Ghana’s Real Estate; the Cash Cow

Enormous opportunities in Ghana’s real estate space.

There’s this popular pidgin phrase which goes like “follow person wey know road”, so when I decided to embark on my investment journey the first thing I did was to research on how successful people invest.

The results from my research was quite surprising as it deviated from usual financial advisors mantra of investing in stocks and bonds.

Specifically I looked at how members of the Tiger 21 split their investments between different types of assets. Tiger 21 is an organisation in the US which requires its members to have at least $20M in investible assets.

I discovered through my research that members of this group have less than 30% of their investments in stocks and bonds and over 50% in private equities and real estate.

The take away from this discovery was crystal clear. The fact that these wealthy group have more than 50% of their investments split equally between business and real estate illustrates that when it comes to growing wealth there’s nothing better than owning a business and when it comes to preserving wealth there’s nothing better than properties.

Andrew Carnegie, one of the richest guys ever to have lived on this planet couldn’t have said it better when he said “Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate”.

Armed with this knowledge, I decided to invest my savings in real estate but the dilemma I had to contend with at the time was which location to invest. I was torn between the UK where I call home and my country of birth Ghana.

After carefully analysing the real estate data in both countries focusing specifically on ROI, Ghana stood tall. Available data at the time depicted that the average ROI in London was 6% whilst that of Accra hovers around 10% pa.

I started my investment journey with a small apartment in the centre of Accra which has done pretty well in terms of occupancy. On hindsight I wouldn’t have invested in that property if I had the knowledge I have now.

At that time I followed the crowd because everyone wanted to have properties in the prime areas such as airport residential, cantonments etc. These areas based on experience offers maximum ROI of about 12%.

I wanted better ROI than what I was getting on my apartments in prime areas of Accra so I decided to try HMOs or houses of multiple occupancy, offering accommodation for unconnected tenants who share living area and kitchen facilities in the suburbans of Accra.

Those I spoke to about the idea to invest in HMOs in Accra were quite skeptical. They never believed HMOs could work in Accra. Nevertheless I gave it a go and fast forward this has been the cash cow generating ROI of about 20 to 25% per annum.

In 2022, I listed 3 rental properties in Accra and made over USD100k passive income in that year with over USD90k coming from Airbnb alone. I achieved over 70% occupancy across board.

These numbers were quite intriguing but again it made me realise how much there is to achieve in Ghana’s real estate sector if you understand the market and knows exactly what you are doing.

This illustrates the sort of opportunities that exist in Ghana’s real estate space if it’s properly positioned. The sector presents significant opportunities that investors can tap into.

I have often been approached by people who have interest in investing in real estate but are unable to raise the initial capital.

This gap presents an opportunity for REITs which is currently somehow non existent in Ghana and a financial company offering competitive interest lower the existing 12% been offered by the banks now.

As a keen follower of tourism and the entertainment industry in Ghana, I can see how these two sectors are growing Year on year and are likely to be the catalyst of Ghana’s economic renaissance which in turn will further soar the demand of rental properties in Ghana.

With Ghana now being the Detty December “capital” I can see 2023 and beyond presenting more opportunities in the real estate space and there hasn’t been any better time to invest in Ghana than now.

Writer: Emmanuel Appiah-Kubi (BSc, MSc, FCCA, IFA)