Immigrants and the property boom in Ghana

By: Dr. Gad Asorwoe Akwesivie

For some years, the Ghanaian experience has been one of exodus to Europe, the USA, Canada and neighbouring African countries, particularly Nigeria, South Africa and Kenya. However, in recent years, there has been a reversal of the net flow. Consequently, Ghana is experiencing large net inflows of immigrants annually. The cities of Accra, Tema and Takoradi are fast becoming the preferred relocation destination for many people, not only from the African continent, but the world over.

The growing migrant inflow to Ghana has led to the debate whether or not there is a connection between settlers and the recent property price boom. This article explores this idea that has been around for some time but has not been formally proven as new knowledge: the migrant connection to the recent property price boom in Accra, Tema and Takoradi.

It is a well-established fact that immigrants settling in numbers in any place engender implications for the economic, social and political set-up of the particular city, region or country. This is partly because immigrants have been identified to be highly geographically concentrated. Compared to the native born, immigrants are more likely to live in the central parts of metropolitan areas in ‘gateway cities and towns’; in the case of Ghana, the cities of Accra, Tema and Sekondi-Takoradi are examples.

Since June 2016, just as with a previous study in 2003, this writer has been compiling property values in the ‘country’ and urban areas and has compared trends in price increases of houses in the urban areas (both for sale and rental) with those of the rest of the country and identified a relatively faster trend in the urban areas compared to that in the country. Also property data was compiled in areas with high immigrant populations in the capital city, Accra, and consistently compared them with price of properties in the other areas of the capital.

Two scenarios were observed: First, the trend in property price increases was significantly much higher (on a year-on-year basis) in the cities than in the other parts of the country. Secondly, it was found that, even in the capital city, Accra, the trend in property price increases varied greatly from suburb to suburb (even within the same residential class areas). This writer reveals that, the trend was significantly faster in areas densely domiciled by immigrants than any other areas. This work, therefore, argues and concludes that immigrants have made a big impact on property prices in Accra, Tema and Takoradi in recent years.

Review of existing literature on the subject
Dr. Gad Asorwoe Akwesivie
Dr. Gad Asorwoe Akwesivie

The spatial uniformity of house price appreciation has been debated by a number of authors. Mayer (1993) studied several cities and concluded that though high value (properties) homes appreciate faster on average, they also are more volatile. Clapp and Giaccotta (1998) found sufficient evidence to support the fact that the evolution of prices for large and small homes differs.

According to authorities on the subject, home ownership is an important measure of economic assimilation. In contrast to wage, home ownership permits interferences about long term integration process of immigrants since it represents an outcome of long term economic progress and plays a key role in providing long term financial security. Myers and Lee (1996) for instance have also identified home-ownership as one of the important events in the integration process of immigrants.

Where they reside in Accra, Tema and Takoradi

Although the exact numbers of immigrants recently settling in Accra, Tema and Takoradi are not readily known, estimates put the yearly inflow at between 38,000 and 42,000 or slightly over in the last three years. Preliminary investigations conducted revealed that immigrants can be found concentrated in particular suburbs of Accra, including the much talked-about East Legon, extending into the Trassaco Valley Estates, the New Achimota area, Teshie Nungua Estates, Airport residential area, Ridge, and the redevelopment areas of Cantonments. Other areas harbouring high densities of immigrants include the Tema metropolis, particularly Communities 18 and 19 and on an even denser scale along the Baatsonaa end of the Spintex road.

These ethnic immigrants’ concentrations would be of little interest if they have no consequence or impact; but the fact is that they do have consequences for the host environment as have been observed in Accra, Tema and Takoradi. Although dense geographic concentrations appear to have a rather negative effect on immigrant population acquisition of the local dialect, they may have good impact on immigrants in the areas of younger citizens maintaining their original ethnic culture and, at times, the mother tongue. There may also be several other advantages of grouping together at one location. For example, such geographic concentrations may facilitate immigrant entrepreneurship although the normal earnings of the immigrants appear to be depressed.

Immigrant groupings very much affect the demand for housing and may impact on their political strength, at all levels from the grassroots to the national. It is not surprising that a small number of immigrants may suddenly wield so considerable a bargaining power and political influence if they are strategically located in a city as happened at New Achimota, Accra where a Nigerian stood but lost contesting the position of an Assembly Man.

Data Analysis

The immigrant inflow to Accra, Tema and Takoradi by continent from our research can be depicted as follows: 52 percent from the African continent, 21 percent from Asia, 17 percent from the Europe, 10 percent from the Americas.

The largest numbers of immigrants to Accra, Tema and Takoradi from the African continent come from neighbouring countries particularly Togo, Burkina-Faso, Ivory Coast, Nigeria, Liberia and Sierra-Leone. The others are South Africa, Mali and Niger. Nigerians account for the single largest number of immigrants in Accra, Tema and Takoradi, from the African continent with as much as 14 percent and 11 percent, 10 percent, 9 percent, 7.6 percent from Burkina-Faso, Togo, Ivory Coast, Sierra Leone and Liberia respectively.

With regards to the residency ownership structure, 148 respondents representing 42.65 percent of immigrants live in rented premises with 67 or 19.30 living in their own acquired homes in prime areas of the cities. Some 132 representing 38 percent of immigrants live with friends, earlier arrivals and relations.

Twenty-Three percent of the economically active group of immigrants coming into Accra, Tema and Takoradi have some formal education with, at least, 47 percent of this category holding a university degree or diploma. Thirty-eight percent of the economically active group migrating to Accra and Tema are skilled trade’s men comprising auto-mechanics, carpenters and building site supervisors. Thirty-Nine percent of the economically active group arriving in these cities have no formal education or skill.

Interestingly, 43 percent of immigrants from Africa, America, and Europe visiting Accra interviewed over the period of the survey were contemplating relocating permanently to Accra, compared to 28 percent of their Asian counterparts. The greater majority of immigrants from Asia (China, Japan and India) were in the Accra for business purposes and stay for much shorter periods. This category of immigrants preferred to stay in Hotels, Bed &Breakfasts or Guest Houses rather than rent or buy homes. It is, therefore, assumed that these categories of immigrants do not impact directly on ‘residential’ property pricing which is the focus of this work.

The analysis revealed an interesting pattern. A vast majority of immigrants live in ‘prime’ let, or owner occupied properties. It is, therefore, likely that this is responsible for the genuine shortage of prime “middle income” housing (in the short term) as the construction sector requires much longer duration to build accommodation. This is more likely to be the case if migrants are wealthier than the host population. This is typical of most Nigerian migrants coming into Accra and Tema. For example, recent immigrants from Nigeria to Accra tend to purchase high quality properties in prime areas of the city that are inelastic in supply or take a long time to build.

We found that 42 percent of the economically active immigrant population arriving in Accra, Tema and Takoradi could afford rental properties attracting GHc600.00 (approx. US$150.00 per calendar month with as many as 27 percent willing and able to afford rental properties attracting GH¢1,100.00 (approx. US$250.00) per calendar month.

Interestingly, 60 percent of properties acquired by immigrants arriving in Ghana were found to be worth over GHc400,000. This is an indication of the wealth of immigrants settling in the country which further buttresses the argument being addressed by this work that immigrants have had a significant impact on the current upward trend of prime properties in the cities of Accra, Tema and Takoradi.

Migration inflows might have a destabilising effect on estate agents expectation about the fundamental value of houses. A temporary increase in house prices stemming from an inflow of relatively wealthier immigrants may cause local agents (buyers, sellers etc.) to have overly optimistic outlook about the appropriate value of houses, for instance leading to a prolonged period of high prices.

Wealthy immigrants influence property prices as agents compete to purchase or rent property to them but, the supply of property is fixed. Some of this price increase will be temporary because price schedules will decline to a new level through time as new, better, state-of-the-art and higher quality properties are built. If the rise in demand is sufficiently small, the desired improvement in the quality of the housing stock will take place within a period and the schedule of house prices will reach its long term level.

The fact that immigration has been an important growth suggests it has had some influence on the housing market. Analysis of data reveals that, immigrants added a huge demand for properties in Accra, Tema and Takoradi.

Immigrants coming to Ghana and settling in Accra, Tema and Takoradi, particularly those planning to settle in prime areas, can only expect property prices to continue to rise drawing from recent changes in immigration regulations by countries across the globe.

GB&F

 

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