Cedi On The Rise: What It Means For Ghana’s Real Estate Market

The Ghanaian cedi has recently gained strength against the United States dollar and other major foreign currencies that many economists are recognising, with Bloomberg even citing it as the best-performing currency in the world. The swift appreciation of the Ghana cedi is being felt across various sectors of the economy, and real estate is no exception. 

While the cedi appreciation attracts discerning opinions, its impact on the real estate market is far more nuanced. Is it a blessing or a curse? No doubt that when the cedi appreciates is generally good for local developers and homebuyers, as it lowers construction costs and strengthens purchasing power. 

Let’s break down what an appreciating cedi truly means for Ghana’s real estate sector. 

What a Stronger Cedi Means for Ghana’s Real Estate Market: Boon or Bane?

1. Lower Construction Costs for Developers—Boon

One thing that contributes to the high cost of homes in Ghana is the construction cost. So if the construction cost is low, homes for sale in Ghana will also be low, and vice versa. With the cedi appreciation, it will lead to a low cost of construction since most of the materials used for construction are imported. When the cedi appreciates, it takes fewer local currency units to buy the same goods abroad, effectively lowering import expenses.

This can translate into:

• Reduced cost of building projects

• Potential for more affordable housing units

• Higher margins for developers

2. Improved Purchasing Power for Local Homebuyers —Boon

It is very true that a strong local currency boosts the value of local earners in international markets. This is more practically significant for local home buyers as their cedi incomes now stretch further. When the cedi appreciates, inflation eases and borrowing costs stabilise, local middle-income earners are better positioned to enter the housing market.

The benefits of this include:

• Increased access to mortgages

• Stronger domestic demand for homes

• A more active secondary market

3. Diminished Returns for Foreign Investors —Bane

Foreign investors in real estate often see Ghana’s real estate market as one with a lot of potential, characterised by high-yield opportunities. However, the current trend of the appreciating cedi can reduce the appeal of these investments. Why do we say so? When the local currency strengthens, rental incomes and capital gains earned in cedis convert to fewer dollars, thereby reducing real returns.

Challenges faced by foreign investors:

• Lower rental yield in USD terms

• Higher entry costs (properties become more expensive in foreign currency)

• Reduced competitive edge compared to other emerging markets

4. Stable or Falling Property Prices (Boon for Buyers, Bane for Sellers)

The fact is that when the local currency appreciates, there will be lower real property development costs and, of course, reduced inflation pressure. This will make property prices stabilise or even dip significantly. While this is good news for home buyers in Ghana, especially for first-time homeowners, it may be challenging for sellers and developers seeking maximum returns.

5. Pressure on the Luxury Market —Bane

Another booming real estate sector that the appreciating cedi will affect most is the luxury property market. This market is often targeted at expatriates and diaspora investors because of their US dollar. However, this real estate investment sector in the country may feel the greatest pinch. With the cedi gaining value, high-end properties priced in US dollars can become less attractive to foreign buyers. This will potentially result in slower sales cycles for premium listings.

6. Strengthened Confidence in the Economy—Boon

One of the fundamental things to restore confidence in an economy is to build a strong and stable local currency. That's why economists in Ghana are saying that the cedi appreciation is a signal of economic confidence. Because they believe that this can boost overall investor sentiment, both locally and internationally.  Again, when there is confidence in an economy, there will be more capital flowing into long-term real estate projects in the country.

Final Verdict: More Boon Than Bane — With Some Caveats

For many Ghanaians, especially local homebuyers and developers, a stronger cedi is good news. It means reduced construction costs, improved affordability, and macroeconomic stability. However, foreign investors and high-end property sellers may face short-term disadvantages due to exchange rate shifts.