…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.
Private Land Banking Investment Concept
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 GH¢ 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 GH¢ 50,000, with 2022 price up to an average of GH¢ 110,000 and in 2023 sold at a price of GH¢ 230,000 and reaching unprecedented price levels of GH¢ 470,000 or more in 2024.
Estimating the monetary and percentage change in prices between the year 2019 and 2024, you will realised that the change in price between 2019 and 2020 is GH¢ 12,000 representing a 120% increase in price.
Then, that between 2021 and 2022 was GH¢ 70,000 representing an increase in price of about 140%, whilst 2023 and 2024 recorded a change in price of GH¢ 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 GH¢ 10,000 now sell for over GH¢ 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 and last but not least entry point for real estate beginner investors.
Growing Demand for Residential and Industrial Properties
According to Worldometer (2024), Ghana’s population is estimated at 35 million and this is projected to exceed 50 million by the year 2050, juxtaposing this with a Ghana Statistical Service Report (2022) of a birth to death ratio of 1is to 13 (1:13) gives a positive net population growth annually.
This excludes migrants into Ghana from neighboring Sub-Saharan African States such as Nigeria, Benin, Ivory Coast, Togo, Burkina Faso, Mali, Guinea, Liberia, Sierra Leone etc.
Their demand for both residential and commercial properties adding to local demand drives urban expansion. Moreover, the proliferation of Chinese, Lebanese, Turkish and Indian businesses adding up has led to a precipitous surge in demand for both residential and industrial properties.
The impact of the few aforementioned variables and others on a nation with a housing deficit of 1.8million and an average newly built housing stock of as low as 37,000 units per year (Fitch Solutions 2022, cited by GCB Bank), it is not rocket science for one to tell or predict the demand pressure on properties now and in the next five (5) years to come. This has makes land banking investment look greater and the time to invest is now.
Infrastructural Development
It is also common knowledge that, major infrastructure development expands the economy. This attracts trade and investment that often lead to the movement of people in the directions where these infrastructural projects are sited.
Over the past few years Ghana has witnessed significant infrastructural development with many other such projects still ongoing across the country.
Notable among these projects include the completion and commissioning of the Pokuase Interchange, the East Legon Spintex Overpass, the Kwame Nkrumah Circle Interchange, the Kaneshie Interchange, the Kumasi-Suame Interchange and International Airport, the Tamale Interchange and International Airport, Terminal 3 at the Kotoka International Airport just to mention few.
Mention is not yet made about those at various stages of construction across the country such as the Takoradi Interchange, the Tema Motorway expansion project etc.
Other facilities worth mentioning includes the Bui Dam, the Atoabo Gas Plant, the West African Gas Pipeline, the Mbakadan Railway redevelopment, the Boankra Inland Port Project, the Lithium discovery in Cape Coast, Nickel discovery in Oti Region et cetera.
These infrastructure projects, new mineral discoveries together with other facilities mentioned above have driven and will continue to drive the movement of both multinationals and indigenous citizens into urban centers such as Kumasi, Takoradi, Cape Coast and Tamale with Accra carrying the highest of these numbers contributing to the skyrocketing land and general property prices.
These developments open new areas to commerce and habitation, escalating land value appreciation. Land banking near such infrastructural projects can yield unprecedented returns on investment. Therefore, if there is ever a time necessary for one to invest in land banking in Ghana, then this is time.
Scarcity and Irreplaceability
Land is finite. As Ghana’s population grows and urban space shrinks, land becomes increasingly scarce and valuable. In central Accra, for example, prime land is almost exhausted, leading to sky-high prices.
This scarcity drives developers and businesses to the outskirt areas like East Legon Hills, Ayi Mensah, Oyibi, Abokobi, Dawhenya, Prampram, Aburi, Appolonia, Ada, Shai Hills etc, creating opportunities for strategic land bankers. Also, apart from land being scarce by virtue of urbanization, population growth etc, its irreplaceability makes demand and investment prospects of it extremely high as it does not have any substitute.
Capital Appreciation
One of the biggest draws for land banking is the potential for massive appreciation. Historical trends show that, land in areas like East Legon and Spintex appreciated by over 400% between 2000 and 2020.
Another practical example is the results of our survey in 2024 where we found over 100% year-on-year land price appreciation using Tema Community 25 and East Legion Hills and this trend will continue until the fundamentals are altered by either public policy or something else probably. This has made private land banking investment timelier.
Minimal Maintenance and Operational Costs
Unlike a house that can easily be destroyed by both natural and man-made disasters or even by deliberate acts of man, and for that matter has to be maintained and insured against these likely incidents, lands do not require this, thereby making land banking cost-friendly compared to developed properties.
In addition, lands do not suffer wear and tear like buildings which will require constant maintenance in order to keep its value. Apart from initial acquisition costs, security cost which may either be cost of keeping land guards, caretakers or fencing or both, land owners incur minimal maintenance expenses compared to developed properties.
Flexibility of Use
One other thing that makes private land banking lucrative is the flexibility of its use. Whilst one is holding land for capital appreciation purposes, a residual income can still be made by the investor.
First, it can be collateralized for loans, leased for temporary uses like farming or events or sold in parcels for higher returns as demand rises. This flexibility allows investors multiple exit strategies that cannot be compared to other property investment vehicles.
As at 2023, our investigation with Turkish block Factories operating on rented lands along the Aflao stretch shows an average monthly rent of USD$2,500 per half (1/2) acre.
Using today’s exchange rate of USD$14 on the assumption that the 2023 rental rate remains unchanged, it will not be far from right to say that, these land investors are receiving a cool average monthly rent of GH¢ 35,000. Can this be compared to T-Bills? Away, let me leave that for readers to judge.
Future Development Possibilities
Apart from the returns that may be accrued from the price appreciation over time, investors can later add value to the land for much higher returns on their investment by developing the land into residential estates, shopping centers, industrial parks, hospitality ventures etc.
Thus, land banking provides a dual pathway, either exit via resale or through direct development. This is what majority of the real estate developers do. Many of them bought these lands years back for paltry sums and are now developing and selling in dollars. One can imagine the returns on investment, this is not a game of chance, it is sound investment.
Hedge against Inflation
Land can serve as a hedge against inflation as its value tends to appreciate over time. I remember in 2022, 2023 when Ghana’s inflation averages around 54%.
This was the time Ghana’s infamous Domestic Debt Exchange Program (DDEP) came, making many uncomfortable where to put their cash because inflation was eroding their hard-earned cash every minute of the day.
So the leadership of the staff association of a reputable multinational company in Ghana consulted me after I gave a property investment advice on the Real Estate Market Show on TV Africa.
Without delay, I advised them to put all their cash into land banking. So, many bought their lands in Tema Community 25 then for GH¢ 120,000 cedis per plot (70x100ft). Today, they are reselling at GH¢ 470,000 or more.
This is just in a space of two (2) years and few months. The reality is, they have not only succeeded in hedging their liquid cash against inflation, they made good returns on their investments, which many investment vehicles could not yield within same period.
Legacy Asset
Unlike other assets that cannot be passed down to one’s descendants of many generations, land can be passed down too many generations up to infinity. Cars, business entities etc can all be passed down to one’s successors, but land is the most secured inheritance one can bequeath to his successors.
Cars may get old and lose their value; other assets may depreciate, expire or be destroyed, business entities may even fold up etc. Land does not depreciate in our part of the world; land does not expire neither can it be destroyed except it’s a coastal land. So, land is a legacy asset one can acquire use for today and still bequeathed tomorrow, to many generations.
Entry Point for Beginner Real Estate Investors
Land is generally more affordable than developed properties. It provides a low-cost entry point into the real estate sector especially for young investors or first-timers nurturing ambitions to enter into the real estate sector. It is the starting point for humble beginners; many started with just a plot, and today own multiple parcels.
Challenges of Private Land Banking
Land Litigation and Title Disputes
Ghana’s land sector is notoriously known for disputes over ownership and multiple sales. Without rigorous due diligence, investors risk costly legal battles or complete loss of investment. This is the reason why seeking professional consultants in the space such as land lawyers, brokers etc is fundamental in this journey.
Land Grabbing, Encroachment and Land Guard Menace
Idle lands may be subject to squatting or illegal developments, especially in peri-urban areas such as Accra, Kumasi etc. Regular monitoring and fencing can mitigate these risks even though that comes with an additional cost.
This is the more reason why one will need caretakers or spies around areas with high title disputes and litigation. The law protects those who fence their lands.
Therefore, anyone who jumps or breaks the fence and accesses your land may be charged with the offence of trespassing. This keeps squatters, encroachers and unscrupulous persons away when the land is fenced. Another option could be land guards even though it is not recognized by law in Ghana.
Policy Uncertainty
Changes in land policies, urban zoning laws, or compulsory government acquisition can affect the investment. For instance, infrastructure projects can sometimes cut through privately held lands without adequate compensation.
Over the years, government takeover of private lands for public infrastructure development has been a blessing as government compensations in most cases are even higher than the average land prices around such locations.
Even though this becomes a challenge in some jurisdictions; it turned out to be an advantage in our part of the world. This also presupposes that, irrespective of the situation or uncertainty, land banking still remains a better investment option comparatively.
Liquidity Risk
Apart from the possibility of its use as collateral for credits from banks, or rental revenue as one waits for higher capital appreciation, land is not as liquid as other assets such as stocks etc. In times of financial need, selling land might take longer compared to other investment assets.
Strategies for Private Land Banking Investment
Conduct Thorough Due Diligence
To mitigate the potential title challenges and litigation, due diligence is fundamental and we recommend a few steps as a guide; first, conduct a land and title verification checks with the Lands Commission, the purpose is to ascertain the tittle of the land, second, check the zoning status of the land; the purpose is to be sure as whether the land in question is zoned for residential, industrial, earthquake zone, Ramsar site etc.
Third, site inspection, this is to ensure the land is free from encumbrances or squatters. Fourth, family consent; in the event it is a stool or family land, one has to be sure if consent is obtained from all necessary parties.
Fifth, survey and demarcate to define explicit boarders to avoid future boundary disputes with neighbors. In doing all these, it is important to engage industry professionals such as lawyers, surveyor, brokers etc. This will save you a million of troubles.
Focus on High-Growth Locations
There are key principal guidelines to this, target areas with ongoing or proposed government projects as such locations have the potential to drive demand rapidly, private industrial expansions, urban migration trends etc.
Recommended emerging areas with huge land banking investment potentials in Ghana includes but not limited the following, Amasaman, Oyarifa, Nsawam, Gomoa Fetteh, Shai Hills, Afienya, Prampram, Tsopoli, Dawa, Sege, Ada, Apolonia City, East Legon Hills, Borteyman, Aburi, Abokobi, Oyibi, Dodowa, Westland, Kwabenya, Kokrobitey, etc.
Diversify Your Land Portfolio
Instead of putting all capital into a single large plot, acquire smaller plots in different upcoming locations to spread risk and maximize returns. If you can, buy from registered and recognized real estate companies. This may include members of the Ghana Real Estate Developers Association (GREDA) in good standing.
Conclusion
Private land banking in Ghana is undoubtedly one of the most promising investment vehicles for the discerning, patient investor. Despite the risk, the long-term rewards far outweigh the potential downsides, particularly when investments are made in strategic locations and backed by proper due diligence.
In an economy like Ghana’s marked by urban growth, industrialization, and increasing diaspora engagement, early land banking can offer unparalleled returns, security against inflation and strategic leverage for future wealth generation.
For those willing to navigate the nuances carefully, private land banking could be the next great frontier in Ghana’s real estate success story. For real estate consultancy services, land banking strategies, or bespoke advisory on property investments across Ghana and Africa, contact the Africa Continental Engineering & Construction Network Ltd. We have you covered 360℃.
Reference
- Worldometer (2024): Ghana Population demographics and Income Distribution Report.
- Ghana Population and Housing Census (2021): General Report, Demographics and Income Distribution.
- Africa Continental Engineering & Construction Network (2024): Investigation into land price appreciation Ghana.
- Ghana Statistical Service (2024): 2nd Quarter Report, Ghana Living Standards Survey, round 7.
