Accra is seen as one of the most central cities in the world— never too far from any destination, faces an undersupply of housing units, with the mid to low end sector accounting for majority of the demand. Based on market analysis, while there are up to 800,000 residential units in Accra, the development pipeline is set to bring an additional 23,000 units on to the market according to Estateintel report.
This will only account for approximately 3% of the total stock, with majority of thispipeline (80%) falling within the middle income to affordable sectors. The mid to low end residential segments also continue to record relatively high occupancy rates owing to the domestic nature of demand. The short let segment of the market has continued to see increasing demand with tourists and business travellers preferring this medium to hotels.
WHAT IS GHANA’S REAL ESTATE RENT YIELD LIKE?
Ghana’s real estate sector asset classes comprises of residential, hospitality and commercial which includes: office, retail and industrial. All of these sectors got hit during the covid19 especially the hospitality which depends on foreign guest.
In a report by Ghana Investment and promotion Centre (GIPC) 2021 Sector report, the average rent yield for residential market is around 10-13.5%, which is one of the highest in Africa after South Africa and Zambia and probably on par with Malawi.
Office space, rents fell by 21.4% in the last two years because of covid which saw average rent around $28 per square metre according to Knight Frank Africa report. Obviously when supply surpass demand, most landlord had no option than to give concessions for rent. This was global phenomenon.
In retail space average rent was 12.5% the last two years. Ghanaian taste of shopping is increasing as we see more retailers such as Giordano and more shopping malls like West Hills mall the biggest mall in West Africa, Palace mall, a 6,800 sqm A&C mall just to name a few.
Although Ghana is regarded as industrial hub in West Africa, the industrial sector rents fell by -44% for the last two years due to same problem. With Volkswagen’s decision to open an assembly plant capable of delivering 5,000 vehicles a year there is going to be increase is rent in this market. This will also attract other players to open plants in Ghana. According to GIPC the average yield is from 11-14%.
With that said, post-covid recovery is gradual as all there is increase in demand across asset classes in the country.
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La Margo Villas Neighbourhood Snapshot
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In a nutshell, the outlook for the prime residential sector remains positive as the demand keeps growing. The mid-low end segment is a sweet spot for most real estate developers. The market is driven by the two forces: the supply and demand. The demand has an upper hand because it influences the price. Despite the hyper inflation that hit the country in recent time, people still need homes to live. That is why i love real estate. No matter the micro or macro environment factors, there is always demand especially in Accra- one of the fastest growing cities in Africa.
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