Pictures of Ghana by an Expat C-Level Executive Virgin or Used, What is Your Choice?

For the last few weeks on Mondays, I have shared my opinion on several subjects with you – from economic and social topics to alternative investment opportunities. Concerning investment opportunities in Ghana, I have focused on those in real estate because this is the industry I know best as the Sales and Marketing Director of Devtraco Limited (probably the largest real estate developer in Ghana).

I have also given you tips and secrets regarding the most frequent business model of investing in real estate: buy-to-let. This is when an investor buys an apartment or house and then finds tenants to rent it. As we considered, this investment model offers three different revenue streams one can profit from. Do you remember what those are? (please see the end of this article to confirm whether you got all three answers correct)

Indeed, real estate investment is one of the most common types of investment in Ghana and, in the long term, tends to be the most profitable as well. Nevertheless, all serious investors know that it is not safe to “put all your eggs in one basket”.

But are there any other models to invest in real estate? Sure, there are.
Let us now look at others you should consider.


Buy-to-Sell Model

With this model, you buy any property off-plan (that is, before construction but after viewing the building plan) and sell it right after handing over, with a premium. In Portugal, my home country, this is one of the most common forms of investing in property mainly because it is fast and simple. However, I find it surprising that I barely see this form of real estate investment in Ghana. It seems selling new, untouched property is very rare here; therefore, it is virgin territory, just waiting to be explored.

As we all know, there is a great demand for ready-to-move-in properties; for instance, from buyers who did not have the need for it in the past and now do, or buyers who are risk-averse and can only buy what they see. Whatever is the case, these buyers pay a premium for the convenience of reduced delivery time and the relative absence of risk. Also, as there are not many properties available at the stage of completion, your potential buyers will not have many options to choose from: with less competition, you are likely to sell faster and at a better price.

There is an average period of two to three years between the time when developers start selling off-plan until completed units are handed over to buyers. During this period, it is possible to make a profit between 15% and 30% on your investment.

To illustrate, I will give you a practical example relating to one of Devtraco’s real estate developments. On the 31st of May last year, we launched the NoVA, a mixed-use development in Roman Ridge, Accra. On that day, studios were for sale at a price of US$85,000 each. We are presently in NoVA’s construction phase and the few remaining studios are being sold at an average price of US$120,000.

By the time this development is complete (in about 2 years), I am sure that studio owners would be able to sell them for about US$130,000.

Furthermore, on 31st May, 2018, US$85,000 was worth GHS397,219. Today, 23rd July 2019 as I write this article, the same amount of US$85,000 is already worth GHS456,548 (source: Only God knows how much the US Dollar will appreciate over the Ghana Cedi in two years.

I must however point out that this is a special case, because Devtraco’s reputation as an experienced, trusted developer enhances the value of its properties. Our NoVA development is also special mainly because it will have an internationally- branded hotel on its premises.

So, although in this particular case the we can see extraordinary earnings (about 52% capital appreciation, plus currency appreciation), the market average for a buy-to-sell property would be between 15% and 30%, as previously mentioned.

Here are a few advantages of buy-to-sell real estate investments:

  • Faster return on investment (between two to three years)
  • You can reinvest the returns to purchase more units and restart the investment cycle
  • Upon completion, you can sell the property directly to a new owner and save yourself time as well as the cost of property fees
  • If you cannot immediately find a new owner, you can still hold the unit and rent it
  • No further risks as compared to buy-to-let investments
  • You can earn tax exemptions on the sale of the property in addition to the net gain you make when the property is sold

There are a few concerns you should always have in mind:

  • As with all property and investment models, you should always be careful to choose the right location, the right property and, most definitely, the right developer. The wrong choices can result in lost time and money; for example, by receiving a bad property or receiving it later than agreed. In extreme cases you can lose your entire investment if the purchased property is never delivered.

Fortunately, there are already a few reliable real estate developers in Ghana.

  • In the long term, you profit more if you hold the property and rent it. So, this form of investment can complement buy-to-let investments.

Used Units

Used property units are very common in mature real estate markets. In general, these are cheaper and larger than new units and therefore compete directly with the brand-new units. The reduction in size is because, with time and an expected decrease in profit margins, developers tend to build smaller units to maximise their earnings.

Again to my surprise, it seems that not too many used property units are being sold in Ghana.

Despite being cheaper and averagely larger, used units are not available instantly as the new owner will most probably have to spend time and money on repairs, maintenance and customisation. The amount of time and money spent on such refurbishment is never totally known in advance. This also varies from property to property but is likely to cost thousands of Ghana Cedis and take several months to complete.

For these reasons, used units may not be the best choice for some investors as they might be “empty” for several months before a rent-paying tenant is found. F

rom a real estate developer’s point of view, used units are a great threat because similar to competition from other developers and individual builders, used units can cannibalise clients from developers, specially end-users.

Ghanaians do not normally buy or sell used properties, and I assume this is due to cultural reasons.

Nevertheless, in the future when Ghana’s property market matures, I am sure we will have many used properties of all sorts available for sale.

Potential revenue streams for buy-to-let investments: 1) Rent 2) Capital appreciation and 3) Currency appreciation 

The writer is Devtraco Group Sales and Marketing Director

Would you like to comment and make suggestions for my next editorials (every Monday)? Please write to me at

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