The apartment investment space in Accra is growing, certainly in terms of supply by developers.
And we’re not even counting the many launches that we frequently hear about. Drive around town, and you’ll see many giant billboards calling out for buyers and investors, promising attractive returns.
If you want to start with this type of investment, you have many options promising healthy returns. But do those promises hold up? Can you bank your hopes on apartment investment in Accra? How do you even start?
Why apartments have become so popular in Accra
Like most cities in the world, the population of Accra has grown by leaps and bounds. And since land is limited in supply, there’s only so much space to provide housing for all of us.
Add the many other urban land uses like hospitals, schools, shopping centers, and related amenities, and there’s even less land.
With the limited land available for housing, developers must go higher to provide more housing units. It’s also easier to create communal facilities for the many households in an apartment unit that provides the same to individual standalone homes.
Due to these factors, apartment units are a win-win for developers and end users who want to live in Accra.
Why invest in apartments in Accra
Here are some rewards you stand to enjoy by investing in apartments in Accra.
Promising cash flow
The popular buy-to-rent model is a way to generate some extra income from real estate investment. Apartments fit well into that strategy, and you can enjoy the benefits if done right.
A path to creating wealth
Like many other types of real estate investment, property values appreciate with time. Your equity in these investments also grows, boosting your wealth.
You can diversify your portfolio better
Adding an apartment to your investments could help you diversify even better. If other sectors struggle, you know you can count on your apartment to hold steady. If you want to invest in an apartment unit in Accra, here are a few points to get you started.
Outline your goals
Like any investment, putting your money in an apartment in Accra would best serve you where you have clearly defined investing goals. These goals will influence your investment strategies and, ultimately, your choice of investment property.
For example, it would help to know the desired locations you want to invest in. You might also need a target rate of return and a minimum cash flow you expect to receive as rent.
Only you know what you want to achieve when you invest in an apartment unit in Accra. Settle that in your heart so you put your money where your heart wants it.
Read also: Two-bedroom apartment for sale at East Legon
Know the kind of investment you want to make
Yes, at face value, we’re talking about investing in apartments in Accra, but that’s too generic and simplistic. You still have to dig deeper to know the kind of investment you want to make.
For example, many prefer to buy an apartment and quickly rent it out (hopefully for a profit).
Others decide to buy, hold for a few years, and sell their units for a profit, given the potential of value appreciation. No approach is wrong, so long as your choice aligns with your investment goals.
You also want to decide whether you’ll be a hands-on or hands-off property investor. While not the most common style, some people prefer to be directly involved in the day-to-day management of their apartment.
They even play an active role in getting tenants and negotiating rent and service charges.
Others prefer having a third-party company handle their real estate investment. Again, depending on your goals and investment style, either approach will work well for you.
Know the numbers
You want to know the numbers around real estate in Accra – or at least apartment – investment before you throw your money at it.
For one, you need to know the trend of financing costs if you don’t intend to use 100% of your money to buy the unit. Even if you’re using 100% of your money because the borrowing costs are prohibitive, what are the opportunity costs of your investment?
Also, what are the market rents for similar apartment units you want to invest in? And what have been the trends over the last few years? How would that affect your goals?
Get familiar with vacancy rates and how long it takes to fill empty units.
Recent announcements of similar apartments in your location are factors to track. If developers bring similar units like yours to the market (increased supply), rents could fall.
Factor in related statutory payments such as taxes, property rates, and insurance, as they could affect your income.
You may pass some of these costs to potential tenants or treat them as outgoings you must handle.
All these factors show how crucial it is to know the numbers before investing in apartments in Accra.
Read also: Four-bedroom apartment for sale in Accra
Beware of down times
Despite all the promises and growth potentials, investing in apartments in Accra isn’t always the quick ticket to wealth. Real estate runs on cycles, and down times are not out of place.
As business growth has slowed in Ghana, it’s not unthinkable for businesses to lay off workers or put expansion plans on hold.
If that goes on for too long, fewer people will have the means to rent those top-tier apartments. Many real estate agents have complained about their properties staying on the market longer than they’ve predicted.
Don’t forget to diversify where possible
At first, you might want to dip your toes in the waters. But if you decide to invest in more than that one apartment unit, you should also consider diversifying your investments.
Yes, even if you intend to build a portfolio of apartment units in Accra, you can still diversify those investments.
For example, you can diversify by unit type. Given many developers offer studio apartments to mostly three-bedroom apartments, you can aim for a healthy mix of these units. Of course, each offering targets a different user, and those differences are a good starting point.
As more apartment units make their way to the real estate market in Accra, it hasn’t been more tempting to grab a piece of this promising investment option.
While it could all seem like too much work, it shouldn’t be too hard to start.
Photo credit: Cover image: Annie Spratt on Unsplash
Second image: Photo by Ricardo Gomez Angel on Unsplash
