Before I entered the real estate industry, I used to question why properties in Ghana are most often priced in US Dollars even though the national currency is not the US Dollar.
I became an ardent critique of the practice and frown at any property I see listed in US Dollars until I entered the real estate industry. Similarly, in the last three (3) years, I have had people ask the same question repeatedly, on several industry conferences and platforms.
But what made me more concerned and triggered the decision to publish this article is an emotional video someone posted on Facebook a couple of months ago. The gentleman featured in the video literally insulted industry players for always quoting property prices in US Dollars and went ahead to jubilate over the ratios of losses suffered by sector players occasioned by the precipitous decline in value of the US Dollar against the Cedi in recent times.
Despite the public’s disgust for this phenomenon, “it is also illegal to price, advertise, or receive payment for goods and services in foreign currency without authorization from the Bank of Ghana pursuant to Section (3) (1) and (4) of the Foreign Exchange Act, 2006 (Act 723). One would then wonder why the public, including some parastatal institutions, are still engaging in this act even though the law frowns on it.
Therefore, the purpose of toddy’s article is to educate the public about why real estate property prices are most often quoted in US Dollar in defiance of law in Ghana. But before we go into the details, it is important to remind you that Ghana is not the only developing economy where real estate properties are quoted in US Dollar.
For want of space and time, we may not be able to mention many, but this practice is also prevalent in countries such as Nigeria, especially in Lagos and Abuja where majority of Nigeria’s high-end properties are situated, Nairobi, Kenya, Harare, Zimbabwe, Luanda, Angola, Maputo, Mozambique etc. Even there is enough evidence of this practice outside the African continent as well, to cite a few, Panama, United Arab Emirates (UAE), Cambodia, Vietnam and some Caribbean nations etc also quote real estate property prices in US Dollars.
Now the multimillion-dollar question many ask and do not get the answers is this, why is this the case in Ghana and the aforementioned countries. Do not go away, the answer to this question is finally here, get a glass of a chilled soft drink and stay tuned as we run you through the basic economic principles behind these decisions.
We shall be looking at a few, among which are these; currency instability, high direct foreign demand, a hedge against inflation and finally, a hedge against exchange rate depreciation losses. We shall conclude by giving economic impacts, whilst offering some recommendations for consideration by policy makers and the public.
Currency Instability
Ghana has always remained an import-driven economy, and this has made the Cedi a volatile currency among major global currencies since independence. This volatility comes with exchange rate depreciation losses to both private individuals and businesses. Therefore, in order to hedge investments and other assets against these depreciation losses, developers and investors price properties in US Dollars. Remember that the US Dollar is one of the most stable currencies across the globe and denominating property prices in the US Dollar serves as a preserve of value or a hedge against the impacts of local currency volatility.
This ensures that the value of the property or the investment in question remains relatively constant over time. Let me cite a practical example for ease of understanding. The average US Dollar to Cedi exchange rate at the end of 2023 was Ghs 11.91/1US Dollar and it shot up astronomically within a short period to Ghs 15.84 in early 2024. If in 2023 I had a property that is listed for sale at Ghs 200,000 its UD Dollar equivalent at that time will be approximately USD$16,797.65 at the exchange rate of Ghs 11.91/1US Dollar.
If I fail to sell it at that time and eventually sell it in 2024 at the same Ghs 200,000, the US Dollar equivalent of my Ghs 200,000 now will be USD$12,626.26 approximately instead of the USD$16,797.65. This will lead to an exchange rate depreciation loss of about USD$4,171.38 with its Cedi equivalent being Ghs 66,074.78. This in percentage terms will be about 33% loss, holding all other variables constant. This is significant!. It is therefore natural to see smart investors and individuals alike price their properties in a more stable currency, the US Dollar, rather than an extremely volatile currency such as the Cedi.
Inflation Hedge
Apart from the impact of exchange rate volatility, inflation over time erodes the purchasing power of local currencies. I mentioned this in one of my articles, properties are not like a tent that can be assembled in minutes. They take years to complete and even the selling takes a much longer time sometimes, particularly high-end properties. What this means essentially is that one property listed for sale can go through several waves of inflation and exchange rates, just as it is the case with the construction process. Therefore, developers will undoubtedly protect their investment against the cataclysmic effects of these volatilities over time.
For ease of comprehension, let me use another practical example here also, on the assumption that all other variables are held constant. If a property is listed for sale at Ghs 100,000 at a time inflation rate was 10% and sells in two (2) years later when inflation rate stood at 20%, practically, the real value of Ghs 100,000 will drop.
Using simple arithmetic, value after first year when inflation was 10% will be Ghs 100,000 (1+0.10) which will be equal to Ghs 110,000. Let’s take a look at the second year where inflation is 20%. Ghs 110,000 (1+0.20) which will also be equal to Ghs 132,000. What this means is that the property should sell at Ghs 132,000 in order to maintain its purchasing power after the two (2) years. In other words, the capital erosion by virtue of inflation in the above scenario will be Ghs 32,000, representing a percentage loss of about 24.24. But if the price were quoted in US Dollars, its value would have been preserved to a greater extent.
Attracting Foreign Investment
It is also important to know that globalization has made the world a small place with air transport, smart intercity rail transport, ships etc. This has made many investors try to look for opportunities across the globe. Therefore, pricing properties in US Dollar appeals to these foreign investors who are more comfortable transacting in a globally recognized currency. It simplifies the investment process for the diaspora and international buyers, making Ghana’s real estate market more accessible and attractive to foreign capital.
Besides, foreign investors and diaspora buyers feel more secure with US Dollar pricing as it eliminates uncertainty from currency fluctuation. I remember those days I used to work with a developer that proudly prices its properties in Cedis. I still remember we used to have calls almost every day from the diaspora community requesting for the property prices to be quoted in UD Dollar instead. So naturally, the developer will do what please his clients hence the reason for this dollarization phenomenon we see in Ghana and other countries.
Material and Input Costs are often in US Dollars
Real estate development relies on imported materials, usually priced in US Dollar. Quoting sale property prices in the US Dollar ensures revenue aligns with input costs. It is a fact, and I know you and I are aware that, significant portion of building materials used in Ghana’s construction industry, such as steel, cement, tiles, paints, roofing sheets, tools, equipment etc are imported and priced in US Dollar.
Consequently, developers incur costs in dollars, prompting them to price properties in the same currency to align revenues with expenditures in order to mitigate the risks of exchange rate and inflation. In countries with volatile exchange rates (like Ghana), quoting property prices in US Dollar ensures that developers and sellers don’t suffer losses when converting sale proceeds into foreign currency for materials, debt servicing or profit repatriation.
Economic Implications
It is important for us to know that the volatility of our economy, high inflations, volatile exchange rates etc poses a significant erosion in value of investor’s capital. Taking into cognizance the impacts of the inflation and volatile exchange rates discussed earlier, if an investor decides to accept and follow public opinion, chances are that, he is most likely to sell his last investment at a point in time and may not be able to build or purchase the next property for reinvestment because all the capital might have been eroded over time by the impact of inflation and exchange rate fluctuations.
Apart from this, the widespread use of the US Dollar in property transactions increases demand for the dollar, putting pressure on the Cedi and contributing to its depreciation. This cycle exacerbates economic instability and undermines confidence in the local currency. We shall be looking at a few of these economic implications, among which are these; exclusion of local buyers, social and development impact and the influence this practice on urban development planning.
Exclusion of Local Buyers
Pricing properties in US Dollar effectively prices out a significant portion of the local population who earn and save in Cedis. This practice limits access to home ownership for many Ghanaians, therefore, widening the housing affordability gap.
Social and Developmental Impact
The dollarization of property prices has broader social implications, housing inequality: It exacerbates disparities in housing access, favoring foreign investors over residents.
Urban Development
It influences urban planning and development, with a focus on high-end properties catering to foreign buyers, potentially neglecting the housing needs of the broader population. This is where we are as a country, with about 90% of percent of investment in the sector skewed towards high-end properties at the expense of social housing which is really needed by the mass majority.
Recommendations
To address the challenges associated with dollar pricing in Ghana’s real estate market, the following measures are recommended.
Support for Affordable Housing: Implement policies that encourage the development of affordable housing projects priced in cedis to cater to the needs of the local population.
Stakeholder Engagement: Engage real estate developers, financial institutions, and investors in dialogues to align practices with national economic goals.
Changing the Structure of the Economy: It is important we change the structure of the economy by implementing supply-side economic policies. That is basically producing more of what we consume locally while adding value to what we export. This will reduce the volume of national imports, therefore easing pressure on Cedi.
I know many would have thought that my first recommendation would be to call for enforcement of the law by prosecuting perpetrators, that is not the ideal solution, it is practically impossible to push business minded people to adhere to laws that will put them out of business.
It will not work, they will either flout the law or boycott investment in the sector in question and that will ultimately lead to market distortions. Even the government knows about this, hence, the reason we see even many state institutions including the Ghana Ports and Habor Authority charging duties in US Dollar. I stand corrected though, but I have doubts if the Ghana Ports and Habor has the authorization from the bank of Ghana to charge duties in US Dollars.
I equally have doubts also in establishments that has government stakes or shares in them such as the Labadi Beach Hotel and several other state owed enterprises (SOEs), all have the authorization from the Bank of Ghana to do business in US Dollar etc. Do note that, I am not reporting or alleging any wrongdoing here by anybody or institution, because I do not have the evidence to prove any. I am only expressing my doubts and will appreciate any education from readers.
Conclusion
While pricing properties in US Dollar offers certain advantages, such as protection against currency and inflation volatility and appeal to foreign investors, it poses significant challenges to Ghana’s economic stability, legal frameworks, and social equity. A balanced approach that aligns with legal provisions, promotes the use of the local currency, and support inclusive housing development is essential for the sustainable growth of Ghana’s real estate market.
But before we take leave, let me be quick to issue this disclaimer that views or opinions expressed in this article or any article by this writer are not to be relied on without obtaining legal or other professional advice when taking a step or entering into a legally binding agreement.
For real estate consultancy services, land banking investment strategies, property development, brokerage services, title registration, project funding consultancy services, feasibility studies etc across Ghana and Africa, contact the Africa Continental Engineering & Construction Network Ltd. We have you covered 360℃.
References
- Foreign Exchange Act, 2006 (Act 723), An Act of Parliament of Ghana, Section (3) (1) and (4): The prohibition of trading in foreign Currencies in Ghana.
- Bloomberg Business News (2025): Exchange Rates Performance 2025: First Quarter in Review.
- ACECN (2025): Market Survey on Prices of Building Material Inputs in the wake of a Strengthening Cedi against major Currencies.
- CediRate.com (May 30, 2025): Cedi Gains Fail to Ease Housing Costs as GREDA Cites Higher Material Inputs Prices in the Wake of a Strengthening Cedi.
About Author
- Daniel Kontie
- Email address: [email protected]
- Website: https://acecnltd.com/
