Empirical evidence gathered suggests that, real estate typically offers an attractive investment with a moderate risk. Real estate is widely known for providing predictable and sustainable cash flows and continually enhances shareholder value through the expert management and strategic improvement in the portfolio of premier income generating properties. There is expectation of a continued demand for property with long leases in Accra and suburban areas of Ghana. Office and commercial yields are relatively high, suggesting demand will continue to drive rents up. 

Ghana’s residential housing deficit is estimated to be over a million houses with only 40,000 out of an estimated annual demand of 100,000 being currently provided (CAHF, 2015[1]). In other sectors, particularly, offices and retail commercial real estate sub sectors, there has been marked growth with an increase in supply of such spaces as well as an expected addition of more office and retail space within the next 2 to 3 years. The outlook remains positive, albeit dependable on improved economic fortunes; particularly as multinational companies continue to flock into the country; businesses as well continue to expand and look for alternative business locations; and also, Ghanaians in the diaspora continue to invest in real estate as a means of hedging their incomes against economic downturns in the West and providing a 'haven' for themselves and their families.

The outlook for the income producing property sector is optimistic and real estate investments continue to remain attractive. Demand for real estate continues to grow with significantly high occupancy rates particularly within the retail sub sector. Yields in real estate have historically been high with property investments usually earning way above government securities for instance. Monthly Rentals for instance in commercial office space have ranged from $30 to $38 per square meter (per square meter) in prime areas with some retail spaces going for as high as $40 - $45 per square meter. There emergence of quick service restaurant (QSR) in Ghana , has shown a positive effect in our real estate sector; with the presence of KFC, Burger King, Pizza Hut & Chicken inn. These are business which investment heavily to gain a good return on thier investment, in view of this they negotiate for long leases with further renewal tenure. 

Airport City in Accra for instance continues to benefit from foreign investors seeking top class, safe office space and with close proximity to key services. This has caused yields on these so-called trophy assets to rise considerably. As other investors seek greater yields they have started to look further afield and to focus on the opportunities available in the other parts of the country and larger regional cities. Greater confidence in the property market has led to investors becoming increasingly willing to invest in good secondary property, which are the best buildings in the good locations such as Osu, North Kaneshie, East Legon, Tesano in Accra and so forth. Good secondary assets are buildings of slightly lower quality whose values can be improved by, for example, refurbishment or the renegotiation of leases.

Notwithstanding these potential benefits, significant risks are associated with the real estate market. Such risks pose challenges to the optimization of returns within the real estate market. Some are briefly explained below:

·        Real Estate Risk

Risk associated with the particular real estate asset investments as well as those of the real estate industry as a whole.  ( Residential, Commercial, Industrial etc)

·        Competition Risk

Risk that arises from competition with numerous other entities seeking to invest in real estate as well as competition to secure tenants.

·        Liquidity Risk

Investments in real estate are relatively illiquid and generally cannot be disposed off quickly. There is therefore the risk of not being able to vary the real estate asset portfolio in response to economic or other conditions promptly

·        Default Risk

This describes the risk of an occupational tenant on a property defaulting on his rental payments thereby leading to potential losses.


Adopting effective and efficient investment strategies will be vital in ensuring that risks are duly mitigated and benefits optimized. Rental growth is expected to be the prime driver of investment performance in the income producing real estate sector.

Risk management techniques will therefore be very pivotal in ensuring that the various risks described above are managed in such a way to still reap optimum benefits and returns. Measures including, but not limited to; efficient tenant screening and selection models, effective investment choices, efficient  rent collection techniques, good knowledge and expertise of the market will be essential in coming up with an effective risk management strategy that will ensure the minimization of costs and optimization of benefits.

*Adu Ernest Koduah, MGhIS                                                                                              * Kwame Kankam Adom

Real Estate Consultant                                                                                                            Real Estate Consultant

[1] Centre for Affordable Housing Finance in Africa: 2015 Yearbook- although a significant proportion of this deficit is within the lower income brackets.

NB:  The view expressed in this article is solely the views of the authors and not in any way reflect the views of the organisation they work for or may be affiliated to.  Data used for this article was obtained from www.traverseapps.com. Raw Data can be made available, sbnject to terms and conditions.