Real Estate Investment In Africa

  • by Inyene
  • 1 year ago
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The real estate industry in African countries is constantly growing. The growth in which it is growing makes many people interested in benefiting from the market. According to United Nations estimates, the population of Africa will reach over 2.5 billion people in 2050. What this means is that properties in Africa will increase and their investment will also increase. So, you may be wondering about the types of real estate properties that are currently available in case you are thinking about investing in real estate, which will be covered shortly.

 What is real estate?

Real estate refers to properties that include both unimproved land and land. These improved lands include buildings, furnishings, roads, and utility systems.

Types of real estate properties

There are various types of real estate properties that one can acquire and make money from. They include:

 Residential properties

Residential properties stand out as the most lucrative property one can acquire and make money from in Africa. The reason is that people are constantly looking for where to reside. So, anyone considering investing in this kind of real estate has a higher probability of seeing a return on their investment.

Some buildings that fall under residential properties include family homes, villas, hostels, etc. the option of renting these buildings out is available. Alternatively, you can sell out new or existing buildings if you want to. To make money off of old residential buildings you can remodel them. Residential properties are a bit easier to acquire compared to other properties.

 Commercial properties

In African countries like Nigeria for instance, most commercial properties are close to residential properties. Commercial properties are used for businesses and they are easy to find. These properties can be used for a variety of things like gyms, restaurants, schools, supermarkets, phone shops, etc.

The buildings are usually rented out which is a good way for owners of commercial properties to make money. Also, they have long-term leases, which enable property owners to raise their rent demands and increase their income. All year round, the commercial property produces more money. In contrast to residential property, they can have more than one unit, and the cost of commercial property is determined by the revenue it brings in and the location.

Land

Land is an empty, undeveloped piece of property with no improvements. Although it is the form of real estate property that costs the least and sells the quickest. It also appreciates over time depending on the location of the land. Land doesn’t require expensive upkeep, and yet its value continues rising. Land is frequently purchased for a variety of factors, including the rights to natural resources and development.

You can use land for several things like agriculture, ranching, carefully planned urban development, etc. Investing in a land that you already own for a specific reason can be expensive. You can lease the land out to someone who wants to use it for a particular period, you can also sell it.

Industrial properties

Industrial properties are distinct. They are used primarily for the production of commodities. These properties are used as warehouses, production facilities, solar power plants, storage facilities, etc. There are no industrial properties accessible in the vicinity where many people are staying or close to residential areas. It is frequently situated in remote areas so that people won’t be harmed by the air pollutants produced by the manufacturing company. The nature of the investment and the property’s location has a big impact on the kind of money that can be made from industrial property investment.

Reasons you should invest

Apart from knowing the types of properties available, there are reasons why you should invest in them. They include:

 

Ability to purchase less than market value

Sometimes, you can purchase properties for less than the market value. This usually occurs when a seller is in need of quick cash to sort things out. Finding homes that are listed below market value is a specialty of real estate brokers. When you find such properties, it is easier for you to make more profit.

The real estate produces consistent cash inflows.

A property that is currently rented out produces a stream of rent payments each month. For things like storage and parking spaces, it may be easier for you to charge more. So, residential and commercial properties can bring in steady cash flow for you especially when you consistently rent them out and depending on the locations of these properties.

The value of real estate increases

The demand for a particular type of real estate property and its location usually influences the value of a property. Even a short distance can significantly affect this, but if you choose your property poorly, it could eventually get worse. Additionally, if you have an old building and you renovate it, it can also increase the chances of you making more profit from selling or renting such property out.

Deferred taxes

Taxes on increases in property value are not due until the property is sold, which could take years after the initial investment. Additionally, it is feasible to stretch the tax-deferral period even further by rolling the gain over into another real estate transaction under the present tax regulations. But, doing these depends on the rules in your country.

Real estate enables active investment management

A proactive real investor can look for the greatest prices, manage expenses, determine which applicants will end up as tenants, and choose when to sell. You also determine which location you want to buy your properties in. Throughout the investment process, you should be actively involved so that you can seek ways to make more profit. In other words, your income is a result of your efforts.

Final thoughts

There are lots of real estate properties out there that people constantly buy and rent for several reasons. Knowing these properties and how advantageous it is will help you in your real estate investment decision. Know that real estate investment is here to stay and join others in benefiting from it.

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