The concept of location in real estate: You will pay dearly when you get it wrong

Location is Key in Real Estate Investment

Today, location is the most important factor in real estate investment. Warren Buffett said, “Price is what you pay; value is what you get.” People want properties that increase in value or generate good rental income.

Understanding Location Beyond Geography

Location means more than just geography. It includes amenities, road access, schools, security, and market demand. Zoning regulations and socio-economic trends also play a role.

Choosing the right location reduces risks in real estate investments. This connects to the idea of "highest and best use" for land valuation. This principle ensures land use aligns with its location for maximum return.

The Cost of Mismatched Development

As a real estate valuer, I see wasted money daily in Accra. Many office complexes are built where demand does not exist. The result? Empty buildings that deteriorate over time.

Developers often set high rents based on features that tenants cannot afford. This leads to low occupancy rates and defeats the purpose of investing.

Residential Mistakes: Cheap Land, Costly Regrets

In residential development, buying cheap land in remote areas can be a mistake. Why spend GH¢40,000 on hard-to-reach land and build a property worth over GH¢1 million? Construction costs are similar across the city.

In Ghana, basic amenities are unevenly distributed. Investing in prime locations with reliable utilities is smarter. A modest home in a good area often outperforms larger homes far away from services.

Benefits of Good Locations

Investing in good locations has many benefits. If you live there, you'll enjoy peace of mind and easy access to services. For rental properties, expect high occupancy rates and premium rents.

Your property will also appreciate steadily over time.

The Fallacy of ‘Remote Areas Will Develop’

Some believe remote areas will eventually develop into valuable locations. While this can happen sometimes, it’s not guaranteed for all areas.

A man once shared how he bought land in a popular area in the 1990s with a friend. His friend sold his share to buy land at Ashaley Botwe for the same price.

Today, that land is worth over US$100,000 (about GH¢1,550,000). The original location barely fetches GH¢200,000 today due to its less desirable location.

Key Indicators of Promising Locations

When assessing property potential, consider these factors:

- Household income levels
- Quality of layout and planning
- Types of developments nearby
- Access to major city parts
- Proximity to landmarks and businesses

Analyzing these indicators helps predict property value appreciation over time.

Expert Advice is Invaluable

Always seek expert advice before making real estate investments. Real estate consultants have knowledge about factors affecting property values.

Engaging an expert armed with solid research helps make informed decisions when developing commercial properties for rent or sale.

Conclusion – Make Smart Property Moves

Real estate investment can be rewarding if done correctly. Mistakes in choosing locations can be costly and irreversible. Every decision should be backed by thorough analysis and professional insight.

With the right approach, your property will meet current needs while growing steadily in value over time.