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17Jun’25
EVALUATING THE LIMITATIONS OF GHANA’S REAL ESTATE AGENCY LAW [ACT 1047]: A CALL FOR POLICY REFINEMENT AND INCLUSIVE REFORMS
EVALUATING THE LIMITATIONS OF GHANA’S REAL ESTATE AGENCY ACT, 2020 (ACT 1047): A CALL FOR POLICY REFINEMENT AND INCLUSIVE REFORMS A couple of months ago I was officially invited by the new management of the Ghana Real Estate Agency Council (REAC) to their office at Cantonment to meet the new Chief Executive Officer. They had seen my contributions as an industry thought leader and wanted to engage me further for a discussion to better shape the Real Estate Sector for the common good of Ghanaians. It was indeed a fruitful session. All thanks and appreciation to this young and intelligent National Service gentleman, Mr. David Dzantor, who facilitated the invitation and the scheduling of that all-important meeting. Whilst I was leaving the office after the meeting that day, they handed me the hard copy of the Real Estate Agency Act, Act 2020 (Act 1047). In the Act I found a small leaflet, in it were highlights of the purpose and mandate of the Council. This was put in a Socratic form of presentation, a question which read “why regulate” and the answer given was “market failure” occasioned by one, “lack of professionalism two, uncontrolled pricing three, transaction risk four, “incidence of fraud and five, “money laundering”. But the question however is, is the Real Estate Agency Act 2020 (Act 1047) inclusive enough to address the issues in the above five (5) thematic areas?. Let me leave this as a rhetorical question for readers to mull as we share our perspective on this all-important subject. But before we go into the substance of the discussion, let me set a few records straight, that our contributions, opinions and suggestions in this article are to help shape not just the real estate agency sector, but the whole real estate industry at large. We do not have any parochial interest whatsoever, implicit or explicit; our contributions are borne purely out of a nationalistic position in pursuit of the common good for all Ghanaian citizens. We have no prejudice against anyone, neither is there any motive intended to target, attack, denigrate, or frustrate anyone individual or a group of people. We therefore appeal to all stakeholders of the real estate industry to accept our opinions or views as nationalistic and must not be construed to mean anything else apart from this. Now, without wasting time, let us get back to the basics. The Ghana Real Estate Agency Act, 2020 (Act 1047), represents a significant legislative step towards regulating the real estate agency sector aimed at enhancing professionalism, transparency, and consumer protection. While the Act introduces commendable measures, several limitations hinder its full potential in transforming the real estate agency landscape. We shall be discussing a few in the foregoing paragraphs among which are these; the exclusion of the informal sector participants, rigid transaction requirements, discretionary commission system, double commission system, the charging of inspection fees, and the exemptions given to nonresident real estate professionals. Exclusion of Informal Sector Participants The Act mandates licensing for real estate agents and brokers, requiring the writing and passing of standardized examinations pursuant to Section (24) (a) (i) and (ii), which says, (24) The Board may issue a license to a person if the person (a) is an individual who has passed a qualifying examination conducted by (i) the Board; or (ii) an independent testing service designated by the Board. This criterion potentially excludes a significant portion of the informal sector participants who, despite lacking formal education, possess practical experience in real estate agency business. Their exclusion we think is not only counter-productive in our opinion because of the unemployment it could cause but also the challenge of exclusivity. We are of the opinion that the exclusion of the informal participants who existed years before the coming into force of Act 2020 (Act 1047) is too draconian and will require a solemn introspection by policy makers. The truth is there are many real estate agents and agencies that are doing genuine agency businesses maned by individuals who are not formally educated enough to sit and pass the licensing exam instituted by Act 1047. Conventionally, existing practitioners in many professions before the coming into force of a regulation such as this are normally given in-service training and are being absorbed into the system as the licensing exams apply to only new entrants coming into the space after the regulation. For this reason, we hereby recommend that all policy makers take a second look at this and make a provision for the absorption of the informal participants to avoid job losses and further market distortions. Rigid Transactional Requirements The Act prohibits cash transactions in real estate payments mandating payments through bank drafts, cheques, or electronic transfers, pursuant to Section (45) (1) of Act 1047, which states that, “payment for each real estate transactions shall be by bank draft, cheque, bank transfer, or electronic money transfer”, whilst subsection (2) says, “a real estate broker or a real estate agent shall not accept cash in payment of any real estate transaction”. Now, this is where the challenge is, while this aims to enhance transparency and curb money laundering, it poses a challenge in a predominantly cash-based economy such as ours. The lack of accessible banking services in certain regions may hinder compliance and exclude potential market participants. Despite the progress made over the years in achieving universal financial inclusion for Ghanaians, challenges persist, some studies in recent times highlighted low bank account ownership and usage, the dominance of cash transactions and limited access to financial services even in certain district capitals in Ghana, remains a significant challenge to compliance (NFIDs 20222). In the traditional communities even in the national city Accra such as Teshie, Jamestown, Gamashie, Lartebiokorshie just to mention a few, there are many landlords who do not own neither a bank account nor mobile money account. This will create a serious inconvenience for such landlords who will have to open bank accounts which they will not operate but for the collection of only
09Jun’25
STRENGTHENING OF THE CEDI AGAINST MAJOR CURRENCIES AND ITS RIPPLE EFFECTS ON GHANA’S REAL ESTATE SECTOR: IMPLICATIONS FOR DEVELOPERS, BUYERS AND INVESTORS
STRENGTHENING OF THE CEDI AGAINST MAJOR CURRENCIES AND ITS RIPPLE EFFECTS ON GHANA’S REAL ESTATE SECTOR: IMPLICATIONS FOR DEVELOPERS, BUYERS AND INVESTORS Between January and May 2025, the Ghanaian cedi has experienced a remarkable appreciation of approximately 16% against the US dollar, positioning it as one of the world’s best-performing currencies, according to Bloomberg News (2025). This surge is attributed to a combination of factors, including the Bank of Ghana’s tight monetary policy, increased gold reserves, improved fiscal discipline and enhanced foreign exchange inflows. This development came as a huge sigh of relief to Ghanaians as it appears to be a novel development leading to a significant reduction in fuel prices, transportation fares and the general price level of goods and services. For this reason, pressure has been mounted on the Ghana Real Estate Developers Association (GREDA) and other stakeholders of the real state sector alike to also respond to this general price reduction by also reducing property prices occasioned by the strengthening of the Cedi. While this development signals macroeconomic stability, boosting investor confidence, it has nuanced implications for Ghana’s real estate sector, where properties are predominantly priced in US dollars. This article delves into the multifaceted impacts of the Cedi’s appreciation on the real estate market and offers strategic recommendations to navigate the evolving landscape. But before we go into the details, do you think this call to reduce property prices is justifiable? Do not go away, get ready as we discuss details of the insights in the subsequent paragraphs of this article. Implications for Local Property Buyers In fact, the Cedi’s appreciation has led to a huge exchange rate depreciation loses in favor of buyers and at the expense of developers. What this means is that a prospective US dollar earning buyer will need more dollars to buy a property now than it was in the past, a stuck reverse of the status quo in the last couple of years. Put it differently, the Cedi’s appreciation against the US Dollar has led to a significant decrease in the local currency equivalent of dollar-priced properties. For ease of comprehension, let me give you a practical example, a property listed at USD$200,000 would have cost approximately Ghs 3 million at an exchange rate of GHS 15/1$USD in January 2025. By May 2025, at an exchange rate of GHS 10.20/1$USD, the same property would now cost around Ghs 2.04 million resulting in an exchange rate loss of about USD$94,000, a Cedi equivalent of Ghs 960,000 approximately. This is a huge quantum leap, making properties more affordable for Cedi-earning or local buyers. If these gains are sustained, these reduced Cedi-equivalent prices will spur interest among local buyers, particularly the emerging middle class seeking investment opportunities in the real estate sector. This will lead to a significant expansion in demand for properties in the mid-end market segment, where demand remains robust, driven by urbanization and a growing middle class. However, demand may remain unchanged even with upward price adjustment for high-end properties by virtue of the ostentatious nature of that category. Implications for Foreign Property Buyers Property demand from the diaspora community or foreign buyers will fall due to the strengthening of the Cedi. What this means essentially is that foreign buyers will need more dollars to be able to buy a property which could have been bought with less dollars in the past as demonstrated earlier in the preceding subheading, “implications for local property buyers”. For example, in January where the exchange rate was USD$15/GHS1, a person buying a property worth USD$100,000 in Ghana would need Ghs 1.5million cedis to be able to buy the property, now compare that to today’s (June, 3, 2025) exchange rate of USD$10.22/GHS1, this same buyer will need about USD$146,777 to be able to purchase the property. This gives an exchange rate difference of about USD$46,777 in favor of the developer and against this foreign buyer in question. This is significant and has the potential to discourage foreign participation in the Ghanaian real estate market in the short-term. Implications for Local Buyers on US Dollar Denominated Mortgage Loans With a stronger Ghana Cedi, the value of US Dollar denominated mortgage loans decreases for local cedi earning buyers. This translates into lower monthly payments, freeing up more funds for other expenses or savings. This is the time all local cedi earning buyers with US Dollar denominated mortgage facility can make a lot of savings by massing up savings to service their loans before the Dollar bounces back, if it ever does at all. Implications for Buyers on Cedi Denominated Mortgage Loans For property buyers on Cedi denominated mortgage or construction loan facilities, there are virtually no negative implications. However, there is a potential risk of interest rate hikes if the Bank of Ghana (BoG) continue to tighten the policy rate in attempt to curtail further inflation. Therefore, until the economic fundamentals are reviewed to focus more on supply side economics, the current policy rate tightening is a cul-de-sac and will soon reach its maximum potential resulting in extreme interest rates against buyers on floating or adjustable mortgage interest rates. For this reason, it is also advisable for those on floating or adjustable Cedi denominated mortgage facilities to double up on their loan servicing efforts. Implications for Resident Foreign Property Developers/Investors On the assumption that these gains are sustained, foreign investors or buyers may exhibit caution due to the reduced dollar-denominated returns when converting profits back to their home currencies. The appreciation of the Cedi implies that the same Dollar investment yields fewer returns upon repatriation, potentially dampening foreign investment enthusiasm in the short term. This development is likely to trigger a short-term foreign investor withdrawal from the market, with existing foreign residential developers likely to stop listing their properties for sale in expectation of a stronger Dollar or adjust prices to compensate for the exchange rate depreciation losses. Moreover, both resident foreign and local developers who rely largely on diaspora clients may face low sales turnover as
02Jun’25
HOW FOREIGN DIRECT REAL ESTATE INVESTMENT IS SHAPING GHANA’S PROPERTY MARKET: A COMPREHENSIVE REVIEW OF THE PROS, THE CONS AND
HOW FOREIGN DIRECT REAL ESTATE INVESTMENT IS SHAPING GHANA’S PROPERTY MARKET: A COMPREHENSIVE REVIEW OF THE PROS AND CONS Ghana’s real estate sector has emerged as a beacon of opportunity for foreign investors, driven by the nation’s political stability, economic growth, rapid urbanization and the legal framework that allows foreigners to own properties through leasehold agreements. This has made the investment climate conducive for foreign direct participation. The market has witnessed a significant uptick in foreign investment transforming the urban landscape in the past decades. This uptick trajectory also underscores the growing confidence of international investors in Ghana’s property market. The objective of this article is to give an overview of the foreign direct real estate investment in Ghana, the pros, the cons and to offer recommendations for mutual growth. To begin with, let me start with a few statistics of these FDIs in the Ghanaian real estate market. The purpose is to enable you appreciate the extent of this foreign direct real estate investment and how this is shaping the Ghanaian real estate landscape. Foreign-Invested Real Estate Projects in Accra As stated earlier, it is important for us to have the statistics of these foreign direct real estate investments in the Ghanaian market. This will help us understand the reality and the degree of influence they have in the market. This analogy is done using some selected foreign direct real estate projects in only prime locations in Accra compared to local content participation. In fact, it is a basic fact that Accra, the capital city, has been the focal point of several high-profile real estate developments funded by foreign investors. Here are a few of these projects: The Alto, 27-floor, Azure, 17-floor and the Aqua, 10-floor high-rise properties all located in the Airport Residential area developed by Trassaco Estate Development Company Ltd. The Octagon at Tudu, Accra, a 10-floor mixed-use development developed by Dream Reality Company Ltd. The Mirage, Airport residential, 16-floor high-rise property, developed by the Yagmur Group, the Iris Boutique Apartments, 10-floor property developed by H&F Realty Ltd, The Gallery, Loxwood, 9 and 11 floors respectively as well as the Lenox located at Shiashe, East Legon, The Steps, 37-floors, located at Accra Business District etc, all developed by Clifton Homes. The Atlantic Tower, 15-floors, located at Airport, is developed by Wahhab Estate Co. Ltd, a member of the Meridian Group. The Solaris, a 13-floor luxury apartment building located at Osu, developed by Swami India Developers. The AVA Residence, 12-floor located at Airport Residential developed by Cornerstone Developers, the Tribute at Airport Residential, developed by Denya Developers. The Harmonia Residence, 17-floor, AGORA 21-floor, and Lagato, 20-floors all developed by Vaal Real Estate Ghana. The Prestige, a 14-floor mix-use luxury apartment project still under construction, adjacent Airport Shell Filling Station developed by i2 Development, the Apex Suits, 8-floor building, the Equator, a 12-floor building, the Zion House, a 4-floor commercial property all developed by Bot Properties. The rest are the Kass Tower, a 17-floor mix-use property developed by one Mr. Kadir Yadigr a foreign investor, etc. In fact, time and space will fail us to list all the luxury high-rise properties in prime locations in Accra developed by foreign direct investors in the Ghanaian Real Estate sector. Mention is not yet made about luxury residential town homes and other high-level commercial properties such as hotel facilities, shopping malls etc. Now, comparing the above to our local content participation within the same space, it is obvious that, there is virtually no local Ghanaian investment that can really match this. The few we can count will be the Heritage Tower, a 16-floor property at Ridge, developed by the Social Security and National Insurance Trust (SSNIT). The Signature Apartments, Selton Skpe, which is still under construction, both by CapeMay properties, the Oasis Residence and Belmonte developed by CPL Developers and the few developments by Quao Realty, Goldkeys and Mobus properties etc. Also, in the area of commercial space and hospitality real estate such as the hotels and Malls, Movenpick Ambassador Hotel, the Kempinski Gold Coast Hotel, the Marriott Hotel, the Accra Mall, Achimota Mall, West Hill Mall, Atlantic Mall, Marina Mall etc are all foreign investor developments. Taking the above into consideration, one will not be far from right to conclude that local participation in this class of real estate investment in Ghana is virtually non-existent. Positive Impact of Foreign Direct Real Estate Investment The infusion of foreign capital into Ghana’s property market has yielded several positive outcomes even though there is the concern of low local participation. It has led to massive infrastructure development, job creation, knowledge and technology transfer, economic diversification, capital inflow, urban renewal and revitalization et cetera. We shall treat each briefly citing a few practical projects. Infrastructure Development These foreign investors have introduced cutting-edge architectural designs, building technology, and international construction standards leading to the construction of modern infrastructure, including roads, utilities and public amenities, enhancing the overall urban environment. This is demonstrated in our case in drone ariel shots taken from selected locations such as the Airport Residential Area, Roman Ridge, North Ridge, Shiashie, Cantonment and Labone. In fact, those in the Ghanaian real estate sector for long would testify that indeed, there has been a significant foreign building infrastructure improvement in the aforementioned locations compared to same a few decades ago. Job Creation Real estate projects generate employment opportunities in construction, property management, building material/equipment inputs sector and other related services. Employment within the sector has gone up considerably to the extent that labor has to be imported from our neighboring countries particularly, Togo, Nigeria and Benin et cetera to bridge the construction sector labor deficit that has been the case in Ghana for some time now. Technology Transfer Foreign participation has indeed introduced advanced construction techniques and management practices, elevating industry standards. This has given local professionals exposure to international best practices, enhancing skills and industry standards. This has really had a significant impact on the way we design, with local development
22May’25
SMART TIPS TO CONSIDER PRIOR TO BUYING YOUR LAND OR DREAM HOME IN GHANA: GUIDE TO FIRT-TIME BUYERS, DEVELOPERS AND INVESTORS
SMART TIPS TO CONSIDER PRIOR TO BUYING YOUR LAND OR DREAM HOME IN GHANA: GUIDE TO FIRST-TIME BUYERS, DEVELOPERS AND INVESTORS In my field of work as an industry thought leader in Ghana’s real estate and construction industry, I have had several personal encounters with first-time land and home buyers and there is always one thing common among them. Their priority and curiosity have always been on the property title. Interestingly, many have been stereotyped to think that title verification must be the first checklist item to watch out for, but that is really not the case. This remark is however not to suggest that the title verification is not relevant but the point I am trying to make here is this, there are equally other important preliminary information that must precede site inspection and the title verification exercise and that should be the basis for one’s decision to acquire a property at a given location in the first place. Regrettably however, many prospective buyers do not know anything about this preliminary information, and the few that are aware of this tend to overlook it. In fact, it is disappointing to say here that, many of the real estate sector players I have personally dealt with over the years do not also know about these smart tips themselves and how they influence client’s buying decisions. What many do is acquire lands to develop or sell to prospective buyers who do not understand the implications of these smart tips on their property investments. Hence, many real estate sector players have succeeded consciously or unconsciously in misleading the general public into making property investment decisions that later turned out to be very disappointing. This is not gut feelings, I had the opportunity to interview quite a number of diaspora property buyers who were lured into acquiring properties in some parts of Tema Community 25 and later had to dispose them off to relocate because they later discovered that they could not sink wells nor drill mechanized boreholes to bridge the water supply gap from Ghana Water Company which was later known to be a perennial problem. This is because underground water around the Tema Community 25, Community 26, Prampram through to Ada is known to have high sodium chloride (salt) concentration, leaving many residents on this stretch in constant acute shortage of potable water supply. The reality is that, they fell victims because they did not have the requisite information to make informed decisions. As a result of the profit motive, central to many land or property dealers, certain information relevant to support buyer decision making are most often withheld, leading many into making regrettable investment decisions. Therefore, the purpose of today’s article is to shed light on the importance of having these tips we are going to discuss in this article as your guiding checklist to support the decision making process in acquiring that dream home or property of yours. The objective is to correct these systemic anomalies by bridging the information gap through industry focused articles such as this to save the masses from putting their hard earned resources into bad property investments. But before we go into the nitty-gritty of these tips, let me set the tone for this discussion by defining the scope which shall cover geographical, environmental and legal factors that embodies what we termed as the smart tips relevant to your property investment decision making. Now, without any specific order, we are going to run you through these fundamental smart tips which includes but not limited the following; land topography, soil and geology, hydrology, weather conditions, natural hazards, ecology, pollution etc. Let us have a brief look at each, citing practical examples and their relevance to real estate developers, investors and first-time buyers alike. Smart Tip 1: Check Land topography This focuses on the study of the land’s shape, slope and elevations. It could be valleys, mountainous, plain, plateaus, hilly etc. The topography of the land has a significant impact on the cost of building. A typically flat and leveled land with rocky top and subsoil will mean somewhat less cost on the building foundation. Contrary to this, a low-lying topography or waterlogged land is most likely to increase the building foundation cost because one will have to stabilize the ground first, raise the foundation up, fill it in order to enhance the soil’s load bearing capacity and also mitigate the impact of future flooding et cetera. Citing a few examples, on a flat plain leveled land, depending on the soil nature, one does not have to spend so much on the building foundation compared low a lying and waterlog areas such as Kasoa or a mountainous area such as McCathy Hills etc. Building at the mountain base at Aburi may require cutting the land deep down in order to get the requisite levels to put up the building foundation. It is therefore important for the prospective investor to beware of these and their implications on the investment before making any buying decisions. Smart Tip 2: Check Soil type This looks at the soil composition, its stability, drainage or water retention properties, load bearing capacity and the potential for erosion etc. Soil type could be rocky, loamy, sandy or clayed. This helps one to estimate the load bearing capacity of the soil, water retention capacity et cetera even before a substantive geotechnical test is conducted. Besides, the mineral composition of the soil is also very crucial in this process; it could be saline, acidic, sulfate etc. This will inform design considerations, give a fair idea of the foundation type to use, the choice of building materials etc. Clayed soil will definitely pose load bearing capacity challenge and may require raft foundation or any foundation that may be recommended by the structural engineer. Therefore, those who have interests in acquiring or developing properties in some parts of Oyibi, Adenta Frafraha, Amrahia, Amasaman, Pokuase, Kasoa etc that are known to have high clay deposits and
21May’25
GIUDE TO REAL ESTATE INVESTING IN GHANA: EXPLORING ALTERNATIVE ENTRY POINTS FOR BIGINNERS
GIUDE TO REAL ESTATE INVESTING IN GHANA: EXPLORING ALTERNATIVE ENTRY POINTS FOR BIGINNERS A few weeks ago I spoke on a real estate panel at Labadi Beach Hotel on the topic “Unpacking Thriving and New Markets and Strategies to Invest in the Real Estate Sector in Ghana”. Immediately we ended the session, close to half the participants surrounded me to seek more insight into how they can invest in the real estate sector in Ghana. To many, it was a dream to pursue someday when they gather enough funds. Little did they know that, that dream can be materialized even now using the little or no resources they have. But among the masses that came to me was a young University of Ghana student. She was so passionate about real estate investing but lamented a poor financial background that makes her see this dream coming to pass in a far distant future if it comes at all. But while she was still counting her problems and reasons why her dream and passion may be a mirage, I looked at her closely and noticed that she was using an iPhone 16 ProMax. Wow, I exclaimed in my thoughts. So after pouring all her frustrations, I told her she has more than what it takes to start her real estate business today even while a student. She was like what!. What do you mean sir!, she asked in surprise, and I asked her as whether the iphone (iphone 16 Promax 1TB) was for her and she said yes. Then I told her again if she is aware the price of her phone can buy a plot of land or even two (2) or be given in exchange for a land in areas such as Tsopoli and some other parts of Accra? and she said no. The rest is history, the point here is, there are many people out there with the mindset that one needs to have huge capital to be able to venture into real estate investing. In fact, it is good when one has huge funds to start with, but whatever the case may be, one can still start with the little he has or even start with nothing at all. This is not motivational speaking. We have been there before, it is sound industry information you need. Having had this experience with many people over the years as an industry thought leader speaking on real estate programs, I decided to publish this article to help persons nurturing ambitions to invest in the real estate sector, are well informed enough to take the swing. Therefore, the purpose of today’s article is to present a formidable guide to real estate investing in Ghana, exploring alternative entry points for beginners. Now, without wasting time, we shall be taking you through six (6) entry points beginners can use as gateway into real estate investing irrespective of how small their initial capital may be. We shall be looking at; the Land Sale Agency Entry Point, Housing Sale Agency Entry Point, Building Material Supplier Entry Point, Joint Venture Entry Point, Property Rental Entry Point and last but not least, the Barter Trade Entry Point. Land Sale Agency Entry Point One can start his or her real estate business without cash; this sounds weird but it is possible. The Land Sale Agency Entry Point is a real estate investor beginner entry point where the individual subscribes to a trusted real estate company and sell their lands on commission basis. Subsequently, an agreement could then be reached between the agent in question and the real estate company to covert commissions into lands for the agent. A dual arrangement could even be made allowing the agent to receive commission at a certain percentage and the rest converted into lands. The beginner who can do this consistently for two (2) consecutive years or more will have enough parcels of land to start his or her own real estate land banking investment. In some cases particularly with lands owned by chiefs, when an agent brokers the purchase of bulk parcels, the chiefs most often give out extra lands to him by way of appreciation even beside what is agreed upon in their written commission contract. Depending on the size of the transaction, the agent can land a parcel as huge as an acre of bonus land or more in addition to his entitled commission. Let me get practical here with an illustration as to how one can employ this concept. There are many bankers and other corporate workers out there who have excess liquidity but lack the information on genuine real estate companies to buy lands from. Drawing a strategy targeting only bankers and working your strategy out within a year can guarantee surprising results. The sale may work magic if one is able to negotiate installment payment plans or a hire purchase plans between these bankers and the real estate companies. This allows many to buy these lands in multiple units over time without putting stress on their budget. In fact, the demand for hire purchase lands has been fantastically high in recent times, the only challenge there the agent will have to surmount is in twofold, one, information asymmetry and two, availability of trusted real estate companies to do business with. What this means is that, anyone who will be able to make this information of available hire purchase lands to the working public and is able to connect this working public to these trusted real estate companies to deal with, is already on his way to a successful real estate investing business. Just a few weeks ago, we facilitated a similar agreement between BuildMasters Ltd and Estate Masters Ltd. It is not a rocket science, you too, can. Housing Sale Agency Entry Point This concept is similar to the Land Sale Agency Entry Point; the mode of operation is however quite different. Unlike the land sale agency concept where commissions can easily be converted
12May’25
10 COMPELLING REASONS WHY LAND BANKING IS THE MOST PROMISING REAL ESTATE INVESTMENT: EXPLORING OPPORTUNITIES IN GHANA’S EMERGING LAND BANKING SECTOR
Ghana’s real estate sector has consistently been a critical pillar of the national economy underpinned by rapid urbanization, population growth, infrastructure expansion and a growing middle class. Yet one area that remains relatively underexplored but holds immense promise is private land banking. Private land banking is the strategic acquisition and holding of land for future sale or development. It is a concept well-established globally but still maturing within Ghana’s real estate investment landscape. As traditional forms of real estate like commercial and residential developments saturate, savvy investors are increasingly recognizing the value of land banking as a low-maintenance and high-upside investment vehicle. This article examines the prospects, challenges, strategies and recommendations for a successful private land banking investment. As mentioned earlier, private land banking involves purchasing land and holding it with the expectation that its value will appreciate over time. The value appreciation could either be driven by government’s infrastructure expansion, urbanization, rapid population growth, industrialization or even by speculation, particularly in our part of the world. Key factors that determine land banking decisions are often locations with potential for growth or development. Depending on the area of interest of the investor in question, one can decide to choose industrial land banking, residential land banking or agricultural land banking. For purposes of clarity, private land banking differs from public land banking which is often operated by governments as a speculative land price control mechanism. In private land banking, investors or corporations control the land assets, aiming for significant future returns in the future. The investor may either be a private natural person or an artificial person or both. But to help you appreciate the investment prospects in land banking in Ghana, let me refresh your mind a little about the outcome of a survey we completed last year about speculative land pricing in Ghana which was published a couple of months ago. In a study that spanned from 2020 to 2024 using Tema Community 25 as a case study, we discovered that in 2019, the price of a titled land (70ftx100ft) sold at an average price of Ghs 10,000. Fast forward in 2020, it sold at an average price of Ghs 22,000. In 2021, same piece of land sold at an average price of Ghs 50,000, with 2022 price up to an average of Ghs 110,000 and in 2023 sold at a price of Ghs 230,000 and reaching unprecedented price levels of Ghs 470,000 or more in 2024. Estimating the monetary and percentage change in prices between the year 2019 and 2024, you will realized that the change in price between 2019 and 2020 is Ghs 12,000 representing a 120% increase in price. Then, that between 2021 and 2022 was Ghs 70,000 representing an increase in price of about 140%, whilst 2023 and 2024 recorded a change in price of Ghs 120,000 representing a 105% rise in price. As it is clearly seen in the above analogy, there is a consistent over 100 percentage increase in the year-on-year prices from 2019 to 2024. Putting this aside, we conducted another study recently using East Legon Hills as the case study. The purpose was to expand the scope of the survey to give grounds for generalization of the results, as that which reflects the reality of this trend in the Ghanaian real estate sector. Without significant deviation, we arrived at the same results. We found that, investors who bought plots (70ftx100ft) in 2010 for Ghs 10,000 now sell for over Ghs 1million. Mention is not made about the situation in prime locations such as East Legon, Airport Residential, Roman Ridge, Labone, Cantonment and North Ridge. The above findings indicate the investment prospects in private land banking in Ghana. Just have a think about this, after buying the land and securing it in 2019 and 2010 respectively; investors did virtually nothing about it yet benefited from the location’s organic growth over time. This is the beauty of private land banking investment and one cannot afford to miss this opportunity having laid hands on this information today. But quite paradoxically however, as interesting and promising private land banking investment prospects are, we were surprise to find that, majority of land owners who bought and held lands did not do that as land banking investment but rather with the intention of developing them for personal use in the future. It was only in few instances we came across some individuals who actually have acquired a few parcels as land banking investment. For corporate organizations in land banking business, we found virtually none except the Social Security and National Insurance Trust (SSNIT) and Land Holdings, a subsidiary of the LMI Holdings. Even with many of the real estate developers who were found to have huge parcels of lands, acquired them for immediate resale or development but not for land banking investment purposes. This underscores how underutilized this opportunity has been, hence our motivation to draw the attention of prospective investors both local and across the globe to this golden opportunity. Having said this, get ready as we walk you through the 10 compelling reasons why private land banking is a promising real estate investments option in Ghana. Subsequently, we shall also share a few challenges, risks and recommendations for the benefits of prospective investors nurturing ambitions to enter into this investment niche in the real estate sector. Do not go away, get your reading lens on, grab a glass of juice and follow through as we run you through these captivating and compelling reasons. 10 compelling Reasons Private Land Banking is Lucrative Before we go into the intricacies of the ten (10) reasons, it is important to let you know that the list is not exhaustive, we only limited this to ten (1) for want of space and time. We shall be looking at the growing demand for residential and industrial properties, industrial development, scarcity and irreplaceability, capital appreciation, minimal maintenance and operational cost, flexibility of use, future development possibilities, hedge against inflation, legacy asset
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