who argue that shopping malls, which usually stock and retail imported goods, is a threat to local manufacturing businesses and the development aspiration of Ghana and the continent as a whole.
President Mahama speaking at the UN Summit of the adoption of 2030 agenda for sustainable development noted: “It is important for us to redefine a new paradigm of development. The present high consumption, wasteful societies are certainly not the model for sustainable development. If the model we must all follow is to have flashy shopping malls filled with all kinds of consumer goods, glitzy new lights and the attractions we see in the big cities of the developed world then we need six more planets like health to sustain human kind.”
This notwithstanding, Ghana sits 9th in the Africa Retail Development Index report.
The report notes that: “Ghana features a fairly balanced profile—about 27 million people (half in urban areas), with a relatively stable economy and retail market that, while still small, is growing.
Interestingly, Ghana is unique among Sub-Saharan African markets in that it has a relatively large middle class yet is highly unsaturated.
This makes it an interesting market for international players to fill some major gaps in different products and sectors.
Compared to its neighbours, particularly giant Nigeria, Ghana has a greater ease of doing business and much lower risk.
The economy has grown steadily for years now and a few shopping malls have arisen around the capital Accra, Ghana’s main urban hub.
“The large middle class is drawing more renowned retail outlets into the country. Mr. Price, Adidas, Woolworth, amongst others, already have presence in the country. Most of these retailers are expected to take up spaces available in existing shopping malls.
The report notes that: “Many international retailers are eyeing expansion into Ghana, including Sunglass Hut, Debenhams, Pick n Pay, and Spanish fashion retailer Mango.
South Africa’s Woolworths already runs two fashion stores in Ghana— even as it pulled out of Nigeria a few years ago.
Nigerian online retailer Jumia entered at the end of 2014, with great expectations despite Ghana’s Internet penetration of roughly 12 percent, and other sites such as Kasoa have sprung up as well.”
With the expected entry of more retail giants, the offering available to Ghanaians is expected to increase to meet the changing taste and preferences.