Real Estate & Construction

Suburban Buffer

Middle-Class Suburbanization

By 2020, Africa is likely to be the fastest urbanizing continent in the world. Currently, it is the most rural, with an average of only 40% of Sub-Saharan Africa’s population […]

By 2020, Africa is likely to be the fastest urbanizing continent in the world. Currently, it is the most rural, with an average of only 40% of Sub-Saharan Africa’s population living in cities. However, annual population growth rates and corresponding need for increased infrastructure are set to change the demographic landscape of the continent. Ghana is no exception. With 53% of the population currently living in urban settings and population growing at a 3.15% rate, up from 2.6% in 2016, the country is on the verge of a huge housing dilemma.
One idea gaining traction in the past couple of years is newly developed satellite smart cities: ambitious, multi-billion-dollar, hyper-livable tech cities populated with bustling, beautified boulevards, private condos, and luxury cars. While there is compelling evidence that micro-communities are indeed an efficient projection of future living spaces, these smart cities have so far failed to target the slice of the population that in two to three decades will be in need of a house.
At the heart of suburbanization will be the Ghanaian middle-class; it is the segment between the high and low end of the population that will be most likely to fill up satellite cities of the future.
As of 2017, Ghana’s middle-income population is far below Western levels both in terms of purchasing power and living standards. In 2017, the average salary for a middle-class individual is USD12.3 a day, while the typical household income for middle-class families is USD16.9. About a third of the middle class has a full-time job, and 31% are self-employed. Less than 42% of middle-class households have indoor running water, while 20% have hot running water. Only 69% have a flush toilet inside the house, and half have a built-in kitchen sink. And although 96% of the middle class enjoys electricity, power cuts are a regular occurrence.
Rapid urbanization, the enormity of slums, and scarcity of employment opportunities in major city centers have necessitated the creation of new urban centers. Satellite cities that are well-organized, self-contained spaces are being built progressively on the periphery of Ghana’s major cities, Accra and Takoradi above all. Targeting the middle-income portion of the population does not only represent a safe and profitable investment, but also a social need. This concept goes beyond the simple and cliché concept of work-live-play most satellite cities are designed around, as they factor in a key element that is likely to influence the future middle class more than the higher-end of the population: commuting.
Public transport is the most common form of travelling among the middle class, as 68% of households do not own a car. However, this number is rapidly decreasing as further evidence of the rise in disposable income. The rising middle-class is likely to pick better living conditions outside Accra and commute rather than living in an apartment downtown.
As for the retail aspect, former luxuries, such as shopping malls are becoming more readily accessible for the expanding middle class. As pointed out by Bright Owusu Amofah, CEO of Appolonia City, “There are many opportunities in retail… Income levels are increasing, and Ghanaians are getting more exposed. The price points between open markets and shopping malls are leveling out. There is still a great deal of demand on the outskirts of Accra.“

While this future for Ghana’s middle class seems far off, investors and developers would be wise to look at the value of this long-term opportunity, considering the mutual benefits for investors, developers, operators, and end users. Despite the moniker of satellite cities, they are more precisely the suburban buffer between those leaving rural areas and overflows in the urban spaces.

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