In a changing economy like ours today, it’s vital to know what your property as an investment asset is not only worth at any given time but what it can give you in return.
Proper pricing of your asset is as important as investing in a property. Usually, your property does not yield ideal returns due to market elusion. Understanding what the market can offer for your asset is profound in consolidating your property value. In the Western Area urban of Sierra Leone, Freetown municipality, for instance, the cost and prices of properties often do not move in the same and corresponding direction.
Both commercial and residential properties demand proper management just like any other business does. While costs relating to your core business will be carefully scrutinized when it comes to the cost of the various property services, you may not have the time or experience to question these in the same way. As an investor or other property owner, you should enrich your knowledge of the industry by seeking bits of help from a professional.
To simplify our passionate look into the various ranges of property values in Freetown, we classified the district into five broad sectors: the West end (St John-Lumley, Aberdeen, Wilberforce, Hill Station, Murray Town plus all its ancillary communities), and the Far-west (Lumley–Goderich); the East end (East End Police- Calaba Town) and Far-East (Calaba Town- Jui) and Central (ST John- East End Police).
Property costs, values, and returns largely depend on their locations. The East and the Far East are considered congested and largely occupied by low- and average-income earners, so property values and returns in these locations are not that great irrespective of the finishes and utilities.
The Central, like the East, is congested too but attracts meaningful investment opportunities. It forms the center of the business activity. Properties in the commercial central district accommodate the daily general merchandise and offices, meaning they provide markets for all business classes. Thus, properties in these locations enjoy sustainable returns, at least for the short and medium-term.
In the West and Far-West, properties in these localities are relatively worthwhile investments and largely suitable for high- and middle-income residential purposes. It accommodates the affluent groups of society.
With that said, if you are a first-time buyer, deciding where and how to invest in properties in Freetown requires an obvious examination of these factors. They are your must-do checkboxes before saying “Yes!”
Let me help you! Let’s go over what you have just read.
1. What is your choice of location? Which part of the city should I invest in? East end, or the Far East, Central, and West end, and the Far West.
2. Where do you intend to invest? These locations are independent factors when pricing your property, whether developed for commercial or private residential purposes. Properties situated in the central business district or in some amazing west and far-west locations enjoy full vacancy and a satisfactory return. It usually grabs incredible returns and takes part in short-term booms in the market.
These locations are at the top of the list for clients that pay for your rent, businesses that take good care of your assets, and affluent expatriates that are there for fun or for commercial needs.
3. How do you intend to invest? Do you intend to buy an empty plot, develop and rent it; lease, develop and rent it; buy, upgrade, and rent it; or sell it, just buy and sell it? Your choice of investment will, to a certain extent, if not greater, influence your returns. The best option depends on the location, your capital or cash strength, and the level of control you have on the ground. Talk to someone you trust and whom you know can advise you well on this choice, or otherwise consult a professional. The consequences of selecting the wrong option are that your capital will be tied up or you will end up abandoning the project entirely. Because properties are not commodities that can be turned into cash as you desire. You have to be meticulous about this. Properties’ returns, although sustainable, are one of the lowest.
4. Who is in your neighborhood? – Who else is in the same location or surroundings as you? Even if you were to erect a multi-million-dollar investment, if it is found in an unattractive environment, you will tend to entertain frustrating offers. An excellently developed property with superior finishing but lying in the congested east and central parts of Freetown could not be a prudent medium- or long-term investment. Similarly, a property can command a considerable price just because it is found in a certain location. For example, a standard three-bedroom around Spur Road or Wilkinson can generate up to $8,000 in annual rental income. The same space and finishes could barely afford $3,000-$4,000 up-gun to Calaba town.
5. What is the market offering for your property elsewhere? Pricing your property in isolation, oblivious to what others offer for similar properties, risks loss of yield and return. This occurs in two forms: one, you underprice your property, retarding and crippling your returns and consequently killing your interest in real estate investment; two, you might be asking for unrealistic prices that even the most desperate client is willing to accept. This delusion may work out in some cases, but in many cases, the opportunity cost is always greater. Accordingly, what you lose before you finally seal a deal is far outweighed by what you record at the end.
Let me explain this to you. Assuming you are asking for $7,000 for a property on Circular Road and the market is only willing to pay $4,000. If this property remained vacant for a year, you would lose $4,000 that year. If it is vacant for 6 months, you have lost $2,000.
In everything we do, we are always focused on the potential commercial benefits to your business. This could be in maximizing the revenue or potential value of your property. It could equally be reducing costs, or dealing with complex property issues that are distracting you from your core business.
Be smart next time you think of investing in or buying a property in Freetown. Good Luck!
Our clients trust us to deliver business-focused solutions that add value and give them a competitive advantage. Our experienced asset management team will actively manage your property, checking all costs, and negotiating them to a competitive level whilst ensuring all agreements are adhered to.
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- Ismail Sheku Umarr Kebe
BSc (Hon) Applied Accounting, IPAM, USL; MBA, University of Suffolk, UK (research student). is a trained and certified real estate asset broker and manager, valuer and appraiser, and head of operations for Global Salone Property and Investment Company Limited, with eight years of progressive industry in Sierra Leone. All rights reserved.