Forecasting into the real estate industry in the next 5 years

Due to the dynamics and rapid changes occurring in Ghana’s Real Estate Industry, I believe it has become necessary to provide an insightful forecast that should assist any real estate mogul in approaching the future.

The change of taste, advancement of technology, dynamism in needs and values as well as access to finance, demands that Real Estate developers embrace the constant changes in the industry and skillfully navigate their way into the future without being archaic in mindset and obsolete in approach.

Civil engineers, planners, building consultants, estate developers, investors, architects, and valuers are all faced with the huge task of keeping up with these changes.

In elite areas such as Accra, Kumasi and Takoradi where parcels of lands have become scarce and difficult to acquire, apartments and condominiums with similar shared properties will both be in demand as a strategy the government and developers will employ to solve the housing deficit gap by the year 2026.

In recent times, Provision of affordable housing for the mass of the population has remained a major challenge for many countries including Ghana. Several interventions have been seen as the way to remedy the ever-growing demands which far outstrip the supply creating an acute shortage. Unfortunately, the shortage of housing continues to be one of the most critical socio-economic challenges facing the country (Ghana National Development Plan 2008).

Ghana currently has a social housing problem, with a deficit of 1.7 million units and a minimum of 170,000 housing units would have to be built annually (Daily Graphic online, 2014). With this, Real Estate developers who possess clairvoyance will really flourish in the coming years especially with the fact that the government cannot achieve its annual target of constructing housing units coupled with the country’s population that will keep growing by 2.25% annually creating more housing deficit in the coming years.

Due to the economic and political instability and its impact on building materials and equipment, as well as the constraint the Covid-19 pandemic has placed on movements and business, the standard of living of citizens has been greatly affected as well as the Real Estate Industry. Within this period, people have lost their jobs with more job cuts expected for the coming years.

This has brought a change in buying patterns and the reduction of buying power in the industry. With Ghana’s expected GDP growth set to sink drastically from 6.8% to 2.6% according to a report by Deloitte, the purchasing of landed properties will become expensive and more cumbersome. Again the high demand for housing units in the country by 2026 will present the good news to Real estate owners and landlords with tenants, as potential house owners will be at their mercy. However, with limited disposable income to work with and a gloomy economy, real estate scores very low on buyers’ priority lists.

Under our current government where taxes have been placed on almost every item, I foresee an increment in house and rental taxes. Currently, there are two rates for rent tax; 8% for residential premises and 15% for non-residential premises. The tax reform by GRA will most likely reduce the benefit of owning a house in Ghana. By 2026 homeowners won’t be enjoying tax holidays as rent tax, property rates, property gain tax, and property sales tax will be required of them under the new tax law being established by the government. This will have a huge impact on the industry and its evidence will be greatly seen by 2028.

Finally, due to congestion in the elite areas mentioned earlier in this article, there could be a possible Mass exodus from these areas to the rural. For instance, in Accra where the capital gets crowded, congested and property prices keep increasing, citizens who earn little and as such cannot keep up with the increasing standard of living due will be forced to move out to other places such as Sunyani, ho and Koforidua.

Due to this Migration, some growing real estate developers will be attracted to such areas as they seek to provide housing solutions for migrants who have left the capital for a more suitable environment. Despite the Migration, buildings and housing in urban areas will remain fruitful as the over-crowding state of the capital is likely to attract foreign and local investors.