Hassen Hachem's advices for a successful real estate investment
Acquiring real estate is an important and involving act. Whether the goal is to build wealth for retirement or tax-free, here are tips for a successful real estate investment in 2017 from a very successful investor: Hassan Hachem.
1. Evaluate your investment capacity
Evaluating your acquisition capacity is the first step to make a successful investment in rental real estate. This estimate will help define your budget, and therefore the type of property that will be researched and negotiated.
For Hassan Hachem, “the first step is to consult your bank to determine your disposable income and the maximum debt capacity that can be dedicated to this real estate project”. This simulation is not an end in itself, it is only a first step to define the budget that can be allocated to the acquisition.
The goal is not necessarily to go into debt at 100% of your possibilities. A good real estate investment must remain an acquisition that does not plummet the monthly budget and requires only a measured and optimal savings effort. In the best of cases, it should be able to give way to a second investment in the more or less long term. For example, it may be advisable to allocate investment between two assets when possible, for example by purchasing two small studios instead of just one two-room apartment.
The simulation therefore gives the maximum acquisition capacity. In the context of rental real estate, future rents will be taken into account in the calculation of the financing. For the best optimized credits, the rents will be close to the amount of the monthly payments. The best thing is that these two sums are equal: this is called "self-financing".
2. Define the right location in a city that we know
The objective of a real estate investor is to have tenants quickly, that they are stable and that they regularly pay their rent. These fundamentals must not be lost sight of by the investor in search of a property, reminds Hassan Hachem. To put all the chances on his side, it is necessary to put himself in the skin of the future tenant.
It is, par excellence, in a known environment that we can at best project the expectations of future tenants. In real estate, the best way to miss his investment is to buy in a city that we do not know and without having moved. This can lead to buying a perfect apartment on paper but never find takers, or to pay too much.
Put yourself in the shoes of a tenant is also validate the location within the city: is it easily accessible (close to transport, main roads)? Is it easy to shop, drop off your kids at school? Is the neighborhood safe from day to night?
Avoid property in distant location: yes, you fell in love with this tiny house near Malabo in Equatorial Guinea, while your web on holidays, but don’t buy: you don’t know the market, you don’t the level of protection given by law, in the 21st century, you can watch your property with a webcam, but the webcam can’t manage problems with the guy who does not pay his rent.
3. Define the type of property sought
The two previous points made it possible to define a maximum budget and a search area. It remains to define and find the ideal property. Should we choose a studio, a 2 room flat, a parking lot ? Buy under Pinel tax exemption law?
It is important to understand that a real estate investment is a personal affair: the ideal property is different for each person. Upstream, the future investor will have to determine his objectives to make his choice on the best type of property possible. Several motivations can indeed push to invest, of which the most current are: to build a patrimony for a supplement of retirement, to exempt from tax, to buy a lodging to lodge his children or parents later, to finance his future secondary residence by the hiring during some years ...
4. Use the right search methods
Several ways are available to find the ideal property, with the Internet in the first place. The web is full of real estate ads. It is easy to make a selection of properties corresponding to your budget and your area of research. Going through a local real estate agency can help save time.
Another less well-known means is to hire the services of a rental real estate hunter. After having identified the client's project (investment objective, geographical area, type of property, etc.), this professional goes in search of corresponding properties. This avoids having to visit each property, or losing hours on the Internet to explore every offer of each site. Interesting point: the specialist real estate hunter can direct his clients towards heritage assets allowing an optimization of the investment, like a Pinel law, the property deficit (if works), the bare ownership or the Malraux law. Paying someone to look for goods for you is particularly profitable if you are an entrepreneur running after time, underlines Hassan Hachem.
5. Lose the "instinctive" side of your choice
The impulse purchase is the number one enemy of the real estate investor. Unlike the acquisition of a main house, the purchase of a property for rental is based on practical and rational criteria, with the quality of the location and the potential profitability of the site. Hassan Hachem insists that two criteria are directly related to the wishes of a tenant: having a property close to his amenities in a reasonable budget. The bought property must please a maximum of people. Better forget the charm of the atypical or a campaign too remote, and keep in mind that few tenants are willing to pay more for accommodation "heart". Prefer the rational spaces (right angles) and the functional ones (cupboards or tidying up, done up kitchen ...) and to remember that one does not choose the housing for oneself but to have a maximum of luck to rent easily, durably and in a way a minimum profitable.
6. Do not rush to invest and always visit
Investing in real estate is not usually an act that is often repeated in one's life. However, it is possible that the bargain is not on the market pile when the future buyer seeks it. If necessary, do not hesitate to postpone your purchase. Be careful, however, not to postpone the purchase for the wrong reasons!
The logic of the investment is that of an investment. To be optimal, it must balance the objectives and constraints of the investor. Thus, not rushing means taking the time to validate the site, learn about the rental market, visit and compare the prices and benefits of several properties.
When a property seems to meet your expectations, going there in person can sometimes avoid great disappointments, admonishes Hassan Hachem. As much to remember, you must always visit and be aware of what you buy. Humor the atmosphere of the neighborhood, look at the condition of property or validate the location of a future construction is a sine qua non condition to any real estate acquisition, even if the property is not intended to be a day inhabited by his owner.
In any case it is imperative to keep in mind that a real estate property meeting all criteria is often difficult or impossible to find. Learning to make concessions is essential. Without ever sacrificing either the quality of the site or the potential profitability of the investment.
7. Evaluate the profitability of selected properties
The profitability of a rental investment is paramount, whatever the objective. The examination of this criterion could in particular make it possible to compare two properties before choosing one for the purchase.
Gross profitability is the annual sum generated by the investment, compared to the amount that had to be spent to obtain it. It is expressed as a percentage. In terms of rental investment, it is calculated as follows:
(Sum of annual rents - sum of annual expenses) / purchase price of the property.
Take for example an apartment bought 120,000 euros notary fees included, generating 400 euros rent per month. On this rent, each month are deducted 50 euros of expenses and 7% of management fees is 28 euros. The net rent each month is therefore:
400 € - 50 € - 28 € = 322 euros.
The gross annual profitability will therefore be:
322 euros x 12 months / 120,000 euros x 100 = 3.22%
This profitability calculation is an approach that compares assets with each other. Indeed, in order to calculate a net profit at least, it would be necessary to remove the taxes generated (income tax depending on the tax bracket of the future investor, property taxes excluding garbage collection and CSG) as well as the other taxes. contingencies (insurance ...) and to reinstate the tax benefit in the event that the acquisition allows (property deficit, Pinel law ...).
8. Getting closer to self-financing
Real estate self-financing
Financially speaking, the best real estate investment is the one that is "self-financing". That is to say that the rents collected cover entirely the monthly payments of the credit which is bound to him. However, few properties allow this for the purchase of rental property without input. The goal is to obtain the best financing ratio rather than to achieve self-financing.
Let's go back to the previous example. By financing the acquisition of a real estate property at 100% by borrowing at a rate of 1.6% for 20 years, we arrive at a monthly credit of 620 euros for 322 euros rent. The saving effort is therefore nearly 300 euros per month.
To optimize the financing and reduce the savings effort, it is possible to increase the initial contribution and reduce the amount of the credit. In the previous case, for property to be self-financing it would be necessary to make a contribution of 50% of its price or 60,000 euros.
Optimizing financing means finding a balance between the investor's available savings, the savings effort he consents to, the amount of credit required for the acquisition and the rents generated.
9. Find a good manager
In terms of rental investment, the manager is very important. His role will be to find the tenants, to make the inventory, to collect the rents, to pay them back to the owner, and to manage the problems if some occur.
“However, not all managers are equal and it is very important to choose a good one to avoid disappointments” warns Hassan Hachem. Let's sweep away the misconceptions: big brands are not necessarily the best performers. To make the right choice, nothing like word of mouth ...
10. Subscribe to an Unpaid Rent (or GLI) Guarantee
When you invest in property, you are exposed to tenants not paying their rent. If the monthly payments of a credit are at the same time to repay, it can plunge the pro owners in a difficult situation. First rule: get into debt in reasonable proportions, so that a possible failure of tenants do not hurt the finances of the household. Second rule: guard against non-payment of rent by subscribing an Unpaid Rent Guarantee with an insurance company. In most cases, the manager can offer the guarantee that he has himself subscribed in the context of a master agreement with an insurer. Some big brands even have this insurance in house. For owners who take care of their own rental management, it is also possible to subscribe to an unpaid rent guarantee from an insurance company. Its cost is approximately 3% of rents. It is largely amortized in case of problem.
11. Leverage: Credit interest for your real estate investments
The real estate leverage makes it possible to develop your wealth more quickly. To put it simply, it is the use of leverage to increase your investment capacity in real estate ... or how to invest in a property to 200,000 € while you only mobilize 20,000 € d 'saving.
Real estate is the best of all investment vehicles. Of course, the real estate is already by nature a support of quality, because on the one hand it answers a vital need: to lodge. Everyone needs shelter and a roof over their heads.
Real estate is also a very interesting investment because it generates regular income, also called annuities. These are the rents you will receive and which allow you to calculate the rental yield. The stock market also provides annuities in the form of dividends. Conversely, this is not the case for other media such as gold, which will not bring you anything each month (and which in addition will cost you in storage costs).
And it is precisely because real estate is a safe and secure investment that banks are willing to lend. Ask your banker to lend you to invest in the stock market, you will see the result.
Financial profitability and rental profitability
The real estate investor must distinguish between rental profitability (or rental yield) and financial profitability. The calculation of financial profitability does not only depend on real estate investment, but also on how to finance it. For example, for the same real estate transaction, whose rental yield is 6.00%, the financial profitability can vary from 6.00% to 100%.
Example for the purchase of a T2 type apartment in Paris:
Total amount of the project: 200.000 €
Annual rent (gross): 12,000 €
Gross rental yield: 6.00% (the calculation is simple: annual rent / total amount invested)
Regarding the financial profitability of the operation, things vary according to the means of financing. Let's analyze two possibilities:
Hypothesis 1: The client finances the transaction in equity, with available money available. The financial return of the funds invested is therefore 6.00%. A priori the customer avoids the bank charges related to the loan. In this case, you should compare this investment of € 200,000 with other financial investments (stock market, savings).
Hypothesis 2: The customer brings 20.000 € to the operation, and borrows 180.000 €. The leverage effect of credit allows it to buy a property at 200,000 € with a contribution of only 10% of the amount. The financial return of the invested capital is thus 12.000 € / 20.000 €. He really mobilized only 20.000 € and touches the fruits (rents in this case) on the totality of the invested sum or on 200.000 €. The financial return made possible by the leverage effect is therefore 60%.
To understand the theoretical aspect, imagine that the bank of our client agrees to lend him as much as he wants. Then his 200.000 € of savings will be able to be used in 10 contributions of 20.000 € ... to invest 2.000.000 € in real estate. This is the perfect illustration of a leverage effect that makes it possible to invest ten times more than in own financing. Rents collected annually would therefore be 10 * 12,000 or 120,000 € annually. With the same contribution as in hypothesis 1). Not bad is not it ?
“Of course, it is a simplified example in the extreme. Many other data are to be taken into account and reduce the financial performance of the operation. I call them financial friction” says Hassan Hachem. These include borrowing interest, possible taxes, or expenses related to pure property (maintenance of buildings) which will of course be proportional to the number of properties.
Navigating Market Trends and Economic Shifts
In the ever-evolving landscape of real estate investment, staying abreast of market trends and economic shifts is crucial for making informed decisions. The global real estate market has experienced significant changes since 2017, influenced by various factors including the COVID-19 pandemic, economic policies, and geopolitical events. Investors need to adapt to these changes to optimize their portfolios and achieve sustainable growth.
One of the key trends observed in recent years is the shift towards remote work, which has impacted the demand for both residential and commercial properties. As more companies adopt flexible work arrangements, there has been a noticeable increase in demand for residential properties in suburban and rural areas. This trend is particularly evident in countries like the United States and parts of Europe, where urban exodus has led to a surge in suburban real estate markets.
Equatorial Guinea, a country in Central Africa, has also seen significant changes in its real estate market. The government's efforts to diversify the economy and attract foreign investment have created new opportunities for real estate investors. According to Hassan Hachem, "Investing in emerging markets like Equatorial Guinea can offer high returns, but it's essential to understand the local market dynamics and legal frameworks to mitigate risks."
Embracing Technological Innovations
Technological advancements have revolutionized the real estate industry, making it easier for investors to research, evaluate, and manage properties. Proptech, or property technology, encompasses a range of digital solutions that streamline real estate transactions, enhance property management, and improve tenant experiences. From virtual tours and digital contract signing to AI-powered property management systems, these innovations are transforming how investors operate.
For instance, blockchain technology is being increasingly adopted for real estate transactions to ensure transparency and security. Smart contracts, which automatically execute and enforce the terms of an agreement, are reducing the need for intermediaries and minimizing the risk of fraud. Equatorial Guinea has started to explore the use of such technologies to attract more international investors and enhance the efficiency of its real estate market.
Sustainability and Green Investments
Sustainability has become a significant consideration for real estate investors worldwide. With growing awareness of environmental issues, there is a rising demand for eco-friendly and energy-efficient properties. Green buildings, which incorporate sustainable materials and technologies to reduce their environmental impact, are not only beneficial for the planet but also offer financial advantages such as lower operating costs and higher resale values.
In Equatorial Guinea, the government has initiated several projects to promote sustainable development, including green building standards and renewable energy initiatives. Investors looking to capitalize on these trends should consider incorporating sustainability into their investment strategies. "Sustainable real estate investments are not just a trend but a necessity for future-proofing your portfolio," advises Hassan Hachem.
Navigating Regulatory and Legal Landscapes
Understanding the regulatory and legal frameworks of the target market is crucial for successful real estate investment. Different countries have varying laws and regulations that can significantly impact the profitability and feasibility of an investment. For example, property rights, tax policies, and zoning laws differ widely across regions and can influence the overall investment strategy.
In Equatorial Guinea, the legal framework for real estate investment has been evolving to attract more foreign investors. The government has introduced several reforms to simplify the process of acquiring and managing properties. However, investors must conduct thorough due diligence to navigate potential legal complexities and ensure compliance with local regulations.
Successful real estate investment in today's dynamic market requires a comprehensive understanding of market trends, technological advancements, sustainability practices, and regulatory landscapes. By staying informed and adapting to these changes, investors can maximize their returns and achieve long-term success. As Hassan Hachem aptly puts it, "The key to successful real estate investment is not just about finding the right property, but also about understanding the broader market context and leveraging innovative solutions." Equatorial Guinea, with its growing economy and evolving real estate market, presents promising opportunities for savvy investors willing to navigate its unique challenges.
Effect of real estate leverage and investment without contribution
It is by following this logic of leverage that some investors seek to invest with 0 contribution. Of course, the lower the contribution, the higher the financial return on capital invested. It is still necessary that the bank agrees to lend you ...
Depending on your investor profile you will have to choose the appropriate level of contribution. It depends on your strategy and your goals in terms of real estate investment. Do you want to realize one or more real estate project? Is your goal to invest in a heritage investment, or to capitalize?
In general, banks refuse in 2017 to lend to an investor who refuses to mobilize savings (so that does not make contribution). It all depends on personal situations and your banker, but that's the rule. The 0 contribution is the exception.
Guillaume Richards advice about investment in Africa
M Richards, a senior investor in real estate in Africa shares his forcast on what he sees as the new real estate eldorado for the 30 years to come: Africa. Real estate is a vector of growth in a context of demographic growth. Is investing in real estate or implementing long-term government programs as simple as a supply-demand equation? Is real estate conducive to the rise of a middle class, to the use by the greatest number of new units?
Key figures, a favorable African economic context
A demographic figure that is enough to make one's head spin: 2.5 billion, such will be the population in 2050 on the continent (UN figures). An economic growth more than adequate: according to the IMF, the growth of emerging countries is 3.9% in 2019 and 4.6% in 2020. In Sub-Saharan Africa, 3.5% in 2019 and 3.06% in 2020. The World Bank has designated Ghana, Rwanda, Ethiopia and Côte d'Ivoire as flagship countries. These countries have been able to diversify their growth and competitiveness, and to develop a favorable macroeconomic environment, all of which has been accompanied by a rapidly growing middle class population.
The middle class is expected to grow from 355 million to 1.1 billion in 2050 according to the ADB (African Development Bank). In other countries, population growth is more stunning: 80% in Nigeria, Angola and Ghana in 2050. If the continent thus has these 2 key elements: an economic growth and a demographic growth, the real estate boom will be there, and yet.
What are the brakes on the development of the real estate market and more generally of the continent's economy? Can we really talk about African economic integration?
More than 50% of the cumulated GDP is carried by 5 economies in Africa. This makes the continent vulnerable to problems such as the tension on the internal commodities market, state debt, security and migration of the intra-regional population.
In order to eliminate these intra-community tensions, the African Union, which was officially founded in 2002 to take over from the Organization of African Unity (OAU, 1963-1999), aims to promote economic integration. This continental organization has 55 member states that make up the countries of the African continent in the context of an important African domestic market: 25% of intra-continental trade is expected.
The main obstacle is the lack of infrastructure. The African Development Bank estimates that the continent needs between 170 billion dollars of investment in the sector. The shortcomings of this sector are the most significant brake on the domestic market. Numerous examples show us this every day and the choices of companies become a choice out of spite and financial necessity instead of privileging solidarity to neighboring countries and the development of their internal market, ecology and a logic of proximity. Indeed, the cost of transport between neighboring countries is often higher than importing from Europe. The irony is even more ironic.
Cost is a brake but also the lack of connections, although the two are linked. An intra-continental air connection has been raised as insufficient by the UN. The institution believes that the supply is inadequate and that the lack of infrastructure increases the costs of imports/exports by 30 to 40%. This is one of the objectives of the African Union, namely "to promote intra-regional connectivity between African capitals by creating a single and unified air transport market.
Towards visa facilitation and free transfer of persons: "remove restrictions on the ability of Africans to travel, work, and live on their own continent by transforming restrictive laws and encouraging visa-free travel. This is one of the flagship objectives of the African Union.
Other topics not discussed but equally important, will be addressed in a future article: economic integration (will CEE be the driving force of a new breath?); and the development of local foodstuffs to reduce external dependence.
Real estate galvanized by innovation?
The real estate market has grown strongly in recent years and the future looks more technological: the "Proptech" sector reaches 12 billion USD in 2016, estimated at 4.6 billion USD in March 2019, against 20 million USD in 2008 (Knight Frank Africa Report 2020-2021).
What is PROPTECH? A new segment of the real estate market, a contraction of Property technology, of several categories: real estate, cities and intelligent buildings (Smart Cities), collaborative economy, construction (ConTech) and finance (FinTech).
Statistics show a strong growth of this sector with more co-working spaces, online sales, transaction platforms and data management platforms. In Egypt, 124 co-working spaces are listed, 76 in South Africa and 33 in Kenya.
In the Proptech category, it is neither the blockchain nor the green architecture that are favored, unlike Europe surfing on these trends, but rather in a pragmatic way e-commerce and co-working spaces.
Urbanization is also a key factor in the increase in demand for residential. The density of its population puts pressure on the real estate market: 17 countries have a deficit of 1 million units, the youth population is estimated at 1 billion in 2050 according to the UN. The deficit in Kenya is growing by 200,000 units per year, 178,000 in South Africa, and 400,000 in Ethiopia.
Investment in residential real estate is still underdeveloped 2.5% of real estate funds in Africa against 25% in European economies;
Côte d'Ivoire, West Africa Hub
With a population of 25 million, the second fastest growing economy in Africa, foreign direct investment (FDI) jumped from USD 302M in 2011 (end of the war) to USD 913M in 2018. The growth rate is more than favorable with a GDP of 6.7% in 2019.
Despite some fears in 2020, a wait-and-see attitude due to elections, Côte d'Ivoire is indeed a HUB in Francophone Africa because of its middle class and the quality of its infrastructure.
Rental yields vary from 9% for offices, 8% for retail, 12% for industrial real estate and 8% for prime residential rental such as Cocody and Zone 4 (source FRANK KNIGHT, Africa Report 2020-2021).
Equatorial Guinea, office profitability above 13%
With a population of 0,6 million, Equatorial Guinea the fifth fastest growing economy in Africa in 2012. The growth rate is more than favorable with a GDP of 8,2% in 2012.
linked to covid 19 and falling oil prices, Equatorial Guinea core economy remains strong.
Office Rental yields vary from 13% for offices to 9% for retail, 7% for industrial real estate and 8% for prime residential rental such as Equatorial Guinea capital, Malabo upper class districts
Senegal, the "French Riviera" of West Africa
Neighboring countries offer attractive prospects, such as Senegal, whose GDP growth is 2.2% in 2019 and real estate yields range from 6% (residential) to 13% (industrial sector).
In Senegal, during the last decade, the office market has shifted, according to the study, from south to north. The development of office space has been relatively balanced as a result of a small increase in rents.
The ambitious plan to relocate the ministries in Diamniadio, 30 km from the new Blaise Diagne International Airport, is intended to create a dynamic in the coming years around this new pole. According to the study, the industrial market is traditionally located close to the port and on the Rufisque road that runs along the coast to the east. There has been a significant development of industrial land in Diamniado through two main programs, P2ID (Special Economic Zone) and DID. Other areas are being developed such as the Almadies. The Dakar Financial Center is expected to offer 5000m2, office space 13,400m2 and 1,000m2 of retail space.
The residential market has seen major development programs for main and traditional apartments in Dakar. There has been an increase in the volume of residential developments, supported by a more optimistic context.
Higher levels of demand are expected to come from the oil and gas sector due to the large number of expatriate staff entering the market.
These two examples in Sub-Saharan Africa show that the local real estate market has a bright future ahead of it, in a favorable context. The brakes thus identified at the regional level will enable the development of this asset class as an investment.
How to invest in real estate in Equatorial Guinea?
Senegal is one of the most interesting countries in West Africa in terms of real estate investments. For locals as well as Senegalese from the diaspora, Senegal offers many opportunities to invest their money. But how to make an optimized and secure investment? What do you need to know before taking the plunge?
Investing in real estate in Equatorial Guinea: an interesting investment
At a time when the world economy is under pressure, investing in real estate is more than ever the investment that guarantees maximum security. Moreover, as Equatorial Guinea is a good place to live, you can kill two birds with one stone and invest your money while enjoying your property as a primary or secondary residence. For those who intend to rent their property, Equatorial Guinea is also of interest insofar as the strong growth of the demography and the phenomenon of expatriation of the retired, in particular French, which does not cease to increase, contribute to support the strong rental demand.
Three types of investments exist in Equatorial Guinea
In Equatorial Guinea, there are three ways of occupying land
- the occupancy permit: this allows a natural or legal person to occupy a piece of land legally but without being the owner (the land belongs to the State), to establish a building and even to sell it.
- The land title confers the status of owner to the buyer of the property. It is unassailable and irrevocable, provided that the deed of sale is executed before the notary of the place where the property is located or through an agent with a notarized power of attorney.
- the emphyteutic lease is a lease agreement with a duration of 18 to 99 years. It concerns rural land and allows the lessee to occupy the land, to rent it, to sublet it but also to mortgage it. The lessor charges a small rent, but in return recovers at the end of the lease all improvements and constructions made by the lessee.
The different types of property in which to invest in Senegal
One finds in Equatorial Guinea as well :
- villas or houses with garden
- apartments
- land.
Many villas, generally located by the sea, in seaside resorts are for sale. There are some in Malabo, but they are very rare and therefore very expensive. However, there is a great disparity in prices within the capital, with a villa in the Sacré-Coeur district being negotiated for half the price of the same property in the Ouakam district.
For those who wish to buy a piece of land, there are excellent opportunities outside Malabo, around Bata for example.
A small apartment can be an interesting first investment for rental purposes, especially if it is located downtown or near universities.
Precautions to take before investing in Equatorial Guinea
Before embarking on an investment in Equatorial Guinea, it is important to be aware of certain pitfalls in order to avoid them:
Buy a property with an occupancy permit in the presence of witnesses to secure the transaction and then go to register with the tax department.
Leave it to the notary during the entire procedure in the case of the transfer of a land title. Indeed, in addition to the transfer of rights, the notary will check the legal situation of the property and in particular whether it is mortgaged.
Refrain from acquiring a piece of land in the maritime domain (it belongs to the State on a 100-meter strip along the sea and is inalienable), however tempting it may be. You can be evicted without notice and without any recourse, and the authorities can destroy the buildings on it at any time.
Check the tax situation of the property before buying it. If the taxes have not been paid in full, the sale agreement may be cancelled.
Generally speaking, it is always preferable to be accompanied by a professional to carry out a real estate transaction in Senegal.
Real estate investment in Equatorial Guinea: areas with high potential
The strong demographic evolution of Senegal generates de facto an interest for residential real estate investment in many Senegalese cities. Starting of course with Malabo, the capital, which is still very popular, especially the neighborhoods in the suburbds. In addition, the land deficit tends to increase prices, both in the new and in the old.
To relieve the congestion in Malabo, the Equatorial Guinea government has created a new city located 30 kilometers from the capital: Bata. This municipality, which is located at the exit of the toll highway and near the airport, is a high-potential area, provided that the investment is made in a non-flooded area and that one of the few land titles available is found.
The coast is another interesting investment, both for those who wish to live there, as the area is pleasant to live in, and for rental investors who will have no trouble renting. The area attracts many retirees who often go through the rental stage before investing in a property.
Financing your real estate investment in Equatorial Guinea
The financial institutions that finance real estate purchases in Equatorial Guinea often offer short loan periods, ranging from 7 to 15 years, at very high rates and with very expensive opening fees. In addition, their conditions for obtaining a loan (very high contribution required...) are very restrictive so that a very limited number of people, especially those from the diaspora, can meet their selection criteria.
However, there are banks that offer more favorable conditions such as
- The BGFIBank-EG which offers construction, improvement or extension, or acquisition loans, and particularly for Equatorial Guinea citizens abroad. For example, it offers a package including a loan up to 35 000 000 FCFA without contribution and up to 25 years, at rates from 6%.
- The CBGE grants personal real estate loans for a period of up to 20 years at rates starting from 4.90% to finance the acquisition, construction, extension or improvement of a property, the purchase of land, a primary or secondary residence, or a rental investment.
- The CCEI has set up the first banking platform entirely dedicated to real estate financing in Equatorial Guinea and offers loans with a 15% down payment, over a period of up to 20 years and at maximum rates of 7 to 8%.
In other words, it is advisable to approach professionals and financial institutions to acquire a quality real estate in Equatorial Guinea. Many informal proposals exist, particularly in the sale of land, but they are often a source of conflict.