Business featured Real Estate

How to Start a Real Estate Business in Ghana

Real estate has become one of the profitable industries in the country over the past decade. We could attribute this to rising demand for real estate partly emanating from a growing middle class and foreign visitors from neighboring countries and afar, who usually have long stays in the country.

In Ghana, real estate returns at least 50% in the local currency to investors if the property is sold outright. Returns in some cases are as high as 200%.
Real estate in Ghana is primarily characterized by acquisition and sale of land, build & sell, renting and leasing, buy & improve & sell, and many more forms. The fast growing ones include erection of apartments for sale and/or lease and acquisition of land for development of gated community properties for sale.

Landed properties usually have very long lives and can serve as a generational business and also as collateral for loans if found in the right location.
Location is a very important factor in the real estate business and in most cases, the single most important factor. In Ghana, major cities represent the best locations. Takordi, Kumasi, Tema and Accra expectedly provide the best value for your landed properties in terms of location.
One of such hot spots in Accra is examined in this article and presented for investors to consider. You can go to the opportunity section to continue reading on this property.

OPERATIONS

In order to reap the full benefits inherent in this business you need to make some choices upfront when buying properties. The real estate business in the country requires careful examination of all documents related to a sale of property and appropriate due diligence.

It is important therefore to conduct a full search at appropriate agencies to satisfy yourself that the property you are investing in is rightfully owned by the seller, unencumbered, and the seller has a legitimate right to sell it. The examination must include physical inspection of property to make sure it is not badly damaged, or that it may not incur you unnecessarily burdensome expenses in the near future such as refilling of site and material repairs or even the need to pull down the property and rebuild it.

Property acquisition is therefore a very important step in the business and must be treated with appropriate professional advice and caution.
Some properties require way too much time and management to make them profitable investments. Out-of-town vacation rentals, low quality commercial buildings in bad areas, long collection of chamber and halls and single rooms are some examples.

Nice properties located in good areas rented for as long as possible to decent creditworthy tenants either for residential or commercial use are among properties that require least management.
To make good returns on your real estate investment, selecting appropriate marketing strategy becomes important. Target your marketing efforts to only people who can and are able to buy or rent your property and do not waste time on those who cannot.

OPPORTUNITY

A parcel of land lies in a prime area in Accra which is available for sale at the moment. The land which measures 92 x 125 ft lies right behind the wall of the plush Trasacco Valley estates at Adjiringanor, and also has King’s cottage to the east, another gated bourgeois community.

This property can be used for two 4-bedroom storey buildings or one 5-bedroom storey building with ample space around it or can even be used for three 3-bedroom houses.

Demand for properties in this area is high as evidenced by the comparatively high property prices. The area already has electricity, roads, water and other completed houses, most of which are storey buildings.
When you buy property, you are diverting money from your liquid assets such as stocks, bonds, term deposits etc., and investing into very illiquid assets – real estate. For this reason, the property must be one that will give you good returns and can be quickly sold.
A financial summary of the investment is presented below. The figures here are presented in US$.

Outright Sale

Property Land Est. Cost of Building Total Cost Est. Sales value Profit % Return
5-bedroom 116,000 110,000 226,000 395,000 169,000 74.78%
Two 4-bedroom 116,000 200,000 316,000 550,000 234,000 74.05%
Three 3-bedroom 116,000 250,000 366,000 660,000 294,000 80.33%

Lease

Property Land Est. Cost of Building Total Cost Est. Annual Income Annual Return
5-bedroom 116,000 110,000 226,000 48,000 21.24%
Two 4-bedroom 116,000 200,000 316,000 72,000 22.78%
Three 3-bedroom 116,000 250,000 366,000 72,000 19.67%
These are only estimates based on certain assumptions. All profits are pretax profits. All amounts are in US$

RISKS AND CHALLENGES

A major risk associated with real estate investment is liquidity. Properties are not easily convertible to cash, unlike financial assets. However, depending on the property type, location and your marketing efforts, a property can be converted into cash within a short period.

Summary

Investment sector: Real Estate
Tenor: 1 year for outright sale; 25 years for renting.
Expected Return: 75% for outright sale; 21% per annum for rent.
Payback Period: 1 year for outright sale; 5years for rent/lease.
Risk: Low
Liquidity: Low
Attention required: Medium
…We are better placed to assist you. contact us now

Or Apply for the digital guide on how to start this business successfully. Business Contact

Related posts

This is Why i Want to Slap my Boss

Nana Afoa Selorm

Story: The Man Who Created A Brilliant Product But Was Afraid to Share

Rebecca Essilfie

How to Start a Business Online

Desmond Bonsu

10 Low Cost Businesses You Can Do in Ghana

Joseph Amponsah

Banks In Ghana: Barclays Bank Ghana

Joseph Amponsah

The Power of Mass Market Products to Make You Rich

Kwabena Okyire Appianing

1 comment

10 Low Cost Businesses You Can Do in Ghana - Top Business Journal January 6, 2017 at 10:22 am

[…] Though an expensive sector to break into, the real estate business in Ghana is, as is the case in most countries, very lucrative. Following the discovery of oil in the Western part of Ghana, the nucleus of development and industrialization is gradually shifting towards the region. So, you will probably make more money as a real estate investor if you focus on the oil-rich region. Learn how to start a real estate business in Ghana. […]

Reply

Leave a Comment