Real estate has always been a solid investment. When a person is able to create enough wealth, real estate and property is one of the first investments they think about. Yet, times are changing. The stability that real estate investment offers seems to be slowly fading away due to uncontrollable geographical, political and even climatic conditions.
The world is seeing unprecedented events like Brexit and Bomb Cyclones. The real estate market keeps reacting to such uncertainties. Concerns about the future of a particular investment keep rising that manifests into major fluctuations or in extreme cases, a crisis. Investing with proper research and forecasts is the right way forward. Depending on experts who study the market day in and day out is now the more sensible thing to do rather than only focusing on location, size and budgetary constraints.
It’s important to know the rent trends in the market you plan to invest in. Is the rent going to climb soundly to cover your cost of the investment? In many markets rentals are still very low. You may not necessarily want to exit from your real estate investment but you should know that whenever you do the market conditions have to be optimal to be able to make a profit. Even finding a buyer will be tough, if you cannot show him or her a prospect for growth.
The above scenarios may give you a bleak outlook about your real estate investments, but one shouldn’t forget that the reason people do invest is to minimise their risk. We want you to do the same this year.
You can diversify your real estate portfolio. With enough money to spend, you can start looking at real estate markets that may have never entered your consideration set. Take for example student accommodation. The education industry is growing, so buildings and property related to creating temporary housing for students will continue to be in demand, as long as the population grows.
Retirement housing, health care facilities, co-living rental sectors are also opportunities that should be carefully considered. Our lifestyles are changing and there is also a shift in family dynamics. The stigma attached to retirement homes or co-living is becoming lesser, as people want to save money and invest in things they consider a priority at that point in life. People are less afraid of breaking societal norms and creating spaces that work for them.
The best part is that these opportunities used to be accessible to mainly institutional investors, where a large investment was needed as costs of construction was higher. Now High Networth Individuals (HNIs) and home offices have just enough money to invest in such ‘commercial’ properties that are smaller projects with lesser cost of construction.
So make 2018, a year where you revisit your real estate portfolio. Your assets are well earned, but make sure they continue to give you the returns they once promised. If they don’t, there are other opportunities that will make sure that the money you worked for continues to work for you.
If you are interested in properties (commercial or residential) in Ghana, do get in touch with us, so that we could help you take the first step to a diversified and sustainable portfolio.