Ghana’s real estate market has witnessed an influx of foreign investments, particularly in prime locations like Accra’s Airport Residential Area, Cantonments and Labone. This trend is reshaping the landscape of real estate in Ghana, influencing property values, urban development, and, crucially, access for local buyers. While foreign investment brings benefits such as economic growth, job creation, and improved infrastructure, it also presents significant challenges – particularly in terms of property affordability and availability for local buyers. Let’s break down the impact, the opportunities, and the potential challenges.
1. The Economic Impact: Growth and Development
Foreign investments drive substantial economic growth, contributing directly to Ghana’s GDP and creating numerous jobs in construction, real estate, and related sectors. According to the Ghana Investment Promotion Centre (GIPC), foreign investments in real estate bring in millions of dollars annually, funding new residential complexes, commercial spaces, and mixed-use developments. The capital injected by foreign investors often leads to high-quality developments with modern amenities that elevate the standards in Ghana’s property market, aligning with global architectural and environmental standards.
Impact on Local Buyers: Foreign-funded projects, especially those targeting the high-end market, can make nearby areas more attractive, increasing the desirability of adjacent properties. This can be positive for local property owners, as it raises the overall property values in the neighbourhood.
2. Rising Property Prices: A Double-Edged Sword
One of the most noticeable impacts of foreign investment is the increase in property prices, particularly in prime urban areas. Properties in high-demand locations like East Legon, Tse Addo and Airport Hills are now increasingly priced beyond the reach of many local buyers due to the high expectations of returns from foreign investors. For instance, an apartment that might have been valued at $150,000 a few years ago could now be priced well above $200,000 as a result of increased demand from expatriates, foreign investors, and international businesses.
Impact on Local Buyers: This trend places a burden on local buyers, especially those in the middle-income bracket, as property prices skyrocket. Local buyers are often priced out of prime areas and may have to look further from the city center for affordable options, sometimes resulting in longer commute times and less access to amenities.
3. Shift Towards High-End Developments and Luxury Housing
With foreign investors driving a good portion of the developments, there is a notable increase in luxury apartments and gated communities. These projects cater primarily to wealthy foreigners, expatriates, and Ghanaians living abroad, who view real estate in Ghana as a stable investment. High-end properties often feature state-of-the-art facilities such as swimming pools, gyms, high-security features, and access to exclusive services – further pushing property prices up.
Impact on Local Buyers: This focus on luxury housing limits the availability of affordable housing options. Many local buyers, particularly first-time homebuyers, may find that the type of housing they seek is increasingly scarce, while developers cater to a wealthier clientele. As a result, demand for affordable housing grows, but the supply remains constrained, creating a gap in the market.
4. Increased Competition for Land
As foreign interest in Ghana’s real estate market grows, competition for land intensifies. High-value areas like Ridge, Cantonments and Labone see increased interest, leading to a scarcity of available plots and a surge in land prices with a standard plot selling for north of $500,000. Foreign investors often have greater capital and can afford to pay a premium for strategic locations, thereby reducing the options available for local buyers and developers with more limited budgets.
Impact on Local Buyers: The cost of land is a significant component of property prices, and as land prices rise, so do overall housing costs. This makes it challenging for local buyers and small-scale developers to compete, often forcing them to either compromise on location or invest in properties in less desirable areas.
5. The Potential for Policy Intervention
The Ghanaian government has recognised the need for affordable housing and is actively exploring measures to address it. Programmes to increase access to affordable mortgages, such as the National Housing Mortgage Scheme, are designed to help low- and middle-income families access homeownership. There’s also a push for public-private partnerships to boost affordable housing development, but these initiatives have yet to make a significant dent in the demand-supply gap.
Impact on Local Buyers: While policy interventions show promise, they need to be scaled and implemented swiftly to have an impact. Local buyers would benefit from more robust and accessible financing options, such as lower mortgage rates or down payment assistance, as well as incentivised affordable housing development.
Links on the National Housing Mortgage Scheme
- National Homeownership Fund – https://nhf.gov.gh/scheme-details.php?exX=MQ==
- Ministry of Finanace – https://mofep.gov.gh/news-and-events/2019-12-30/national-housing-and-mortgage-fund-nhmf-survey
6. A Balanced Perspective: Finding Opportunities
Despite these challenges, there are still opportunities for local buyers within Ghana’s dynamic real estate market. Local buyers can benefit by focusing on emerging neighbourhoods with strong growth potential. Areas on the periphery of central Accra, such as East Legon Hills and Oyarifa, are seeing growth, with property values increasing as infrastructure and amenities develop. Additionally, Ghanaian buyers can consider cooperative buying or investment groups to pool resources and invest in desirable areas. This is not common but worth considering. [If you have information on this, kindly leave a comment.]
Impact on Local Buyers: These strategies allow local buyers to access appreciating assets while potentially avoiding the high costs associated with prime locations. It’s also an opportunity for local developers to focus on affordable and mid-range housing, as demand for these types of properties remains robust.
Conclusion: Navigating the New Landscape
Foreign investment is transforming Ghana’s real estate sector, with both positive and challenging impacts on local buyers. While the influx of capital boosts development and raises housing standards, it also contributes to rising prices and limited affordable housing options. For local buyers, navigating this landscape requires strategic planning, staying informed about government programmes, and being open to alternative investment strategies. With continued policy intervention and innovation in the housing sector, Ghana’s real estate market can evolve into an inclusive space that benefits both local and foreign participants.