Housing developers await SEC action on regulation

Housing developers are keenly awaiting the Securities and Exchange Commission’s (SEC) review of its unit and mutual trust fund regulations to allow fund managers invest more than 10 percent of their funds in the real-estate sector.

The SEC last year said it was reviewing the said regulation to encourage fund managers of pooled investor schemes to commit more resources into the housing sector, as the country struggles to address the country’s widening housing deficit.

Mr. Kojo Kwakye Owusu, Managing Director of UT Properties Limited said: “We have heard rumours about it, but we have not seen anything substantial or solid. At several levels, even the new pension schemes limits the amount of funds that can be committed to real estate to 15 percent. So there are funds available but SEC laws has restricted how much is to be released into our sector.

“If that ratio can be increased to allow fund managers to give us enough funds, we would see a big boost in housing delivery in Ghana. The likes of UT properties is very well positioned to take advantage.” Mr. Owusu’s comment follows similar requests by some members of Ghana Real Estate Development Association (GRADA) for speedy review of the SEC’s regulations.

The current housing deficit in the country is estimated at 1.7 million units, with an annual growth of 70,000 units. The GREDA estimates that about 50% of Ghanaians are said to live in sub-standard housing and various unsuitable structures.

Governments have over the years tried various acts to address the housing problem. In 2011 government entered into an arrangement with STX Ghana and its Korean counterparts for the construction of about 300,000 housing units to address the decade-old shortfall in the housing sector. The initiative was seen as the largest government intervention in the sector.

However, the deal fell through following STX’s boardroom wrangling involving the partners. This led to the government suspending its initial US$1.5billion sovereign guarantee. However, local contractors have now been offered the opportunity to pool resources and take advantage of the incentives being offered by government.

“Many of us believe that we can rely on local developers to bridge the housing deficit. If we give them the support they can do it. Others are trying to take advantage of the STX guarantee of 10-years,” Mr. Rashid Pelpuo, Minister of State in Charge of Public Private Partnerships (PPP), said at an economic forum held in Accra recently.

Questions have also been raised about the country’s current land administration system, as it creates a lot challenges for developers. The Water Resources Ministry says it’s finalising modalities for the release of some land banks to developers.

Mr. Owusu said: “The government should just make the environment an enabling one. Talking about that, most of the time they talk about it in economics to create an enabling environment -- but the truth is, if you want developers to go on site to build, just create an environment where it is easy for them to go on site with their tools and start digging foundations.

“Developers will pay you enough money for litigation-free lands; for somewhere that they know there is water, electricity and motorable roads.”