Ghana Real Estate Sector: The New Cash-Cow for Investors

Long before spiral population growth and huge economic gains made houses one of the high-end commodities in Ghana, the banking and insurance sectors were considered the cash-cows for high yield seeking investors. As a result, local investment institutions such as the country’s pension fund manager – the Social Security and National Insurance Trust (SSNIT), the SIC Financial Services as well as a host of other multinational, individual and institutional investors pushed a larger chunk of their investment budgets into blue-chip banks and insurance companies.

The trend has, however, changed, nearly two decades down the line. Although the financial institutions – banks and insurance companies – are still posting double digit growth rates on annual bases, changes in population growth and its composition, the discovery and exploitation of oil in commercial quantities, huge economic growth, the prospects and their attendant effects on FDIs and tourists arrivals in the country has made the real estate sector the new area to watch and possibly invest in.

That is because, as more Ghanaians move into the middle and upper income bracket, thanks to the consistent display of strong economic growth, demand for decent yet moderately priced accommodation increases, thus making the construction, leasing and/or selling of landed properties a business with ready market. More people, especially the less endowed, are also up in search of decent accommodation for rent in major cities, especially in Accra, the national capital, Takoradi, where commercial exploration and exploitation of oil and gas is underway, and Kumasi, the apparent business capital.

Recent data from the country’s national statistical body, the Ghana Statistical Service, showed that it was suffering from a housing deficit of over 1.5 million units and urgent actions are needed to address it before it escalates even further.

That is good news to giant real estate companies such as the Manet Group and to accommodation leasing institutions and individuals – the landlords. The landlords, for instance, have taken advantage of the high patronage for houses, call them rooms, to demand high rents and advances contrary to the country’s renting laws. In Ghana, nobody is permitted by law to demand a rent for a period exceeding one month. However, landlords now demand for and take rent advances for periods exceeding one year.

The good news in the housing industry also extends to the hospitality industry where frequent arrivals of tourists, conference and business seminar and workshop attendants as well investors has sent prices of hotel rooms skyrocketing.

Although Ghana is home to hundreds of hotels, including some of the finest in the subregion, there are often times when the number of visitors and tourists overrun the hotel rooms, leading to referrals outside the major cities. About 1.5 million tourists visited the country in 2012, according to data from the Ghana Tourism Authority, the body that regulates the country’s tourism industry. Continue reading…