Africa will indeed rise some day after careful development of its resources. In recent times, the “Africa is rising” rhetoric is gaining grounds and has become one of the strategic approaches of the imperialists in their quest for survival. Perhaps Africa and for that matter Ghana has forgotten Lord MaCaulay’s Address to the British Parliament on 22nd February 1835:
“ …, that I do not think we would ever conquer this country, unless we break the backbone of this nation,…, and therefore, I propose that we replace her old and ancient educational system, for if they think that all that is foreign and English is good and greater than their own, they will lose their self-esteem,…, and they will become what we want them, a truly dominated nation”
The Ghana Institution of Surveyors (GhIS) is a professional body of Land Economist (including real estate), Quantity Surveyors and Land Surveyors, established in 1969 by the then Ghana Branch of the Royal Institute of Chartered Surveyors (RICS). The irony is that, since the promulgation of the GhIS, various attempts have been made to secure an understanding with the RICS to allow its members (GhIS) recognition and accreditation to practice in RICS jurisdictions (UK), but to no avail. However, in 2013, a Memorandum of Understanding (MoU) committing both bodies to recognise each other’s members’ professional qualifications was signed. I could envisage the eureka on the faces of those executives who led the achievement of these “victory” and “dream”. As a promising Land Economist, trained first in the KNUST and in the Imperialist’s finest university – Cambridge, I am sad that the future of Ghanaian-trained graduates in the Land Economy, Quantity Surveying and Land Surveying professions has been exchanged for a “needless RICS accreditation”, as opined by one of the Fellows of this same institution. For the Competition Policy Analyst, it is like exchanging gold for salt, the very nature of butter trading in ancient Ghana.
In this article, which is the first part of my views about this “needless GhIS-RICS MoU”, I try to present some facts and evidence that underpins my worry about the GhIS’ official sale of the Ghanaian real estate market for mere recognition and achievement of a useless dream. With current professional competencies in the aforementioned specializations of the GhIS at very low levels, I wish to state the opinion of the many unemployed graduates that this might not be the optimal time to enter into such agreements. This conviction lies in the invariably expectation of potential loss of jobs to foreign competitors, which might perpetuate the already problematic phenomenon of capital flight and graduate unemployment in Ghana.
Current Nature of GhIS Core Competencies
The GhIS is made up of three main divisions: Valuation and Estate Services (VES), Quantity Surveying (QS) and Land Surveying (LS). Services provided by the VES including property valuation for sales or purchase, rental, mortgage, insurance, probate, taxation, accounting and rating purposes, e.t.c. Others include property/facilities and land management, investment feasibility/viability appraisals; estate agency and property development. The QS services include construction cost estimation, cost planning, valuation of construction work, tendering and procurement, construction project management and cost control beside others. Finally but not the least, the LS professionals are involved in cadastre surveys, engineering surveys, large, medium and small scale mapping of cities and towns.
It is clear from these service sets that the GhIS is a real estate and construction institution. To really understand my point, a definition of real estate and construction is important. Real estate is “property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature; an interest vested in this; (also) an item of real property; (more generally) buildings or housing in general. There are a lot of everyday activities that actually come under the definition of construction work. The definition is very broad, many work activities or tasks on a building or structure are construction and they include:
“Construction, Alterations, Converting, Fitting-out, Commissioning, Renovating, Repairing, Upkeep, Decorating, Maintaining, De-commissioning, Demolishing, Dismantling, Assembling”
Global Universe of Real Estate by Regions
In 2009, a number of institutions and researchers published the size of real estate holdings according to the political regions of the world. They include Feri Property Funds Research, IMF, Pramerica REI, and Chin & Dziewulska beside others. In their report, they estimated and pointed to Africa as the “goldmine” for high yielding investments. These estimates indicate that North America and Europe has the highest investments representing 33% each, followed by Asia (27%), Latin America (3%), Middle East (2), Australia (2) and Africa (less than 1%). This is also estimated in value terms as €4,041bn (North America), €3,961bn (Europe), €3,266bn (Asia), €324bn (Latin America), €281bn (Middle East), €236bn (Australia) and €61bn (Africa). From these figures, Africa remains a desert in terms of real estate investments and for that matter a virgin to be exploited for their quest for higher returns. The developed world is so much developed that further development can only occur in brownfield sites (already developed sites), since they will not compromise on their greenfields compared to Africans. Given the already developed infrastructure in the advanced economies, certainty of investment is high. In other words, risk is relatively low and returns same.
The “risky” Africa and for that matter Ghana remains a major terrain for the diversification of these low returns for foreign investors. Investment in Africa in the form of new developments and redevelopments would typically be considered “opportunistic”, usually yielding higher returns because of potential higher risk-taking. Is this not what we see in almost all Africa’s big cities? Unfortunately, their owners are mostly non-Africans but commonly North Americans and Europeans. Walk through the airport area in Accra-Ghana, and all you see is magnificent real estate going up higher and higher. If you don’t know, the tallest building in Ghana is owned by an Italian – Trassaco’s Alto Villagio Vista situate at the Tetteh Quarshie Roundabout. The Trassaco Estates remains the most expensive community in Ghana and almost all the returns are bagged back to their investors in the developed world. Regimanuel Gray Estates (known to be Ghanaian) is reported to be the largest real estate developer in Ghana; however, the business is also partly owned by foreigners.
The hurting bit is not the investments that are made in developing infrastructure in Ghana, but how many of the lucrative jobs in this process is done by Ghanaian surveyors? In the last one year, my experience consulting for some of these foreign investors reveals that most of the juicy real estate and construction jobs are awarded to foreigners. The situation is the same in the oil and gas industry. An expatriate’ salary is about a hundred times that of indigenes doing the same jobs even in the face of the local content requirement. We can’t really blame these foreign investors for bringing in their own people to work for them in our own country; because expertise in real estate is very low. The majority of the so-called experts, who are members of the GhIS do not match the expertise of their foreign counterparts, as revealed by the President of one of the foreign investment firms I consulted for.
Why the GhIS has sold the Future of the Real Estate Market
Ghana will continue to see many more investments in real estate now and in the future. So, we can identify two major markets that require real estate services. The current and most traditional is the market for individual progressive housing and stores-building; and the emerging market is the market for sophisticated houses, office, shops, factories and recreational real estate beside others. The current and traditional real estate market although constitutes the largest size, about 90% according to the HFC (2007) is characterized by low returns and the range of services required are limited because owners tend to build informally and the involvement of professionals is limited. The emerging real estate market in Ghana is likened to the beautiful and magnificent commercial and residential real estate in the airport and Ridge areas of Accra. This new investments constitute the market potential of the Ghanaian real estate market. In fact, the future of our real estate market is the juicy bit that the GhIS should concentrate on protecting because these “allies” are not interested in the informal real estate market.
The very nature of these real estate investments requires modern sophisticated skill sets and expertise which the majority of the current crop of GhIS members lack. Even the Mugabes cannot be trusted to have acquired these expertise because they never really upgrade themselves in the new knowledge economy. In fact, “this is how we do it here” as many will tell you; and what they refer to as “this is how we do it” is an archaic method, which lacks the essence of temporary practice. International professionals have long abandoned those outdated methods but that is the essence of our current cherished real estate professionals. Notwithstanding, there are some real decent and up-to-date professionals and firms in Ghana. I can however not vouch on their global competitiveness. The RICS on the other hand has been a leader in the development of these new real estate techniques and its members relatively well positioned, sophisticated and acquainted with modern trends in the market. Thus, by comparison, they have a better understanding of the real estate market by far and could do more wonderful things in terms of service provision than my own country-men. This is the view of a Fellow of the GhIS, which I concur to be a genuine concern. As if that is not enough, most of them have lost major contracts because of the lack of expertise – he must be Jesus to admit all these. If the Mugabes with all the practical experience are practically a no-match, what would the recent graduate who has no practical experience and no up-to-date theoretical experience do? No wonder most of them are comfortable in the banks dishing out cash – no offence to bank tellers – rather than being on the field, measuring buildings in the dust. Yet, the relevant academic institutions in this regard continue to struggle in making relevant the content of the courses they offer. Even the so-called GhIS seminars have had little to no impact on practice – just a gathering of old colleagues, where new leaders are consistently unveiled but no new relevant impacts made – the same old chorus. If these comments were coming from non-GhIS members, I may not take it very seriously; but I must because these comments reflect internal concerns.
As if we need Jesus to remind us that most of the graduates from our Ghanaian GhIS profession-related tertiary institutions woefully lack the skills and technical competencies needed in industry. In fact, the average Land Economist (member of GhIS) is confused about property valuation, which as of today remains the dominant property valuation service. In detail, it appears to be the most failed course of the Land Economy programme at the KNUST. Professional training as part of the GhIS membership process is “nothing to write home about” according to most members contacted. They criticize the GhIS as merely a group of cronies who are making a lot of money (curtesy a certain legal form) from Ghanaians largely due to high illiteracy and information asymmetry. On a critical note, one of the members had indicated that “if you are trained by people who cannot compete in the global market place, you don’t expect to compete either in same”. This is revealing because there appears to be no GhIS members, both individuals and firms competing in the international real estate market. I mean GhIS members who are trained in Ghana, resident in Ghana and practice in Ghana. Those we can point to are perhaps, members who are resident and schooled in America or Europe. They are effectively not practising in Ghana and definitely not by GhIS standards. Are there any specific GhIS Standards at all?
Consistently, I have heard from practitioners in Ghana that the investment method of valuation cannot be used in Ghana because of the fluctuating macroeconomy. When I try to think about this concept, I cannot understand; and when I understand, I cannot think about it. This is the reason the real estate market in Ghana could be over-priced; and perhaps heading towards a bubble bust. Valuation practice in Ghana is equal to the “Cost Method of valuation”, with 99.99% confidence level; although there are more relevant methods; 99.99% is 100%, is it? Yes, by consistently using the Cost Method in valuing almost all properties, they (Valuers) create value for properties which practically may not have any economic value at all and vice versa. Maybe such people are ignorant about the real estate investment asset class. But more important and for the purposes of emphasis, the macroeconomy is an environment in which real estate investment like all other investments including stocks and bond operate and achieve value; so why would a valeur not allow his valuations to reflect the market fundamentals? Hmmm, perhaps they lack the expertise to build an appropriate investment model for valuation purposes. To reiterate the comment of one renowned valeur in Ghana and one of my favourite, “Valuers are not made in the classroom”, yet, “good and global industry Valuers” are also not made in a confused industry under unsophisticated trainers; that I believe is more important.
In effect, foreign investors sneak in their experts from America or Europe to perform some of the basic but important real estate jobs in Ghana, although they are not members of the GhIS; yet there is a law which restricts non-members from operating (see Section 18(3) of NRCD143). By giving RICS members direct entry into GhIS, many more will now influx Ghana and not only work on these new and complex real estate investment deals; but also might compete away the existing services provided by GhIS members. This policy could culminate in loss of jobs and increase the capital flight situation in Ghana. In the Part II of this article, I will deal with competition policy and make suggestion going forward with the development of Ghana’s real estate industry and how the GhIS could be made more relevant in this times.
Kenneth A. Donkor-Hyiaman, MPhil (Cantab)
PhD Real Estate & Planning Researcher
School of Real Estate and Planning,
Henley Business School, University of Reading, UK