Real Estate: Developers bemoan high interest rates on loans
Nii Bortey Addo, a real estate developer has bemoaned the high interest rate on loans from banks in the country.
Speaking during a Twitter Space Conversation dubbed “Is Real Estate a Viable Business in the Current Economic Climate?” hosted by norvanreports on Sunday, February 12, 2023, Mr Addo posited that most developers are unable to go for loans from the banks to build houses for persons willing to rent or buy houses due to the high interest rates on loans.
This is aside the sector being capital intensive in nature.
According to Mr Addo, developers are unable to bear the high interest rate costs, an assertion that was alluded to by the Head of Business Development and Strategic Initiative at First National Bank Ghana, Edward Nyarko.
Interest rates on loans by banks is currently above 30%.
Aside the high interest rates on loans, other factors inhibiting the efficient operation of developers is costly land legislation and issues of litigation.
“We need better regulation and policies in the sector, particularly in the area of pricing as well as litigations. Litigations in the sector are too much,” he added.
Meanwhile, Mr Edward Nyarko, has urged investors interested in investing in the real estate sector should have a long term horizon.
According to him, investing in real estate for the long term can aid investors achieve huge real positive returns.
Mr Nyarko avers that investing in the real estate sector amid the current economic climate is a good decision for investors.
This, he noted, is due to both the income and capital appreciation in real estate assets, particularly during periods of high inflation as high inflation reflects in the prices of real estate assets.
Despite being a good investment avenue for investors, Mr Nyarko advised investors to first seek professional advice before deciding to invest in the sector. This, he noted, is for investors to avoid the pitfalls of investing in the sector.
