The History of Land Prices in Kumasi

Many are those who continue to ask me, 'is it good to invest in land in Kumasi?' I have several times tried to let such people see what i see in the land market. But most often i fail. I therefore took time to research into the history of land price in Kumasi. I hope you will get the answers you want in the land market in terms of land prices.

         In 1960, 100 feet by 100 feet land at Asaago, a town near Kumasi was worth less than ¢10. In 1974, the same land meant for residential building sold for GH¢3 at Asenua. At Esereso, at the time when land was first subdivided for residential purposes in 1985, whiles strangers paid around GH¢4, subjects of the village presented bottles of Schnapps. An acre of land at Adum, now the Central Business District and the most expensive location in Kumasi, in 1960 was worth around GH¢50. But by 1973, land prices in Adum had risen to over GH¢164. Probably, this was the highest price achieved in Kumasi during this time.

However, the period between 1990 and 1999 saw land prices rise far beyond expectations. This is due to several factors. During this period, constitutional rule had been regained. Rawlings’ military rule in Ghana had ended. The 1992 Constitution, firmly establishing the 2^nd Republic of Ghana, had been promulgated and guaranteed private ownership of property (Article 18; 1). A democratic election had been successfully held. Most Ghanaians had begun to build confidence in the economy and had started investing in land to accumulate wealth. In January 1995, with inflation hovering around 59%, land prices, like all other commodities in Ghana, was rising fast. The young generation realised that capital gains made from land could be a quick path to wealth due to the rapid increases in land prices. These, among other factors, tickled demand for land. Suddenly, everybody was buying. Land speculation became a rewarding part-time business for many. With so many people looking for land to buy, estate agency gained ascendancy without control.

The price of land sold in just a few years quadrupled in value. By 1997, Alhaji Ibrahim Baryeh reported that a 100 by 100 feet building plot at Asenua exchanged for GH¢130, far higher than the GH¢3 in 1974. Within a space of 23 years, land at Asenua had gained capital value by 4,233%. At Kyerekrom, prices range from GH¢220 to GH¢350 depending on whether the buyer was a subject of the town or a stranger. In the case of Emena, land exchanged between GH¢85 and GH¢120. At Apire, prices were between GH¢120 and GH¢350. By February 1997, the same land which sold for ¢10 in 1960 at Asaago fetched between GH¢150 and GH¢200. At Santasi, prices started from GH¢300. The decade just before the year 2011 did not see land prices fall. In fact, they rose rapidly. With the year 2000 beginning another decade in the land market, political power had been peacefully transferred from the National Democratic Congress (NDC) to the New Patriotic Party (NPP) through a fair, transparent, and democratic election. John Agyekum Kuffour had been sworn in as the President of Ghana and had declared a ‘golden age of business’.

Like several other markets, the land market responded positively. Confidence in the Ghanaian economy had deepened. Demand for land rose, and in tandem with prices. By 2004, land prices in Kumasi had risen from previous highs to higher levels. Prices ranged from GH¢3,000 to as high as GH¢50,000 for a standard 100 feet by 100 feet plot. A standard plot at neighbourhoods such as Asokwa, in 2003, was sold around GH¢60,000. By 2006, land prices in the city ranged from GH¢200,000 to GH¢300,000 per acre which were mainly leasehold interest A 100 feet by 100 feet land which exchanged at Asaago for GH¢150 in 1997, was now priced over GH¢5,500, representing about 3,567% capital gains over 13 years. Half of an acre building plot at Atasomanso which sold for GH¢3,000 per plot in 1997 rose to over GH¢90,000 by the end of 2010 (i.e. 2,233% in capital gains in 13 years). Between 2000 and 2010, like the decade before it, land prices seldom dropped. At Apire, a standard building plot from 1990 to 1993 was sold between GH¢300 and GH¢400. By 2003, prices had risen to nearly GH¢3,000. Land prices in the neighbourhood did not stop rising. It skyrocketed to over GH¢7,000 in 2010.

In recent times, price of undeveloped land has been rising fast. The picture below charts prices of selected locations in Kumasi. Analysis of land prices collected from the field presents interesting statistical results. The maximum land price per acre of GH¢1,869,200 was achieved at Adum, the Central Business District of Kumasi. This means that Adum is the most expensive location in Kumasi. The minimum price of Gh8,000 per acre was recorded at Zongo Extension. However, the most frequent price (mode) at which an acre of land was bought was Gh40,000. This translates into GH¢10,000 for a standard plot. And yet the mean price of land per acre recorded was around GH¢141,300. What this means is that with GH¢35,300, a standard plot at a good location can be acquired. In all, prices ranged from as low as GH8,000 to as high as GH¢1,869,200 per acre. 

            What the history and current land prices in Kumasi tell us is that an investment in land is by far the best option. Investment in land is seldom affected by inflation. Land prices seldom fall. Capital gains from land are astonishing. Even capital gains realised on the Ghana Stock market in a year on all the stocks listed on the GSE do not often come close. In other regions of Ghana where pressure of land is relatively low, one is still better of investing in land. for example, between 2008 and 2009, land prices increased by 66.7% in the Wa Municipality in the Upper West Region of Ghana. In the Eastern Region of Ghana, between 1992 and 2003, land prices recorded over 235% increase. 

Land Acquisition In Kumasi - A New Light

Late 2011, a ‘gargantuan’ crime hit the Asantehene’s Lands Secretariat. It was reported that the office was bridled with bribery and corruption. The case caused the then Liaison Officer’s job. Several officers also lost their job, as a result. For more than a month, the Asantehene’s Lands Office remained closed.

In or around November 2011, when the office was opened to the public a new administration had be instituted, reforms had taken place and land acquisition and registration processes was to be simplified.

Before January 2012, a land owner wishing to register his land was only required to present allocation note and site plans to the Asantehene’s Lands Secretariat for processing. The Secretariat then enquired from the Lands Commission whether the plot was free and could be registered in the current allottee’s name. This attracted a small fee. When a favourable response was received, the land owner had to pay drink money, and would Asantehene endorsed the allocation note and it was then released to the Lands Commission to prepare the lease document for execution by the proposed lessee, the caretaker chief, Asantehene. The lease document had to be sent from the Lands Commission to the Asantehene’s Lands Secretariat for the execution to take place. Then the document would be returned to the Lands Commission for the transactions to be recorded finally.  Experts said the process involved over hundred steps in addition to the cost.

This process existed up to December 2011. Starting January 2012, to register land in Kumasi one must first obtain a search report on the land from the Lands Commission. The search report is to show that the land can be registered and that it has not been registered in anybody’s name. You must add the search report to your allocation note, Cadastre plan and five passport size photograph and present them to the Asantehene’s Lands Secretariat at the Manhyia Palace. The Secretariat would check the validity of your submitted documents. Drink money (1/3 of land valued would be assessed. This and other fees and charges must be paid. The Lease or indenture would be prepared for execution. After execution, the document is sent to the Lands Commission for final registration.

The process of stool land acquisition and registration may be reduced into seven simple steps.

 1.       Negotiate and pay for land,

2.       Secure allocation note and cadastre (site) plans,

3.       Conduct a search at the Lands Commission over the Land,

4.       Submit the allocation note, cadastre (site) plans and five (5) passport pictures to the Asantehene’s Lands Office,

5.       Pay Drink Money & other fees & charges

6.       Lease document is prepared and executed

7.       Executed document is released to Lands Commission for plotting and registration registration.

In my opinion, this was by far the simplest process ever drawn up for land acquisition and registration in Kumasi. However, there still remains some unloosed knots. I, therefore, attempt a critique of the new process in place. To do the best your views, questions and contributions will count. What are the areas you wish that I discuss?

Rethinking Allocation Note

In April, 2011 I blog to the fact that Allocation Note is an introductory letter for land buyers. I must say, that is a historical meaning. The idea that allocation note is a mere letter introducing land buyers to the Asantehene or other relevant Paramount chief so that proper land documents would be prepared for them does not often go down well with most people who own land in Kumasi.

          In practice, it comes as a surprise. In recent times, most land buyers have a developed a different but casual understanding of the meaning and legal implication of allocation notes.They think that allocation note is as good as a registered lease document or any other valid land document. They think that land registration is a matter of choice, not a need. And they also think that by keeping allocation notes in their homes, they are doing the right thing to secure their ownership of land. This thinking forms the basis of new ideas that are been sowed to expand the meaning and legal implications of allocation notes. When this is idea is accepted by land administrators,  allocation note holders could actually walk to the Lands Commission and deposit copies of their allocation notes, whiles keeping the original and this may constitute land registration. 

           I must say that, even before this idea gathers enough support from land experts and public land administrators, some financial institutions have welcomed it. They now take allocation notes as valid land document to secure loans. And such institutions are reaping immense benefits.

            Looking at the high cost and the long time it takes to register land and procure a lease in Kumasi, accepting allocation note as a valid land document that may be registered can only be said to be ingenious. In my opinion expanding the meaning and legal implications of allocation note to include the ‘casual’ meaning than letting it remain a mere letter meant to introduce land buyers to the Asantehene is crucial in protecting right to land and creating wealth in the land market. Thousands of allocation notes are being given out by chiefs everyday. Consequently, almost every land owner have, knows or has heard of allocation note. But let us ask ourselves. How many of the millions of allocation notes issued by chiefs daily have successfully been converted into leases? Since 1943, when the first allocation note was issued, millions of such documents have  been given out to land owners. However, less than six thousand of such allocation notes till now have been or is being converted into leases.

             Clearly, the wheels of converting allocation notes into leases grind slowly. It takes too long. And the cost is too much. That is why the idea of expanding the meaning and legal implication of allocation note is clearly clever, to me. I don't know how you see it. 

What is in an Allocation Note?

I wish to dare say that  most people who buy or own land in Kumasi know very little about allocation notes. There mounting secrets about allocation notes that most land experts and  land buyers don't know? Secrets, mountains of them which affect the fate of land buyers everyday, exists. Land buyers, thousands of them, buy land in the thick darkness of the knowledge of allocations notes. That is why most land buyers continue to experience avoidable land ownership problems long after they have paid money for land. But before we go ahead to unravel these secrets about allocation notes, let's first of all ask ourselves this question: what is an allocation note? If we are able to answer this question clearly without an iota of ambiguity , we will  pave the right way to bring to light the secrets of allocation notes.

In Kumasi, when someone buys land from a chief, the buyer  is often given a piece of paper to show that he is the owner of the land. The piece of paper is often well known as an allocation note or paper. An allocation note, therefore, indicates that there has been an original transfer of land from a Stool or a Chief to another person. Allocation notes often bear the logo or letterhead of the Stool  or the chief selling the land. On it are often written the terms and conditions of the transaction. Such as, for example, development of the land  should begin within one year and be completed in three years and that 'ground rent must be paid annually'. Allocation notes are signed by the chief and his principal elders. The date on which the sale took place is written on it, a brief description of the land that is being given out such as the plot number. In addition, three site plans of the land being sold are also attached to allocation notes. At least anyone who has bought land in Kumasi know this. 

What most people, including some land experts, do not know about allocation notes is that before 1943, allocation notes were not known in the corridors of buying, selling, and owing land in Kumasi. Most land sales were oral. The practice was that anyone wishing to acquire land had to  just see the elders of the town  with drinks and that person had land. Land was in abundance. And land was often given out without hesitation. No allocation notes were issued to cover such transactions.

In 1943, when the British came into the scene., everything changed. A law was passed to establish a Land Office for the Asantehene. Located at the Manhyia Palace, where it is still at today, the office was to help the Asantehene keep records on all of it's land transactions. Thereafter ‘43, when chiefs gave out land, they were required to inform the Asantehene’s Lands Office in writing so that the transaction would be recorded. At that time most chiefs could not read nor write. But developed simple letters to introduce people whom they gave land to send to the Asantehene’s Lands Office. On the 15^th of February, 1955 the Tafo Stool for example gave out a plot of land at Nhyiaso to one Kyeami Kwasi Yeboah. In my research I had the opportunity to see the letter. It read; 

“I have the honour to inform you that the above plot has been allocated to Kyeami Kwasi Yeboah and I should be obliged if you would prepare the necessary papers for him.”

This letter, like most allocation notes issued in the olden days by our ancestors points to the fact that allocation notes were not meant to be only an an introductory papers. But with time, these letters meant for introducing land buyers to the Asantehene become known as allocation notes. allocation notes did not attached conditions  to the sale of land such as; ‘you should start developing the land within one year and complete in two or three years’. Allocation notes didn’t require the endorsement of the Asantehene to be valid. Though when leases were prepared, the Asantehene had to sign to make it valid. Today, most land buyers clinch to allocation notes as land documents. However, most land experts see nothing legal in allocations notes. As a matter of fact, these two opposite beliefs about allocation notes is the genesis of the secret world of allocation notes in Kumasi.

I believe you now have an idea about what constitute an allocation note. I believe you now know that allocation is very new in the tradition of buying and selling land in Kumasi. And I believe you are asking many more questions about allocation notes. Don't worry. Ask those questions, share your opinions as comments and I will do my best to respond. In our subsequent articles on this blog, we will be unraveling lots and lots of secrets in the world of allocation notes. Tell your friends about this blog.

How To Buy Land Like Abraham

Genesis, in the Holy Bible, gives a vivid account of how Abraham safely bought land in the ancient city of Canaan. Thousands of years afterward, Abraham’s distant descendants continue to enjoy the land without any litigation. But what do we find today? You buy land today and tomorrow, you are in litigating over the ownership of the land.

                So how did Abraham go about buying land that made land litigation flee from his distant descendants? The story Genesis tells has wise lessons that may be ancient but may still relevant in our days. Let’s read the Bible; 

Genesis 23 – “¹ When Sarah was 127 years old, ²she died at Kiriath-arba (now called Hebron) in the land of Canaan. There Abraham mourned and wept for her. ³Then, leaving her body, he said to the Hittite elders, ⁴”Here I am, a stranger and foreigner among you. Please sell me a piece of land so I can give my wife a proper burial” ⁵The Hittites replied to Abraham, ⁶“Listen, my lord, you are an honoured prince among us. Choose the finest of our tombs and bury her there. No one will refuse to help you in this way.”

⁷Then Abraham bow low before the Hittites and said, ⁸“Since you are willing to help me in this way, be so kind to ask Ephron son of Zohar ⁹to let me buy his cave at Machpelah, down at the end of his field. I will pay the full price in the presence of witnesses, so I will have a permanent burial place for my family. ¹⁰Ephron was sitting there among the others, and he answered Abraham as the others listened, speaking publicly before all the Hittite elders of the town. ¹¹“No, my lord, he said to Abraham, “Please listen to me. I will give you the field and the cave. Here in the presence of my people, I give it to you. Go and bury your dead”

¹²Abraham again bowed low before the citizens of the land, ¹³and he replied to Ephron as everyone listened. “No, listen to me, I will buy it from you. Let me pay the full price for the field so I can bury my dead there.”

¹⁴Ephron answered Abraham, ¹⁵My lord, please listen to me. The land is worth 400 pieces of silver, but what is that between friends? Go ahead and bury your dead.” ¹⁶So Abraham agreed to Ephron’s price and paid the amount he had suggested – 400 pieces of silver, weighed according to the market standard. The Hittite elders witnessed the transaction.

¹⁷So Abraham bought the plot of land belonging to Ephron at Machpelah, near Mamre. This included the field itself, the cave that was in it, and all the surroundings trees. ¹⁸It was transferred to Abraham as his permanent possession in the presence of the Hittite elders at the city gate. ¹⁹Then Abraham buried his wife, Sarah, there in Canaan, in the cave of Machpelah, near Mamre (also called Hebron). ²⁰So the field and the cave were transferred from the Hittites to Abraham for use as a permanent burial place.”

Genesis 25 - ^“7Abraham lived for 175 years, ⁸and he died at a ripe old age, having lived for a long and satisfying life. He breathed his last and joined his ancestors in death. ⁹His sons Isaac and Ishmael buried him in the cave of Machpelah, near Mamre, in the field of Ephron son of Zophar the Hittite. This field was the field Abraham had purchased from the Hittites and where he had buried his wife Sarah.

Genesis 49 - ²⁹Then Jacob instructed them, “Soon I will die and join my ancestors. Bury me with my father and grandfather in the cave in the field of Ephron the Hittite. ³⁰This is where the cave in the field of Machpelah, near Mamre in Canaan, that Abraham bought from Ephron the Hittite as a permanent burial site. ³¹There Abraham and his wife Sarah are buried. There Isaac and his wife, Rebekah, are buried. And there I buried Leah.  ³²It is the plot of land and the cave that my grandfather Abraham bought from the Hittites.”

Genesis 50 –“¹²So Jacob’s sons did as he had commanded them. ¹³They carried his body to the land of Canaan and buried him in the cave in the field of Machpelah, near Mamre. This is the cave that Abraham had bought as a permanent site from Ephron the Hittite.”

I believe you have picked some lessons from the Bible. I also strongly believe you would like to share these lessons with me. You may also have some questions. Please do let me know. Thank you for taking your time to learn the right way to buy land and avoid dispute.

Chilling Taxies For The Property Market

Last night, I took my eyes off my Study Bible to read Ghana’s 2011 Budget. It was revealing. Some sections were interesting, others were like political grammar. But in this article, I would like to share with you how the 2011 Budget may affect the land and property market. It’s about the government’s proposed property taxes.

Property Rates

Just today, I have been hearing media speculations about possible hikes in rent as a result of government’s intention to strengthen administration of property rate. I have a different opinion. Strengthening property rate administration does not necessary mean increasing property rate to be paid by property owners. It may as well mean that property rates that are not been collected will be collected as a result of effective administration. Actually, this is what the budget says.

“…in many economies, property taxes contribute substantially to revenue mobilization. In Ghana, property taxes make up only 0.03 percent of Ghana’s GDP.” “…there is huge potential for the MMDAs to improve their revenue mobilization through property taxes and be less dependent on the Common Fund in providing local services and amenities.” “…payment of property tax is a civic duty. We need those taxes to improve basic local amenities such as sanitation, water, and street lights. Moreover, the government provides services like police protection and judicial services in order for all of us to enjoy our property peacefully. It is our intent to work with the Ministry of Local Government and Rural Development to strengthen capacity in the administration of property taxes in this country. An improved scheme will be put in place by the end of the first quarter of 2011 to take effect in the second quarter.” “…I wish to propose to this House that in the near future, government releases to the Assemblies may place more weight on their revenue mobilization efforts as reflected in the DACF formula.”

Does this sound like increasing taxes? In only refers to strengthening property rate administration. I think if revenue mobilized from property rates would be used to improve the standard of living of every living Ghanaian, then it must be paid.

No Tax Holidays for Real Estate Developers

Another hullabaloo that I expect but has not come yet is from real estate developers, like GREADA. Why are they not talking about government’s intention to take away the five years tax exemptions like they did with the STX deal? Or is it that they fear of been charged with “causing fear and panic”?

What am talking about is what the 2011 Budget provides at item 143 that, “…the five years exemption period granted to companies engaged in the construction for letting or sale of residential premises under Section 11(6) of Act 592 was mainly to create affordable accommodation for the middle to low income earners. Unfortunately, the real estate developers focused on building for the high and upper class of the society while abandoning the original purpose. The government proposes to abolish the general five year tax exemption for real estate developers. However, given government’s heavy involvement with the provision of affordable housing, real estate developers who partner the Ministry of Works and Housing to provide affordable houses will continue to benefit from the five year exemption.”

Why are real estate developers quiet? I should think that may be they are preparing their petition to parliament.

Taxing Land Professionals

Another group of people to receive a chill from the Budget are individual land professionals such as real estate consultants, valuers, land surveyors and quantity surveyors. According to the Budget, “Ghana has many self-employed professionals who are contributing to economic development through the provision of professional services. Indeed it is very satisfying to note that on several government projects we have had opportunity to use our own competent professionals working in consultancy capacities. Knowing the level of fees paid for such services in the private sector, we think that it is the responsibility of these professionals to also contribute their quota as required by law and discharge their civic responsibility with regard to the payment of taxes. We are aware that a small but significant group of such professionals have conscientiously discharged their responsibility to the state. We want to acknowledge and recognize them, and at the same time create a conducive administrative framework for others to follow suit.”

It continues that “…we want to encourage the voluntary compliance of professionals in their tax payments as a civic responsibility. Beginning 2011, Government will focus attention on the revenue contribution from the self-employed group with special emphasis on professionals. A special desk will be established in the Domestic Tax Division of the Ghana Revenue Authority to monitor compliance of professionals in their tax payments. The GRA will coordinate monitoring from the district level, reconcile data with the Registrar General‟s Department to develop the necessary databases to facilitate monitoring, seek data from the recognized professional bodies, and assess current enforcement procedures.”

The Ghana Institution of Surveyors, Ghana Institute of Planners, Ghana Institute of Architects must begin to assimilate the provisions of the budget and see how it may affect consultancy services of individual members. This is area worth discussing at conference of such professional bodies.

Gift Tax Increased

“…Gift Tax moves in tandem with general Income Tax including Capital Gains Tax. Since Capital Gains Tax has been increased from 5 percent to 15 percent [Internal Revenue (Amendment) Act, 2010 Act 797] it is only proper to do the same for Gift Tax. In this regard, an increase in gift tax to be in tandem with general income tax is being proposed. This will avoid shifting of Capital Gains to Gift Tax.”

These are just policies. It is their implementation that would matter. It is their implementation that would determine how deep these proposed properties taxes may prick the land and property market.

7 Steps To Doing a Land Lease

If you have bought a piece of land from a chief in Kumasi, you must have an allocation note. You should also understand that the allocation note isn't for your keep. Actually, it's a letter of introduction. It's a note to be shown to the Asantehene’s Lands Office and the Lands Commission for  them to prepared  a  lease in your name.

            So follow me through these seven steps  to get a lease over your land. The lease is a contractual document to show that the Asantehene and the chief  who sold the land to you have actually given the land to you.

One, submit your allocation note and three original site plans to the Asantehene’s Lands Office. The Office if located within the Manhyia Palace.

Two, the Asantehene’ Lands Office will do a search to find out if the land has not been registered in any other person’s name.  

Three, if it is found that the plot has not been registered in anybody’s the Asantehene will endorse the allocation note with his Green Pen.

Four, the allocation note will be released to the Lands Commission and the Lands Commission will prepare the lease.

Five, you will be called to the Lands Commission to make payments and sign the lease.

Six, the lease will be sent to Manhyia for the Asantehene and the chief who sold the land to you to sign their portions of the lease.

Lastly, the lease will be record at Lands Commission.

This is the process you will go through to get your lease done. But I must say that as simple this process may seem, at times it may be very heckling. I therefore recommend that you employ the services of a land professional such a valuer, land economist or an estate manager to go through the process for you. All the same, you may contact me.