La Beach Towers: A Dream Continues To Haunt Accra’s Waterfront

Following my recent piece on the fascinating history of Shangri-La Hotel, a surprisingly large number of people have asked me to write something about another iconic abandoned property, La Beach Towers (picture attached), a gaunt tower astride the La Beach road.

Frankly, I didn’t find the story titillating enough to deserve its own Scarab post, especially also as it didn’t hit enough of the development policy notes that often excite me. But given the interest, and the fact that there is quite a bit of misinformation still milling about (including claims that it was abandoned because it started to “sink”), I thought I should do this quick overview.

I should probably rephrase a bit. Yes, there are some very curious ADJACENT stories about the people involved and the project itself, but each probably works best in their own piece, hence my initial hesitation. Nonetheless, some of the disparate themes could still be worked into a coherent story.

Anyway, here goes.

La Beach Towers is said to have been conceived by the former Deputy Railways Minister in the just departed NPP government sometime around 2009. He was certainly the primary driver of the vision. And, yes, he is also the same man who sparked controversy for declaring that the galamsey fight is incompatible with electoral victory of the ruling party.

In contemporary politics, he is best known as the perennial contender with Obour (former musician and current boss of the Ghanaian post office system) for the Asante Akim South parliamentary seat. And for always coming on tops.

Professionally, he is a lawyer and estate professional, having started his career in the public sector. His last stint as a private sector employee was at Unilever. Thereafter, he moved into real estate entrepreneurship and endeavoured to make his mark. La Beach Towers was to be his grand entrance.

The project was envisaged to comprise of three 17-storey towers on the beachfront. Costing $80 million in total. This is where things start to look confused. There was no dedicated financing. However, a few high net worth individuals committed some funds. Ghana Home Loans “committed” to raise $100 million to fund mortgage packages for condo buyers interested in the property.

The approach adopted by the La Beach Tower’s sponsors is quite common nowadays in the luxury real estate sector. Get the land, squeeze some cash from high net-worth individuals to get going, and try and pre-sell a bunch of units to secure next-stage capital. You can go ahead and call this the “off-plan slingshot” model of property financing. There is a whole story waiting to be written about how it is fueling a Dubai-style property speculation frenzy in Ghana but with different fundamentals.

As project completion nears, pre-sales volumes are expected to rise in tandem. At which point your supporting bank chips in, with the property serving as collateral. In some cases, your own assets have to be on the line as well. Basically, the banks won’t commit until the project sponsors have enough skin in the game.

Whilst innovative concepts are steadily being introduced into the real estate sector in Ghana, practices are still, at least, five decades behind more developed markets with only a very limited use of risk-minimisation options like securitisation, real estate partnerships, corporate sale and leasebacks, and crowdfunding, etc. Even savings and credit cooperative based models active in Kenya have yet to reach Ghana. For now, it is mostly hard-knuckle stuff.

Thus, for the delicate financing schemes currently in use in Ghana to work, you need a very accommodating construction partner willing to walk the journey with you. Especially if the project is a massive mixed-use complex that you cannot hope to design, execute, and supervise yourself. Like La Beach Towers.

Ghana Home Loans and Property Solutions Models, the former deputy minister’s outfit, approached MBS, the powerful construction sector player run out of Tema by the Barbisotti brothers. By this time, a special purpose vehicle called Real Concepts Limited, controlled primarily by the former deputy minister (who around that time was just about entering Parliament onto the Opposition benches), was assuming responsibility for the commercial aspects of the project. It was even purporting to manage design and engineering and had architectural drawings, landscaping designs, and some geospatial plans in hand.

The choice of the Barbisottis was smart. The third-generation Italian family has a fascinating back-story that won’t detain us here too much. Suffice it to say that the patriarch of the family arrived in Ghana (the then Gold Coast) as far back as the 1920s.

The family’s story will mirror the ups and downs of this Republic. During the second world war, their Italian heritage would cause their arrest and exile to the Caribbean by the British colonial authorities due to Fascist Italy’s alliance with Nazi Germany during the war. A decade or so after the war, they were back in West Africa to start over. That cycle has repeated itself with the latest re-entry dating to the 1990s. It has also made them, like the other Italian construction families in Ghana, very savvy about the Ghanaian business, political, and social realities.

The Barbisottis are known to be hard-nosed, yes (cue the tragic Samuel Doe story), but they are also anything if not flexible and full of grit. Whilst prioritising giant projects – like the Movenpick Hotel, the expansion and refresh of Labadi Beach Hotel, big 37 Military Hospital projects, the aborted National Cathedral (as part of a consortium with Desimone and Rizzani de Eccher), the Stanchart headquarters and others – they have also been known to work hand in hand with entrepreneurs operating in Ghana’s capital-scarce environment to execute iconic projects like the La Villa Boutique hotel within tight resource constraints.

When the Barbisottis onboarded the La Beach Towers project in 2011, the first thing they did was take a closer look at the planned designs. They brought on board Alessandro Masoni, currently head of architecture at the University of New York in the Albanian capital of Tirana. Though Masoni is a Tuscany guy and the Barbisottis are Lombardy folks (Bergamo, to be more precise), the sync appeared to have been perfect. Masoni had the same grit and flexibility needed to survive the flux and tensions of working in Accra’s chaotic real estate sector.

Which is all for the better, because when Masoni first looked at the La Beach Towers designs, he couldn’t believe it. The beachfront property was being sold to investors as the very height of luxury. Yet, at least half the condos had a view of the Labadi slums rather than some coconut-lined shorelines of the Atlantic Ocean. It was not just spatial orientation that was wrong. The entire concept simply failed to match its advertising.

By this point, in hindsight, the project was already doomed. Redesigns and re-alignment with the marketing vision led to a considerable shift in commercial logic. Minimum pricing for units at the low end (with less spectacular views of the ocean) had to be raised from circa $300,000 for units to nearly $580,000. The sky-villas and penthouses seemed impossible to deliver below a million-dollars. The price-floor for top-storey apartments couldn’t be sold for lower than $650,000. Some of these decisions could also have been a consequence of the need to reduce the total number of units across the towers.

Remember that the project’s capital cost remained at $80 million. At 192 units in total, the average construction cost per unit significantly exceeded $400,000. Accommodating financing and other costs meant that even at $580,000 rock-bottom pricing, the project developers were cutting it close.

It was now 2012. The main project visionary was neck-deep in NPP politics. Pre-sales were failing to come through, and uptake of the 20-year mortgage packages from Ghana Home Loans (GHL) was seeing virtually zero interest. The project’s champions within GHL were sweating. Of the three planned towers, only one was making progress and even then it required a return to the drawing board to rethink spatial design for amenities, etc. GHL honchos started to see very dim prospects for the $100 million fundraise, and earlier ideas about a real estate investment trust linked to the project now looked fanciful.

Then in 2013, Abraaj acquired Ghana Home Loans. The strategic priority now shifted towards becoming a universal bank with a strong real estate sector-wide portfolio and capacity, rather than staying as a mere specialised mortgages provider.

Meanwhile, discussions with FMO and the World Bank’s private sector arm to back La Beach Towers were not proceeding well. The project was stalled though not officially terminated.

Then, in 2018, Abraaj, the majority shareholder in GHL, itself started to unravel spectacularly. Its downfall became perhaps the most talked about in the African private equity community for a generation. Two years later, First National Bank of South Africa moved to acquire GHL, ahead of a mandatory deadline for banks in Ghana to recapitalise. The La Beach Towers project, long moribund, felt now like a distant memory.

Discussions about the project nowadays tend to focus on the structural integrity of the lone tower and the possible safety issues posed by its decrepit look. Under Ghanaian law, the municipal authorities are responsible for formal evaluations of such concerns. Given lack of resources, however, they are usually unable to say one way or another if there is indeed an issue worthy of investigation.

Since the project’s abandonment in 2013, there have been no definite studies on the structure to gauge deterioration in view of the obvious lack of maintenance. Some residents claim to be haunted by fears of a possible collapse.

One can sympathise with them. Just as one can sympathise with all those whose grand dreams for the project have so far been stuck in suspended animation. Each is haunted in a different way by dark spirits in the Ghanaian real estate industry.