Foto File

 

Ghana’s apartment market blossomed after the September 11 attacks on the twin towers in New York. Talk about the world being a global village. However, to understand the current trends it is best to have some insight into the experiences that shaped them.

 

A brief history

 

In 1996, when I first got exposed to Ghana’s property market as a fresh Land Economy Graduate, the only apartment buildings available in the city were Government flats/apartments for civil servants. The limited choices for most foreigners meant they were forced to rent a rather large family sized 3-to-4-bedroom dwelling within the prime areas of the city. Furniture and white goods shops were also quite rare and therefore most had to import or bring furniture from abroad or their previous country of posting.

After the September 11 attacks occurred, word on the street among Estate Agents was that the United States and allied diplomatic organizations had made changes to accommodation requirements for staff, limiting accommodation to a specific radius and in secured and gated communities. I never came across any such communication but in the following months as terminations occurred it was clear a change was afoot.

 

 

 

 

With the growing need for condominiums and homes with shared services; the scramble for prime lands for developments began. The target market was any Ghanaian who could afford to purchase an apartment with the goal to renting out to the diplomatic and expatriate community, who were the main target for the buy-to-let investor. Some wealthy developers and Joint Venture partners however kept entire buildings solely for rent.

So, the buy-to-let market evolved as most buyers did just that; bought with the sole aim of renting out. This was a new phenomenon in Ghana but not uncommon with the sophisticated/exposed Ghanaian investor. So how did it evolve?

 

 

Impressive yields and long lease terms.

 

 

Early investors can attest to the attractive and impressive yields. Looking on some past data I put together (available on request), Gross yields were averaging between 13% to as high as 15% per Anum, with lease terms of 2 years minimum and rents paid upfront. The impressive rental terms were also a feature carried over from when diplomats had to commit to paying up to 3 years upfront in order to secure the very few houses available on the market. It was fast becoming the Eldorado of rental property investments for those bold enough to venture into the space.

 

 

Increased supply

 

Naturally, supply increased as well. Property owners entered into various Joint venture partnerships with Real Estate Developers for the construction of mainly Condominiums/flats and Town Houses. Families relocated aging parents outside the prime areas and redeveloped their lands into modern condos and town homes.

 

 

Choices

 

During the boom, between 2004 and 2008, most homeowners were calling the shots as to whom they wanted as tenants. Almost every landlord had set criteria, in order of preference, the choices were mainly based on nationality/race, in this particular order;

A westerner – Europe/North America (Caucasian)
A westerner (Europe/North America (Other race)
Asian (Korean/Japanese)
African (South African)
African (Other- if payment terms were favorable)
Any other
At least this was the criteria until they had one bad experience.

 

 

Early Predictions

 

After the 2008 global downturn, it was obvious that the market was going to take a certain turn. No one could tell exactly but within 10 years some things became more certain than others;

 

 

SELLING NOW - 4 BED ROOM TOWN HOMES

 

Real Estate projects that were in the offing were nearing completion thus increasing supply on the market. In recent years, newer investors are still entering the market. Tenants started to insist on offering only one year's commitment in order to pay just a year upfront. Unless owners were ready to accept a longer term. I personally encountered a few tenants who simply committed to a year's term, paid for the period then moved to another new apartment as there were several new options on the market. This was the beginning of the need for furnished accommodation.

 

Some developers built modern and new apartments in the second- and third-class locations in order to capture the second-class market or those who couldn’t afford to purchase within the prime locations. For some also, that was the only opportunity presenting itself. As infrastructure and security improved around the city, some of these foreigners ventured outside the first-class areas and took apartments in the second- and third-class locations for slightly cheaper rents, depending on their employers' requirements.

 

All these experiences have helped to shape what we now have as the prime residential market for apartments. It has become quite obvious that within a span of 20 years, some major changes have occurred that will define the market trends for the future.

 

 

In part 2 we will take a look at the short-let conundrum and how to maximize it as an investor.

 

 

GET A FREE COPY OF  AFRICAN HOME BUILDING MAGAZINE  

 

About the Writter : Sarah Sodzi Ziddah is an Experienced Real Estate Professional. Skilled in Real Estate Acquisition and Conveyancing (Ghana Property Market), Facilities and Estate Management, Corporate Real Estate Strategy, Valuation, Procurement, Sales and Marketing.

 

source : Sarah Sodzi Ziddah

Comments System WIDGET PACK