I have read online posts, watched comments from regular show hosts about how saturated the Ghanaian real estate market is. Nothing could be further from the truth, but before you throw a stone at the messenger, the numbers don’t lie. Let’s dig into the market, and then draw a constructive conclusion.
THE NUMBERS DON’T LIE
I have heard Accra real estate is one of the most expensive markets in the world. I won’t argue with that for a second. For instance, penthouses and townhouses are the most expensive residential property types in Accra, with sales prices ranging from US$450,000 to US$2.5 million, according to Broll Ghana. For high-end apartments, the average sales price currently ranges from US$85,000 to US$620,000.
According to Knight Frank, there is a growing population in the urban areas and, as a result, about 37.5% of all households in Accra rent homes, which is about 22% of the population. So why then do we talk about saturation if there is a growing population that needs housing? The question is not about oversupply, but the ability to afford it. Arguably, Accra is a less developed modern city.
In a separate research finding, roughly 40.4% of households in Accra own their own houses, which constitute 57.4% of the population. This indicates the demand for housing. The Ghana housing deficit of 1.7million, give or take, means people need housing. The increasing urbanization triggers demand for housing in Accra and creates an opportunity for developers. Fortunately, there are no barriers to entry into the Accra housing market.
Read also:A snapshot of Accra’s residential real estate market in 2022
PRICING DRIVERS
One of the main drivers of Ghana’s real estate prices is land acquisition, which, needless to say, affects the pricing mechanism. Let me give you an example. We scoped out “X” acres of land for development purposes in a somewhat prime location in the city of Accra. The landowner wants a whopping $25million minimum. We went back and forth but the landowner just wouldn’t budge. In this scenario, the cost of the land alone would have been enough to develop the “X” acres of land project, depending on the amenities offered.
Now, factor the development and construction cost into it. A property developer is left with no choice but to price the units in order to recoup his investments, debt service and make some somewhat reasonable profit. Take for instance, the prices for fully-furnished three-bedroom houses in Accra range from US$100,000 to US$500,000, which is 15% higher than in the rest of the country.
Read also:Why are rents so expensive in Ghana, Accra? -villashark.com
DEMAND DRIVERS
Accra and, for that matter, Ghana, which is peaceful and rich with culture and friendly locals, is one of the preferred and attractive destinations for tourists and keeps captivating international companies and businesses. There is also a growing number of middle-class population in the country which have a taste for a lifestyle- not just a structure. Furthermore, there is an increasing inflow of mid-executives from neighboring countries and Ghanaians in the diaspora returning home seeking quality housing not just like any other bricklayer.
Read also:Top Locations in Accra: Houses and Apartments for Rent or Sale, and Commercial Spaces for Rent
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Read also: ECO-FRIENDLY HOMES FOR SALE WITH SOLAR IN GHANA
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How is the real estate market in Ghana?
That bring us to the previous question. The demand for residential and commercial real estate continues to see magnificent growth driving by to rapid urbanization. Accra for instance, the average rent in prime areas is about $4500 per month. With regards to the commercial real estate market, the average office rent per square is $28. That is also true for industrial recording $5 and retail is as high as $45 per square metre, according to Knight Frank Africa Report .
Read also:Is Ghana Experiencing Real Estate Boom or Market Crash?
What is the current housing situation in Ghana?
There is shortage of 1.8million units to meet the rapid increasing demand for housing in the fast growing country. Although there has been a reduction of 33% from the previous 2.8million in 2010, there is still much grounds to cover. The sector is far away from oversupplied. Accra the Capital city is where everything revolves around in Ghana, followed by Kumasi. Everyone want to live in Accra which puts pressure on the supply side. It is fair to say that rental market is landowners’ market as most people rent then owning their properties. Although the government said affordable housing program is on its high agenda, , the Saglemi housing project which supposed to provide housing for low income earners is a total failure and uninhabited development. Kind of a ghost town.
Finally
Finally, the opportunities in the Accra real estate market are endless. As the saying goes, “there is, a market for everything”. That said, studying the market and understanding what the market wants is no brainer for any developer. There are new developers and foreign developers entering into Ghana real estate sector to serve the “hungry for shelter” market. In Ghana land prices always goes high. Buy right and understand your target audience and your return of investment will be phenomenal.
Take Away
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