Real Estate Investment In An Emerging African Economy: Which Strategy?

“Where the carcass is, there the eagles will be gathered”. Having smelt of investment opportunitiesin Ghana, investors from Asia, especially China and Singapore, are swarming into Ghana to capitalize on theinvestment opportunities in the country. Parcels of land in Accra are being bought by the Chinese as if theparcels were “the bread of their lives”. In a country where real property data are hard to come by, a study basedon credible real property market data would be very useful to those who want to make informed real propertyinvestment decisions. We employ residential property market data for Accra–Tema, the largest Conurbationin the country from 1992 to 2007 to evaluate the relative performances of value and growth residentialproperty investment strategies. The data are sorted into value and growth portfolios on the basis of initial yield.Econometric and stochastic dominance models are used to analyse the data to test the main hypothesis thatthere is no difference between the performances of the value and growth portfolios over five, ten, thirteen-yearinvestment horizons. The results show that the growth portfolio outperformed the value portfolio and that thesuperior performance is not a function of risk. The results, which could be of interest to residential propertyinvestors in Ghana, add an emerging African market economy’s flavour to the scanty literature on value realestate investment.