This article will be of maximum importance to investors who are or intend to do a build-to-let or buy-to-let real estate investment in Ghana. Most real estate investors put weight on expected returns on investment (ROI) when considering which properties to invest in. However, depending on what kind of investor you are, and the locations within which your investment is made, a few other considerations which are mostly overlooked will be necessary to get the maximum return on investment.
Over the course of the last three years a real estate broker, I have observed that there are just a handful of locations in Accra that offer high ROI to real estate investors. These high ROI locations are Cantonments, Labone , Osu, Ridge, Dzorwulu, Abelemkpe , Ridge, Airport Residential Area and East Legon.
Because of the high ROI’s on Real Estate Investments in Accra, there has been growth in investment in Real Estate property in Ghana over the last decade. Currently, a major part of the ongoing real estate projects in Ghana are been developed by investors from Italy, UK, Turkey and Isreal.
Direct Investment – For Rent
If you are looking to Invest in Ghana on a built-to-let or buy-to-let basis, then kindly note the following success factors;
Location – As mentioned in the earlier part of the article, rental properties have high ROI in very few areas in Accra. These areas are Cantonments, Labone , Osu, Ridge, Dzorwulu, Abelenkpe , Roman Ridge, Airport Residential Area and East Legon. As an investor, you have to ensure that your development is located in one of the above listed areas. ROI in these areas range from 8% – 12 %. As a buy-to-let investor, kindly ensure that all purchased property(ies) are in the areas above mentioned. Land in these prime locations will cost you between $500,000 – $1,000,000 per plot if you are looking to build.
The high cost of land in these prime areas serves as a barrier to entry for most local developers. In the few instances where local developers build property in prime areas, there is usually a profit sharing arrangement between the land owner and developer, an arrangement which makes the land owner an equity holder in the development project.
Tenancy Rate – Tenancy Rate is a measure of how often apartments are occupied or rented by tenants. The tenancy rate will give an investor an idea of how long it will take before an apartment is rented after the expiration of one tenancy agreement. As a direct investor, you should notice that tenancy rate is affected by such factors as location, design, size of room, design concept among other things. Though there is no public data on tenancy rates of apartments in Ghana, an investor can contact an experienced agency like SellRent Ghana LLC to help understand the average rates in different areas in Accra, Ghana. Kindly note that the biggest factors that affect the tenancy rate in Accra are the uniqueness of the Architecture or design of the property and the Price. An investor who can get these two factors right will be in a position to earn high returns on their investment.
Architecture & Amenities – The more unique and aesthetically pleasing the design of the property, the likelihood for higher rental yield. In the residential development space, a few builders in Ghana are going a step further to include shopping centers at the ground floors of their apartments to offer maximum convenience to their tenants. All high yield properties have to come with swimming pool (rooftop preferable), garden, gym, concierge reception and should have sizable compound. The interior of the property should also be sizable and modern.
Rental Price – The average price of properties in the prime areas in Accra are as follows;
1 bedroom – $ 1,500 per month (Apartment) and $1,000 (Studio)
2 bedroom – $ 2,450 per month (Apartment)
3 bedroom – $ 3,500 per month (Apartment and Townhouse)
4 bedroom – $ 3,900 per month (Apartment) and $4,000 per month (Townhouse)
Commercial Property – $ 28 to $42 per sqm
Like in many other parts of the world, price has a direct effect on sales and rental of property. Higher prices are not necessarily bad for business in Ghana. However, ensure that there is unique value for which reason the prospective client will pay a premium for your property.
Opportunity
At the moment of my writing, there is shortage of decent, well-priced 1 bedroom apartments for singles in the prime areas above mentioned. An investor looking to gain high tenancy is therefore encouraged to build or buy these apartment options.
By: Yaw Opoku
Real Estate Broker & Advisor
