As as Real Estate Agency, we get asked this a lot. Agents can only provide advise about how much a property might fetch in the market but final asking price is ultimately down to landlords. While we do agree that some properties are unrealistically priced, we have tried to look into some of the reasons which might help explain property in Sierra Leone might seem higher than others in the Region (The Gambia) for example.
1. Glory days of NGO financed rentals.
This was especially true in the immediate aftermath of the conflict. The demand for accommodation by relief NGOs and the UN led to inflated prices and more people woke up to opportunities in Real Estate. Real Estate is one of the few investment opportunities available which might guarantee returns in retirement. This has continued to evolve and we have seen an increase in commercial apartments in recent years.
2. Cost and availability of land
Freehold is only available in Freetown and with our centralized government land in Freetown is in high demand (and short supply) and as such high prices are to be expected.
3. Cost of construction
While the character of the Freetown landscape can serve up some fantastic views, the hilly topography can significantly add to the cost of construction. Often, there are huge costs for excavation before even a foundation can be laid.
4. Lack of proper mortgage opportunities
There are very limited opportunities for mortgages in Sierra Leone though you can get loans through banks. This can mean that there is no pressure coming from the need to service debt because the house is fully paid and this means the landlord can sit on it and wait for their ideal rent. In cases where there are loan repayments to be made, high interest rates and unfavorable terms only serve to push up rent demand even higher.
5. ROI Period
Most people investing in Sierra Leone don’t take a long term view when it comes to recouping their investment. It might be a fundamental lack of trust in the stability of the economy. So basically the want their return on investment as soon as possible.
6. Plain old Speculation
Or as we might say in krio, “try chance”. After all, they say the right price is the price someone is willing to pay for it right?
This is not an exhaustive list and we would like to know if you can think of any more. We are also interested in hearing about your experience in the Sierra Leone real estate market – for rental or sales.