Ghana Real Estate Investment Guide

Are you looking to invest in Ghana? This guide is a complete overview of the Ghana economy and the investment opportunities available to the savvy investor in 2021.

Geography and Location

Ghana is a country in Western Africa, situated on the coast of the Gulf of Guinea. It has diverse geography as well as rich biodiversity. This diversity ranges from coastal savannahs to tropical rainforests.

Ghana covers an area of 238,535 km² (92,099 sq mi). It shares 2,420 km of land borders with three countries;

Burkina Faso (602 km) to the north, Ivory Coast (720 km) to the west, and Togo (1,098 km) to the east. To the south are the Gulf of Guinea and the Atlantic Ocean.

Population, People and Language

According to the latest data, Ghana has a population of 31.73 million (2021). 57.35% of the total population lives in urban areas and cities. The country has a population density of 137 people per sq Km.

The median age is 21.5 years. Ghana is a multilingual country where people speak about eighty languages. The three main languages spoken include Akan, French and English.

The population growth rate currently stands at 2.19%.

Real Estate and Investing

Real estate in Ghana has grown into an important economic sector. In 2020, real estate in Ghana contributed roughly $264.3 million to the country’s GDP, an increase from the preceding year.

One of the propelling reasons for the growth of the real estate business is the country’s high urbanisation rate of 56.7 per cent. There is a substantial affordable housing deficit of 5.7 million, hence a massive demand for housing.

In efforts to bridge the housing gap, the government supports the construction of affordable homes and enhances access to housing credit through mortgages for government workers. Housing projects initiated in 2007 and abandoned for some time, have been resuscitated and completed, or are at various stages of completion.

Rental Yield 

Residential yield averages from 8%-10%

Other Investor Information

• A five-year tax exemption on the business income of real estate companies
• Ease of Doing Business Regional – 2020: 17th  
• Ease of Doing Business International – 2020: 118th
• Free transfer of capital, profits and dividends

Taxation

• Withholding Tax (WHT) – Dividends: 8%; Interests: 15%; Royalties: 15% (residents)/15% (non-residents)
• 15% tax on rental income by non-resident individuals
• Capital Gains Tax – 15%
• Corporate Tax, Personal Income Tax and VAT – 25% 
• Double Taxation Avoidance – Agreements with 16 countries
• The income of a certified company from a low-cost housing business is subject to tax at 1%.
• 25% tax on gifts

The Government of Ghana aims to hit a 20% tax-to-GDP ratio by 2023. Most of the tax revenues have come from increased corporate and personal income tax, VAT, and similar taxes.

Below is a summary of the nation’s significant taxes:-

Source: Ubuturo Research

Economy

Ghana boasts one of the most successful economies in Africa. The nation’s economy is boosted by a diverse and rich resource base, coupled with good governance.

Ghana has one of the highest GDP per capita in West Africa due to its flourishing economy.

The nation attracts foreign investors due to its favourable business environment. Efforts by Government bodies like the Ghana Investment Promotion Ministry of Trade and Industry have put in place significant initiatives through promoting investment incentives like tax exemptions, tax holidays and other facilitations to investors.

Ghana’s economy is recovering gradually over the medium term from the effects of the 2020 pandemic. Thanks to commodity price growth and strong domestic demand. The West African nation also received $1 billion equivalent in the recent IMF SDRs allocation, partly to support economic recovery. 

GDP

The national GDP has been steadily growing for the last 6 years. The annual growth rate declined to 0.88% in 2020, from 6.48% in 2019.

Source: Ubuturo Research

Economic Sectors

The leading economic sector is the service sector. It is the most significant component of the economy. It comprises the banking sector and telecommunications.

The industry sector accounts for 32% of GDP and includes;

Mining Sector – This contributes 37% of export revenues in Ghana. Gold is the most exploited mineral. Other minerals are manganese, bauxite and diamonds.

The country is also rich in deposits of; Iron ore, limestone, columbite-tantalite, feldspar, quartz and salt. In addition, there are minor deposits of ilmenite, magnetite and rutile.

Agriculture Sector – This is a significant sector, and accounts for over 40 % of export earnings. At the same time, it provides over 90 % of the country’s food needs.

Other subsectors include; lumbering, light manufacturing, aluminium smelting, agro-processing, cement production, small commercial shipbuilding and petroleum.

Emerging Sectors

Medical tourism, entertainment and new technologies are among the fast-developing sectors.

• Ghana is one of the potential destinations for medical tourism in Africa. Efforts to construct an ultra-modern health facility are underway. This will provide specialised health care to patients.
• Ghana has grown into a reputable technology hub in sub-Saharan Africa, with different agricultural, health and telecommunications innovations.

Resources

Ghana has plenty of natural resources;

• Gold. It accounts for about 95% of the country’s mineral revenue. Today, Ghana is Africa’s largest gold producer, overtaking South Africa in 2019. It is also the 6th largest producer worldwide.
• Diamonds. Ghana also has significant deposits of diamonds. This plays a significant role in the country’s economy. In 2014, the country was among the top rough diamond producers.
• Cocoa is Ghana’s main cash crop. Most of the crop’s production occurs in the country’s forested areas. Ghana earns most of its cocoa export revenue from countries like the Netherlands, the United States, and Malaysia.
• Timber products. Timber is Ghana’s third-largest export. Some of the timber products in demand include; Sliced veneer, plywood, rotary veneer and kiln-dried lumber.
  Other timber exports include curl veneer, boules, furniture parts and air-dried lumber.
• Bauxite
• Manganese
• Oil.

Above all, these resources make Ghana among the wealthier nations in West Africa. 

Final Thoughts

In conclusion, people looking to invest in Africa should consider Ghana on their list. The country has been experiencing a booming economy in recent years. One of the main reasons for this is its rich natural resources like gold and oil reserves.

Besides these lucrative commodities, they also have a flourishing real estate market. Moreover, the solid economic growth rates, improved public services, and tax incentives make the investment climate in Ghana even more attractive!

Are you ready to invest in Africa right now? Property and real estate are solid investment opportunities in Africa. Visit ARE for more details.