Up to 80% of hotels in Accra’s commercial property development pipeline suspended

Although it looks like the total stock of international brand hotels in Accra is set to almost double, only 14% of pipeline projects are actively under construction as many have been stalled due to the impact of the pandemic and the Currency devaluation according to the Accra Development Pipeline Report by pan-African real estate data company, Estate Intel.

Trevor Ward- MD W Hospitality Group who Estate Intel spoke to explained, “For the end of 2021, Accra was down 40% on revenue per available room (RevPAR) compared to 2019, this which is not bad compared to Nairobi (50% down) and Johannesburg (65% down in Sandton) Although the market is currently oversupplied, this may be temporary if the oil sector picks up and there are new government initiatives to encourage tourism, just as was done in the year of return. ‘ in 2019.

In a related trend, the office sector remains relatively flat. A large portion (33%) of the development pipeline is on hold, potentially due to the impact of the pandemic on the industry.

Dolapo Omidire, CEO of Estate Intel, said: “Overall, the office sector in Accra has been impacted by the significant layoffs and space reductions that have accompanied the Covid-19 pandemic, which has had an impact on the sector with vacancy rates remaining high at 20% and 25%. in Grade A and B offices respectively. However, leasing activity has started to recover with new entrants expected to return in 2022. Currency devaluation continued to impact leasing activity. promoters’ access to funding, which impacted the overall pipeline.

However, other sectors such as mid-low end residential seem to be performing better. According to Estate Intel, there are up to 800,000 residential units in Accra, with the development pipeline currently comprising only 23,000 units. This is only about 3% of the total inventory, with the majority of this pipeline (80%) falling into the middle-income and affordable sectors. However, demand remains high in these segments, indicating an attractive opportunity for investors and developers due to the domestic nature of demand in this segment.

Dolapo explained: “Demand in the residential sector is quite nuanced in the market. While occupancy rates remain low in the prime residential segment due to lower demand from expatriates and multinational employees in the context of the pandemic, the mid-low end residential segments continued to record relatively high occupancy rates due to the domestic nature of the demand..”

Regarding the market outlook, Estate Intel indicates that the current macro-economic environment is the main determining factor.

“While Accra is often seen as a soft landing in West Africa due to its supportive economic policies and tourist-friendly tone, recent monetary measures by the national government have dampened investor appetite. This currency devaluation has resulted in challenges that include, but are not limited to, increased construction costs and a slowdown in project financing. However, with the right balance between measures and incentives, market activity could pick up during the year. Dolapo concluded.

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