The real estate industry in Ghana is one of the fastest expanding areas of the economy. Indeed, industry analysts do not find this surprising, especially because the World Bank’s Global Economic Prospect Report predicts that Ghana’s economy will grow at the fastest rate in Sub-Saharan Africa in fiscal year 2011.
Is real estate profitable in Ghana?
The construction business was singled out as one of the areas expected to increase significantly in the next few years, according to the research. This report follows ten years of economic progress, which has resulted in a large increase in income levels.
This upbeat attitude has undoubtedly resulted in increased investment in the Ghanaian economy. The real estate business, in particular, appears to be doing exceptionally well, especially given the country’s massive housing shortage in both the residential and commercial sectors in urban areas.
As a result, it’s no surprise that the returns on investment are high in this industry.
Office and apartment units are frequently sold out before they are finished. However, there are numerous risks in the real estate sector, and the prudent investor must tread carefully to maximize their return on investment.
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In the real estate industry, there are numerous hidden dangers and potential transactional charges that can trip up even the most seasoned investor.
The land tenure system in Ghana is the most serious of these hidden dangers. No interest in or right over stool lands (which make up the majority of land holdings in Ghana) shall be created, according to the Ghanaian Constitution. freehold interest in land in any individual or body corporate.
The constitution further says that no interest or right in any land shall be created that vests a freehold interest in land in Ghana in anyone who is not a Ghanaian citizen.
As a result, the vast majority of real estate projects are erected on leased land. By definition, a lease must have a start and end date. When it comes to individual leases in Ghana, the industry standard is to grant a 99-year lease.
In practice, the normal lease agreement includes language requiring the lessor to acquire authorization from the head lease before granting any sublease or assignment.
Before paying any money, an investor must receive from the lessor a properly executed consent from the head lease.
Failure to secure a fully executed permission from the head lease could cause unnecessary delays in the registration process, as well as the possibility of litigation.
Because the lessor can only give you what he has, an investor must ensure that the balance of the lease meets his or her specific investment requirements.
Thus, if the remaining term of the original lease is 20 years, the greatest interest you can get is an assignment of the remaining 20-year interest.
The lease agreement must also include a renewal option. Because there is currently no legislation addressing ownership rights and disputes in the event that the lessor decides not to renew the lease after the term has expired, it is critical that the parties agree on how the land and any investments made on the land will be handled when the lease expires.