Ghana’s real estate sector, once a beacon of growth in Africa, is now grappling with a slowdown. The Real Estate Market Attractiveness Index of 2023 places Ghana among the least attractive destinations for real estate investment, a stark contrast to its previous standing.
The culprits? A cocktail of macroeconomic challenges and global uncertainties. Ghana’s inflation rate, a staggering 35.2%, is a red flag for investors. High inflation erodes the value of the currency and injects uncertainty into the market, deterring both local and international investors.
The country’s GDP growth rate, another key indicator, is also on the decline. Economic growth is a vital driver in the real estate sector, influencing demand for both residential and commercial properties.
Construction costs in Ghana, estimated at USD 1,700 per sqm, are above the continental average. These high costs limit the feasibility of development projects and affect the affordability of properties.
In comparison, Botswana and Morocco, the top-ranking countries in the Real Estate Market Attractiveness Index, have managed to maintain relative currency stability, low inflation rates, and lower construction costs. For instance, Botswana and Morocco have inflation rates of 3.1% and 4.3%, respectively, and Morocco’s construction costs per sqm are significantly lower than the continental average.
The depreciation of the Ghanaian cedi, which declined by 83% in the year to December 2023, is the most influential factor affecting Ghana’s real estate market. This depreciation raises concerns about economic stability and affects the cost of imported construction materials, thereby impacting overall project expenses.
Ghana’s real estate sector is at a critical juncture, facing challenges that require strategic interventions for recovery and growth. Addressing inflation, stimulating economic growth, and tackling construction cost issues are crucial for restoring investor confidence. Efforts to stabilize the currency and create a conducive business environment can help revitalize Ghana’s real estate market.
Despite the current challenges, there are opportunities for innovative solutions and collaborative efforts to position Ghana as a more attractive destination for real estate investment in the future.
Source: Modern Ghana
