Fallen cedi raises fear in real estate industry

Mouhamad Hamidi, Chief Executive Officer of EYE-con Construction, has said if the central bank does not put measures to halt the cedi depreciation it will seriously damage the real estate industry.

“The way am looking at the situation if there are no pragmatic measures to curb the cedi from further falling, the construction companies will build but nobody will buy.

“People will sit back and watch until the cedi is stabilised because day-in and day-out the cedi keeps falling,” he told the B&FT in an interview.

He said construction companies import almost all the materials they use in putting up a building and these are paid in dollars and it has made buildings very expensive now when they convert into cedi.

The local currency is down 27 percent against the dollar this year, and its slide has largely defied the extraordinary efforts of the Bank of Ghana (BoG) to stem the decline. The cedi now trades at an official average rate of 3.03 to the dollar compared to 2.16 in December.

Homeowners who are servicing their dollar mortgages in cedis are reeling from the rapid decline of local currency, which has been boosting their monthly repayments to levels that leave barely enough disposable income for them to survive.

However, Mr. Hamidi advised prospective buyers to buy their houses now because it could be worse in the future.

“My advice to those who are interested in buying their own houses is that they should do so now because tomorrow will be worse than today.”

He said though the prospects of the industry is bright the cost pressure caused by the depreciation of the cedi have led to increase cost of production which has also affected prices of building in the country.

Asked whether this will affect investors’ money in the real estate, he said: “Even though people are putting a lot of money into real estate development the money is safe and will reap it when the economy is stabilised.”

A survey conducted by Housindata Ghana Limited, a market research firm, said prices of houses which started soaring in 2013, have continued during the first quarter of 2014 with a two-bedroom semi-detached and a three-bedroom detached house which were sold for US$69,500 and US$180,000 respectively rose to US$98,000 and US4220, 000, an increase of 41 percent and 22 percent.