Accra Property Perspective - January 2025 Edition

In This Edition:

?●????? ?? Your Guide to Real Estate Investment Trusts (REITs) in Ghana

●????? ??? Experience Exclusive Luxury at The Lucan, Chelsea, London

?? Your Guide to Real Estate Investment Trusts (REITs) in Ghana

Investing in real estate has long been a cornerstone for building wealth, but traditional property ownership often requires significant capital, time, and expertise. For those seeking a more accessible and flexible approach, Real Estate Investment Trusts (REITs) offer a compelling alternative, especially within Ghana's evolving market.

Understanding REITs

A Real Estate Investment Trust (REIT) is a company that owns, operates, or finances income-generating real estate across various sectors, including residential, commercial, and industrial properties. By purchasing shares in a REIT, investors can earn a portion of the income produced without directly managing properties. This model provides exposure to real estate assets with the liquidity and simplicity of investing in shares and stocks. The U.S real estate investment trusts in 2023 alone managed $4.5 trillion in real estate worldwide according to CNBC.

Benefits of Investing in REITs

●????? Diversification: REITs allow investors to diversify their portfolios by including a range of property types and locations, thereby mitigating risk. These asset classes broadly include shopping malls, university hostels, billboards, storage, health facilities and popular nowadays are data centers - due to the rise in tech innovations such as Artificial Intelligence, blockchain, etc.

●????? Regular Income: By law, REITs are required to distribute a significant portion of their taxable income as dividends, offering investors a steady income stream.

●????? Accessibility: Investing in REITs typically requires less capital than purchasing properties outright, making real estate investment more accessible to a broader audience. You don't have to have lots of credits or a lot of money. You also don't have to dedicate a lot of time and you don't have to be an expert in real estate to invest in REITs.

●????? Liquidity: Publicly traded REITs can be bought and sold on stock exchanges, providing greater liquidity compared to direct property investments.

The REIT Landscape in Ghana

In Ghana, the REIT sector is gaining momentum. Notably, GCB Capital has introduced the GCB Real Estate Investment Trust (GCB REIT), focusing on affordable residential properties and real estate investments. This initiative aims to address housing challenges while offering investors valuable opportunities. Another example is the Republic Investments REIT who’s main objective is to provide investors with capital appreciation in a long term diversified portfolio.? The primary focus of this Trust is to invest mobilized funds into securities of real estate companies, development of real estate or investing equity in companies that engage in real estate investment activities.

These trusts are publicly listed on the Ghana Stock Exchange (GSE) and regulated by the Securities and Exchange Commission (SEC), providing oversight and adequate guidelines to ensure a structured and secure investment environment. This is further solidified by the introduction of the The Securities Industry (REITS) Guidelines in 2019 issued by the Securities and Exchange Commission (the SEC).

On top of these, there are private equity funds that offer additional investment options for acute investors. Most notably is the Sentinel Commercial Real Estate Investment Trust (REIT), which acquired One Airport Square (OAS), an iconic 9-story Grade A building in the prime area of Accra’s Airport City.

Is a REIT Right for You?

Investing in REITs can be an excellent way to gain exposure to the real estate market without the complexities of property management. However, it's essential to conduct thorough research and consider factors such as the REIT's portfolio composition, management team, and historical performance. Consulting with financial advisors can provide personalized insights tailored to your investment goals.

As Ghana's real estate market continues to evolve, REITs present a promising avenue for investors seeking to participate in the sector's growth while enjoying the benefits of a diversified and professionally managed portfolio.

Disclaimer: This newsletter is for informational purposes only and does not constitute financial advice. Reach out to our advisory team or consult with a financial advisor before making investment decisions.

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