Investing in Ghana is often seen as a very attractive property investment location with the promise of high returns. However, some fundamental economic truths must be considered to anticipate returns
The average Ghanaian in the greater Accra region earns between x and y and the most populous occupation stands at x. At the same time the average household size is x and household income is y. So lets assume the required house for the average Ghanaian household would be a 3 bedrooom house or apartment which has current asking price of x cedis or y cedis per month. So rents would be %X of monthly income whilst property values are Y times yearly salary.
To bring this into context New York has a X salary multiple and rents cover x% of monthly salary. The Ghanaian dream has always been towards buying your own land and building a house for you family but with land prices sky rocketing in the capital this make it more and more difficult to achieve. Not to mention the upfront payment required for rentals and Mortgage interest rates being at a huge X cedis.
It is the clear that the average Ghanaian can not afford the average property price. However, they may be able to afford a more reasonable lower end of the market. So between the X and Y price range which would be a X% of monthly salary and property sale price between X and Y which would represent X% of income and a more reasonable
So that means there is an oversupply of unaffordable properties and massive undersupply of affordable properties. Normal over supply would result in buyers having more options and sellers/ landlords having to reduce prices in order make payments on debts taken to build or purchase homes. With this over supply not being fueld by credit but cash normal price becomes less elastic to increases in supply.
So the opportunity in Ghana really centres on the following areas
- affordable market for long term occupation and
- lower priced properties for highly desirable areas for short let areas
