Moving up the ladder
Mobus Property Developments CEO Richard Jonah talks about the company plans to combat the housing deficit, and their award winning developments across Ghana
Writer Emily Jarvis
Project manager Arron Rampling
Mobus Property Developments is a property development firm founded in 2010 by the current CEO Richard Kojo Jonah. It is a privately owned company, mainly focused on commercial property development, offices and retail centres. On an opportunistic basis the company has also embarked on a number of residential developments aimed at the middle to upper market segment. Richard Jonah, spoke to Africa Outlook about some of the company's challenges and the need for residential housing in Ghana given increasing urbanization.
Like most property developers in Sub- Saharan Africa, Jonah outlined that it is access to long term capital that is the company's biggest challenge: "Property development is a long term game, therefore it helps if you can secure cheaper sources of long term capital," which Mr Jonah adds is quite difficult to do in local markets given the volatility of currency and the limited balance sheets of many local banks.
Jonah's second challenge when assessing various opportunities is to do with land tenure. "Most lands in Ghana are privately owned as opposed to owned by the Government. One of the biggest issues our local courts have to deal with issues of land litigation, tenure and the subsequent fighting over land title. Being able to secure a good piece of land with a clean title and with no claims can prove difficult and add significant lead times to project development."
That said, with challenges come opportunity. There is currently a housing deficit of approximately two million homes in Ghana, and a significant deficit in formal commercial retail and office space to support the growing economy. Consequently, the number of individuals and institutions that are investing in the property sector is on the rise. Although Government is trying to support and encourage investment in this sector, issues of infrastructure, access to capital, land tenure and security are part of what are causing this "bottle neck" in delivery of housing and commercial real estate. This being said, there are huge opportunities present in the Ghanaian construction industry, and with the Government supporting new road networks and electricity supplies, fresh areas are being opened up for development.
The Meridian City Project
Jonah told me about two exciting projects that Mobus have on the horizon. Most notably, the $120million mixed-use commercial development called Meridian City, located in Ghana's main port city, Tema. It is the first of its kind; a privately developed commercial centre with a 20,000Sqm retail component, a 10,000Sqm A Grade office block and a hospitality component in the form of a three star business hotel.
Jonah further explains: "Tema has a population of about a million people, what's exciting for us is that it is the main port city, and is Ghana's main commercial and manufacturing hub. Independent market research supported the need for a large modern retail centre and an internationally branded hotel." With construction starting in June of this year and a target completion February 2016 the retail component of the building has gained the support of two major international food anchors as well as a host of other big name fashion and general goods stores. The hotel will have 120 rooms, helping to support the infrastructure that Tema offers as a centralised location for the shipping industry. Although the project has yet to break ground, the proposed development was entered into, and subsequently won, the best mixed-use development in the African and Middle Eastern Property Development Awards, in December 2013.
Winner of an Array of Construction Awards
Mr Jonah proudly talked about the company's other recent progress: "We are currently constructing a commercial office block called Capital Place in Accra. It won best office development in Ghana. The design is quite unique to the local market in the sense that it is Ghana's first commercial office park. It will have a 'campus-like feel' with multiple buildings that offer the same modern design and amenities." Mobus Property also boasts two further International Property awards in the residential sector for best development of multiple units in Ghana: Knight Court, a 20 unit apartment complex in the capital Accra, and Phoenix Villas, a secure cluster development off ering a leisure centre, 30 semidetached houses and 50 apartments. "These two developments are in the construction stages. As a young company we are very humbled to have been nominated and also won these awards, in addition to the aforementioned Meridian City award," Jonah emphasised.
Securing the Land to Build on
In terms of securing their investments and future, Mobus have been quite aggressive regarding securing a proprietary land portfolio. Jonah cites: "Our business is conducted through an investment holding company and a property developments arm. The investment holding company holds completed assets through SPV's and our developments arm refers to lands in development," he continued "our current project pipeline is on land that we were able to secure quite early on in the development of the company. We then went as far as South Africa and the UK to try to secure funding for these projects, to work in partnership with others who were looking at working within this space. These partners consist of professional teams of architects, engineers and funding partners." The business has been able to move quite quickly as a result of this system, with supportive partners assisting in a smooth progression to the building stage. The company target is to have 80% of their assets in income-generative investments to help them strengthen their balance sheet.
Africa Outlook asked Mr Jonah to talk about the company's business model, he explains: "Mobus has a team of skilled and experienced professionals that handle the entire development process of our projects. Our skills cut across the whole development cycle from land acquisition, permitting, market research, fund raising, to execution where we manage professional teams and contractors. We believe in long term partnerships and even when it comes with third party land owners, we work jointly with the land owners to help meet both our investment goals." The company try to work collaboratively with these land owners in to determine what the best use of the land is by doing extensive market research supported by on-site engineering. Jonah adds: "Strategic partnerships have been a key factor in our success."
As for company expansion, Mobus Property are currently researching property in Nigeria and Liberia. Jonah proclaims: "We see these two areas as huge growth opportunities both in the commercial space and in residential development. We believe the long term regional exposure provides us with a good edge against geographic concentration and exchange rate risk. Our ambition is to be a regional player in West Africa, growing into Nigeria and Liberia focusing mainly on commercial property developments. The issue of shortage in housing is a regional problem and wherever we identify an opportunity, Mobus are always working on ways to help bridge the housing deficit."
The late Richard Jonah sadly passed away recently. Before his untimely passing, we spoke to him about the company Mobus Property. We were honoured to have had the opportunity to interview such an enigmatic man.