Business News of 2013-12-12

Real Estate Entrepreneur calls for Construction Finance Fund

A Ghanaian Real Estate Entrepreneur is advocating for a Construction Finance Fund as a way of curing the generally low standards of real estate development in the country.

Ernest Hanson is the Managing Director of Beaufort Properties, which is currently working with global industry giant Micheletti on a more than US$10 million luxury 61 unit development, dubbed Beaufort Ridge, located in the prestigious North Ridge area in Accra.

He noted that real estate is capital intensive but it is difficult getting funding from the banks because government has, through its high treasury bills rates, virtually crowded out the private sector from getting credit from the banks to investment into real estate.

The banks, according to him, are in business to make money the easiest way possible so once government’s treasury bills rate is high, the banks would not bother going through the painstaking process to give loans to the private sector.

“As a result lots of people go into real estate business using buyers’ deposits to build and they end up putting up sub-standard structures and offer sub-standard living for their customers,” he said. “Most of the players also use sub-standard materials and unqualified personnel because they can’t afford to meet the high standards.”

Hanson is convinced that could be cured with a Construction Finance Fund, which would require industry players to show evidence of qualified personnel and high standard materials, and that would naturally screen the industry and push out the unqualified folk.

“Imagine if we have a fund of about US$10million or US$20million and we insist that every real estate developer needs to register with GREDA and meet set standards so that they can access the fund – everybody will change their game – we need that at the regulatory level,” he said.

He is also certain that such a fund would be a natural screen, make the market more competitive and improve living for Ghanaians.

The Beaufort Properties MD, who is also an investment banker by training, thinks government would need to find cheaper debt sources elsewhere to force the banks to look for alternative sources of investment within the private sector, and that would make affordable funds available to the real estate industry.

With over 10 years of experience in the real estate business, and having built five residential communities in three years as co-founder of Clifton Homes, Hanson could tell that the taste of customers is changing and they are demanding quality homes, so the need to up the standards is imperative.

“This is why at Beaufort we go for the best and work with the best in the industry to ensure that our customers get value for money. That informed our choice of Micheletti as a partner in our 61 unit Beaufort Ridge project which is our biggest project so far,” he said.

The Beaufort Ridge project, which is expected to be completed by 2015, is a mixture of three bedroom buy-to-live apartments, as well as two-bedroom and one-bedroom buy-to-rent apartments.

The six-storey residential building has a basement and comes with facilities such as general air-conditioning hidden, recreational area, 24-hour standby generator, tight security,

Beaufort Properties believes this development confirms the company’s position as one of Ghana’s most innovative developers. The firm is working with local and international experts to ensure Beaufort Ridge is an exemplary structure of quality, precision and inspired design.

Ernest Hanson, Managing Director of Beaufort Properties says ‘We believe Micheletti is one of the leading contractors in West Africa and we are confident that they are well placed to bring our vision into being.’

He is glad that about 80% of the apartments have already been sold out even before the project starts, and most of the buyers are Ghanaians living in Ghana, unlike other luxury residences, which are largely occupied by foreigners or Ghanaians from the Diaspora.

Meanwhile, Michelleti has also said it is looking forward to working on Beaufort Ridge as with the view to turning impressive designs into a truly memorable addition to North Ridge and a valuable property investment for Beaufort Properties’ clients.