Doing Business in Ghana through Real Estate

Nov / 18 / 2019

Ghana is categorised as a lower-middle-income country by the World Bank and is recognised as 1 of 109 middle-income countries in which sustainable growth and development have a positive effect on the rest of the world. Considering the fact that Ghana’s progress does not only have national and regional consequences, I would like us to consider how investing in real estate can contribute to a stronger economy even as it increases personal wealth. Real estate is one of several investment options in Ghana which can generate long-term returns. However, it is one of the few options that allows investors of all kinds to participate. Not everyone can invest in the mining industry, operate an oil and gas business or own an international franchise, but many local and foreign individuals can become real estate investors.

Acquiring Real Estate

Ghana’s real estate industry is full of income-generating opportunities in the short, medium and long term, relative to one’s investment goals and initial capital. For many Ghanaians, the entry point to a real estate investment is building and owning their own homes. Land is acquired in a preferred or available location; permits and other documentation are secured; building plans are drawn; and the right labour is contracted to begin construction. This process can take individual builders anywhere from a few years to a large number of years depending on the resources at their disposal; whether that is time, money or both. Buying existing real estate comes at a higher initial cost but offers near-instant income-earning potential because the property is readily available for lease or resale.

Return on your real estate investment

A real estate investment can produce year-round income through rent payment while the property appreciates in value. This is because there is a high demand for accommodation from all directions: single men and women, families, tourists and expatriates, even employees on various work assignments all over the country all need suitable places. As long as people need a place to live – and they always will – there must continue to be a good supply of a variety of houses and apartments for sale to accommodate them. However, location is a major determining factor of a piece of property’s marketability, and every real estate investor must bear this in mind before signing the dotted line to buy a plot of land or a building.

Real estate investment is flexible

Ghana’s real estate sector also offers local and foreign investors a measure of control that other investments do not. For instance, the price of crude oil or gold is determined by external factors that determine how much an investment will yield. The success of investments in the money or capital market is also determined by conditions beyond an investor’s control. In contrast, a real estate investment is a tangible asset which can be kept and leased, developed and collateralised, or sold to take advantage of market conditions. This flexibility makes real estate a viable means of building wealth and maintaining financial security.

Real estate requires patience

I must, however, point out that patience is required with real estate investments as many of them only deliver considerable yield over time: an investment in real estate is not a get-rich-quick scheme. There are associated costs as well, ranging from property taxes, planned maintenance expenses and unexpected repairs. I also advise that you do due diligence before making payment for all independent land acquisitions. The World Bank’s Doing Business 2020 report states that it takes 33 days to register a piece of property at a cost equivalent to 6.1% of its value. This encompasses the following:

  • Conducting a search at the Land Title Registry of the Lands Commission to ascertain the property’s rightful ownership and/or reveal any land disputes
  • Getting a lawyer to draft a sales and purchase agreement for the buyer and seller
  • Assessing the property’s current open market value and paying Stamp Duty to the Land Valuation Division of the Lands Commission
  • Submitting an application for a land title certificate at the Land Title Registry
  • Issuing the land title certificate after which the property owner can go on to make use of it (although most property owners in Ghana do so before the certificate is issued)

Always remember that there is no substitute for doing things the right way, because it saves you from avoidable losses and regret in the future. It is your responsibility to ensure that all legal and regulatory conditions are fulfilled when you decide to purchase land or a building, so that your investment can pay off for years and years to come.

Invest in Real Estate Now!

Are you considering diversifying your income or investment portfolio in Ghana? Take a bold step and invest in the real estate sector if you are yet to do so. You can choose to finance it with your own capital, partner with others to pool your resources on agreed terms or through debt if you are eligible for a bank mortgage. Over time, and as you better appreciate the world of real estate, you can expand your investments to own multiple units and even establish a self-sustaining financial legacy for your family and loved ones. I would be very happy to answer your questions and hear your thoughts on the subject of real estate investment in Ghana, so let’s connect via email at jorge.osorio@DevtracoGroup.com.

Jorge Osorio is Sales and Marketing Director at Devtraco Group (www.DevtracoGroup.com)

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