Akua Nyame-Mensah: Real Estate in Accra – (Un)Reasonable?
I spend a lot of time asking developers and agents what goes into the pricing of real estate in Accra. I ask this question so much because the prices seem to constantly be much higher than I expect. Are people just being opportunistic? Is the cost of construction and acquiring land really that high?
The answer sometimes is yes.
Without getting too technical, what factors impact the price of property in Accra?
The age of the property, features, where it is located, how far it is from important amenities and the prices of the surrounding properties are the first things that come to my mind.
When asking developers they start with: the land, the cost of the construction materials, and the costs of the basic infrastructure.
Obtaining land is a major headache in Accra. Issues related to fraud can force a developer to spend two to three times more on the process of obtaining the land than budgeted. Construction materials are also a major cost to developers in the country because the majority of materials are imported.
Infrastructure is another huge cost to developers in Accra, especially when they are building in greenfield sites. Developers may have to put in roads, electricity poles, transformers, water pipes and other types of infrastructure typically put in by the government before a community is built. All these costs are passed on to the consumer and increase when the currency depreciates.
When speaking with agents they usually begin with the area. Of course the type and size of the property is important but in general, property bought in first class residential areas where land and property is also typically better documented, is more expensive. The residential class status of an area depends on the level of infrastructure available. Upper class residential areas have better roads, drainage, electricity supply, etc. The price of a property could be high regardless of the age or attractiveness of the features just because it is in a firstclass area.
There are of course institutions that have the mandate to value properties but most property owners do not depend on them until there is a legal issue.
The Land Valuation Division of the Lands Commission is responsible for the valuation of government properties and the registered members of the Ghana Institution of Surveyors (GhIS) have the mandate to value property whether for rent or sale. Those in the Land Valuation Division are also GhIS members.
The price of land, costs incurred when trying to obtain land and the location are the main price determinants, especially for property bought off plan. As the market in Ghana becomes more transparent and more data is collected about the pricing of properties, property owners will begin to turn to official institutions in charge of valuing property and people will be able to better compare and contrast what is available and see for themselves if what they are paying for is really worth it.
Akua Nyame-Mensah is Managing Director of Lamudi Ghana, Ghana’s Best Online Real Estate Marketplace.
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