Real Estate Investment Trust (REIT): A pathway to affordable housing investment in Ghana

By Priscilla Marilyn BADGER & Nana Kweku BOSOMPEM

Ownership of property is a right that the 1992 Constitution of Ghana seeks to jealously protect, highlighting its significance to our democracy. Specifically, article 18 provides that: “Every person has the right to own property either alone or in association with others”.

However, for the average Ghanaian, the enjoyment of this right has become increasingly illusory. Ghana currently faces a housing deficit that is currently estimated to be 1.8 million units^[1], driven largely by rapid population growth and urbanization.

This has created a demand for homes that far exceeds supply, causing property prices to rise well beyond the means of the average Ghanaian.

For instance, the price of one-bedroom self-contained in Accra ranges from US$17,000–US$24,000 while the national average annual income was US$2341.38 (GH¢33,937) in 2018 which implies low-income households cannot afford these houses.

These challenges are further compounded by limited access to financing in Ghana as mortgage products in Ghana are very limited, often with very steep interest rates.

In light of the foregoing challenges, we might be inclined to conclude that the prospects for meaningful participation in Ghana’s real estate sector are rather slim. However, as shall be demonstrated in the subsequent paragraphs, a credible and increasingly relevant alternative to direct real estate ownership exists: the Real Estate Investment Trust (REIT).

Accordingly, the purpose of this article is to analyze the legal and regulatory framework governing the establishment of REITs in Ghana, and to assess the extent to which these vehicles can enhance access to real estate investment for individuals who would otherwise be excluded by the limited financing opportunities earlier referred to.

What is a REIT?

A REIT is a public company that invests in real estate assets to generate recurrent income (rental and interest) from operating, owning, or financing income-producing real estate and real estate-related investments.^[2]  It is an investment vehicle that pools investors’ capital to invest in income-generating real estate assets. They are designed to give

individual investors the opportunity to invest in a diversified portfolio of real estate and make it possible for such investors to earn dividends from real estate investment assets without having to personally oversee the management of the real estate assets. The main types of REITs include:

1. Equity REITs:

These are the most common type of REITs and primarily invest in and own income-generating real estate properties such as residential buildings, commercial office buildings, retail centers, and others. Income is generated through rents from tenants, with a significant proportion distributed to shareholders. The value of equity REITs is largely driven by the performance and valuation of the underlying real estate properties.

2. Mortgage REITs:

Also known as “mREITs”, these focus on investing in real estate mortgages or mortgage-backed securities. They provide financing for real estate by originating or purchasing mortgage loans. They generate income primarily through the interest that is earned on these mortgage investments.

3. Hybrid REITS:

Hybrid REITs are REITs that combine elements of both equity REITs and mortgage REITs. Unlike traditional equity REITs, which earn income primarily from owning and leasing properties, or mortgage REITs, which generate returns from interest on real estate loans and mortgages, hybrid REITs derive revenue from both rent and the provision of financing activities. This structure allows them to diversify income streams, balancing rental income with income generated from interest payments.

The legal framework governing REITS in Ghana

While REITs operate within Ghana’s broader corporate and property regulatory framework and are therefore subject to the general provisions of the Companies Act, 2019 (Act 992) and the Land Act, 2020 (Act 1036), the establishment and operation of REITs are primarily regulated by the Securities Industry Act, 2016 (Act 929) and the and the Security and Exchanges Commission Guidelines SEC Guidelines on Real Estate Investment Trusts, 2019 (“The Guidelines”). The key requirements as provided under these laws are summarized below:

1.      Incorporation and Name Requirements

A prospective REIT must first be incorporated as a public company under Ghanaian law or registered as an external company if incorporated outside Ghana. The Guidelines further require that the name of the entity must not be misleading or undesirable and must expressly include the words “Real Estate Investment Company.” This requirement ensures clarity of purpose and prevents investors from being confused about the nature of the REIT’s business.

2.     Licensing and Fit & Proper Requirement

Before operating as a REIT, an applicant must obtain an operating license from Securities and Exchange Commission (SEC). As part of the requirements for obtaining the license, the applicant must satisfy the SEC that it is a fit and proper person. This evaluation is carried out by the SEC in accordance with the Guidelines. Whether or not a person is fit and proper within the meaning of the Guidelines is determined, having regards to:

• the ability to carry on the regulated activity competently, honestly and fairly; and the reputation, character, financial integrity and reliability, the company, its directors, chief executive, management, representatives and all other key personnel, and any substantial shareholder of the company
• any information in the possession of the Commission whether provided by the applicant or not, relating to where the applicant is a company in a group of companies any other company in the same group of companies;
• any substantial shareholder or officer of the company or any other company in the same group of companies
• whether the applicant has established effective internal control procedures and risk management systems to ensure its compliance with all applicable regulatory requirements;
• the state of affairs of any other business which the person carries on or proposes to carry on

A license granted by the SEC to a REIT is valid for one year from the date of issue and may be automatically renewed annually, subject to payment of the prescribed annual license fee on or before the license anniversary.^[3]

3.     Capital and Key Appointments

The REIT must meet and maintain the minimum paid-up capital prescribed by the SEC. The REIT must appoint a REIT manager^[4] and a custodian^[5], each of which must be duly licensed by the SEC.

A REIT manager means a person or company that provides real estate management services for a REIT. For a REIT that is not self-managed, it refers to the management company appointed by the board of directors to manage the REIT under a management contract. For a REIT that is self-managed, it refers to the company itself.

A REIT manager licensed for REIT companies shall engage only in fund management, unless otherwise expressly permitted in writing by the SEC.^[6] A REIT manager must be a company incorporated in Ghana and must have its scope of business limited to only fund management unless otherwise exempt by the SEC in writing.^[7] It must also be independent of the REIT and the REIT Custodian.

A REIT custodian is the person to whom the assets of the REIT are entrusted for safekeeping.^[8]  A custodian of a REIT must meet one of the following criteria:

• it should be a licensed bank;
• it should be a trustee company that is a subsidiary of a licensed bank; or
• another company licensed by the Commission, provided the Commission is satisfied that the company has sufficient financial, technical, and operational resources and experience to effectively conduct its business and fulfill its obligations as a custodian.

In addition, a custodian must be a fit and proper person to hold the assets of a collective investment scheme, must be independent of the REIT and the REIT manager, and must be independently audited. The custodian must also maintain such minimum unimpaired paid-up capital as may be specified by the

Commission from time to time and must be capable of complying with the Guidelines.

Upon successful acquisition of a REIT license, a REIT must also appoint a property valuer.^[9] The valuer’s responsibility is to value all the real estate held under the REIT on the basis of a full valuation and conduct a physical inspection of the site of the real estate as well as an inspection of the building(s) and facilities erected

thereon not less than once a year.^[10] Also, the valuer must also produce a valuation report on real estate to be acquired or sold by the REIT.^[11] A property valuer for a REIT must retire after conducting valuations for three consecutive years and may only be re-appointed after a gap of three years.^[12]

4. Constitution and Operational Restrictions

The Guidelines impose several operational restrictions that must be expressly incorporated into the constitution of the REIT. More specifically, their constitutions must stipulate that:

• the company shall be engaged in the business of investing in income generating real estate;
• at least 75 % of its revenue shall derive from rents, mortgage interest and investment income from indirect property ownership;
• at least 75 % of its total assets shall comprise of real estate;
• at least 80% of its distributable profit, for each accounting period, shall be distributed to shareholders;
• the company shall list on an exchange within three (3) years as a REIT;
• its leverage ratio does not exceed 40% of gross asset value
• shall ensure that the property restrictions on its operations specified in (i) to (vi) above are expressly and clearly restated in its prospectus.
• shall not invest more than 40% in a single property

5. Prospectus and Public Offering Requirements

No REIT shall offer its securities to the public or be admitted to trading unless an approved prospectus has been published prior to the offer or before any request for admission to trading.^[13] SEC will not approve a prospectus unless it is satisfied that the prospectus contains the necessary information; and all of the other applicable requirements imposed by or in accordance with these Guidelines have been complied with.  The information is necessary to enable shareholders to make an informed assessment of:

• the assets and liabilities, financial position, profits and losses, and prospects of the issuer of the REIT securities and of any guarantor;
• the rights and liabilities attaching to the REIT securities; and
• such other information and particulars as may be specified by the Commission

TAXATION OF REITS

In Ghana, REITs benefit from an exemption from corporate income tax.^[14] However, rental income earned by the REIT is subject to withholding tax of 8 % where the rent is paid for residential premises ^[15] , and 15 % where the rent is generated from a commercial premises.^[16]  Further, dividend payments distributed to shareholders of the REIT are subject to tax.^[17]

It is also pertinent to note that the exemption of REITs from income tax in Ghana fundamentally alters their tax treatment compared to standard companies. More specifically, while a typical Ghanaian company must add capital gains to its income and pay the standard corporate tax rate, an approved REIT is entirely exempt from this, owing to the income tax exemption granted by Act 896.

Consequently, the REIT would be able to distribute a significantly larger share of its earnings directly to its shareholders, who are then taxed on the distributions they receive through withholding tax. This tax incentive is aimed at encouraging more investment in Ghana’s real estate sector.

THE CASE FOR REITS AS AN AFFORDABLE HOUSING TOOL

Although REITs are for-profit investment vehicles, their commercial character does not detract from their potential to serve broader social interests. When properly structured, REITs can bridge the affordable housing gap while still generating significant returns for investors. Indeed, evidence exists internationally to support this. In China, the real estate sector was once a major driver of economic growth. However, since 2020, it has faced a sustained crisis.

In response, the central government promoted the Affordable Rental Housing (ARH) program as a key solution under the 14th Five-Year Plan (2021–2025). The plan aims to provide 8.7 million subsidized rental units to low- and middle-income groups and new urban residents with stable employment. By mid-2025, about two-thirds of these units were completed, with significant allocations in major cities. A key driver of this policy has been the use of REITs to mobilize capital. One of such REITs is the China

Merchants Fund Shekou Rental Housing REIT, listed on 23 October 2024. As one of the first nationwide, market-oriented ARH REITs, it issued 5 billion shares at 2.727 yuan each, raising 13.635 billion yuan, which exceeds its planned 12.48-billion-yuan target by 11% and underlying an asset valuation of 12.46 billion yuan.^[18]  This oversubscription reflects strong investor confidence in affordable housing and further emphasizes the potential for REITs to be used as an income generating tool with social impact benefits.

Similarly, in the United States, REITs have been utilized in the financing of affordable housing projects. The Community Development Trust has supported more than 38,000 affordable units across multiple states, while the Housing Partnership Equity Trust enables nonprofit housing providers to acquire and preserve affordable rental properties in high-cost markets.

As highlighted in the preceding paragraphs, a central challenge in Ghana’s housing market is the extremely high cost of financing, with commercial lending rates standing as high as 35.85% in January 2023.^[19] These exorbitant rates make financing inaccessible for most households while also significantly impacting real estate developers’ ability to raise capital for affordable housing projects. REITs offer a viable alternative by enabling the pooling of capital from both public and private sectors, reducing reliance on banks and creating an alternative source of funding for affordable real estate projects.

The Government of Ghana, realizing the potential REITs possess as an investment vehicle and social impact tool, has made significant strides in advancing their use. Notably, and as previously stated, the income generated by REITs is exempt from corporate income tax. This incentive makes both the formation of REITs and investment in them more appealing. Another noteworthy stride is the creation of the National Homeownership Fund (NHF).

The establishment of the NHF represents a significant milestone in leveraging REIT-backed financing towards the creation of affordable housing. The NHF, working in partnership with GCB Real Estate Investment Trust PLC (GCB REITs) has supported the development of housing units accessible through well-structured renttoown schemes, thereby offering a more sustainable and affordable pathway to homeownership for low and middle-income households.^[20]

These initiatives reflect a growing recognition in Ghana that REITs can serve not merely as vehicles for the creation of wealth, but an avenue for public-private partnerships  through which the state and private sector can jointly address Ghana’s nagging affordable housing problem.

CONCLUSION

Although Ghana continues to struggle with the persistent challenge of affordable housing, which is largely driven by limited access to financing, this obstacle is not insurmountable. The emergence of REITs, supported by targeted regulatory incentives such as the tax exemption provided for under the Income Tax Act, 2015 offers a credible pathway toward making affordable housing affordable for the average Ghanaian.

While REITs are not a complete solution, they are certainly a step in the right direction and one of the most promising tools available to solve Ghana’s nagging affordable housing problem

Marilyn Badger is a Ghanaian lawyer and a Senior Associate at AB Lexmall & Associates, with experience advising businesses on corporate, commercial, and regulatory matters. She has supported local and international companies across various sectors, with particular expertise in corporate structuring, labour law, transactions, and governance. 

Nana Kweku Bosompem is a Ghanaian lawyer and an Associate at AB Lexmall & Associates. He has supported organisations across various sectors, with particular expertise in transactions, corporate structuring, governance, and compliance.

[1] The United Nations Settlement Program (UN-Habitat), Ghana Housing Profile 2024,  https://unhabitat.org/sites/default/files/2025/02/ghana_housing_profile_final_version.pdf (accessed 2 December 2025)

[2] https://ghanalawhub.com/a–practical–guide–to–real–estate–investment–trusts–reits/ (accessed 2 December 2025)

[3] ibid, Guideline 5(6)

[4] ibid, Guideline 15(1)

[5] ibid, Guideline 28(1)

[6] ibid, Guideline 1

[7] Ibid, Guideline 17(5)

[8] ibid , Guideline 1

[9] Ibid, Guideline 40

[10] Ibid, Guideline 42(1)

[11] Ibid, Guideline 42(2)

[12] Ibid, Guideline 44(1)

[13] Ibid, regulation 45(1)

[14] Income Tax Act, 2015 (Act 896) as amended by the Income Tax (Amendment) (No. 2) Act, 2017 (Act 956), s. 2 (b)

[15] ibid, section 115(1) and paragraph 8(1)(vi) of the First Schedule

[16] ibid, paragraph 8(1)(vii) of the First Schedule

[17] ibid, section 59(1)

[18] Yuchen Zue, “Policy-Driven Investments in a Downturn: The Role and Potential of ARH REITs in

China’s Housing Market Transition”(paper presented at the 4th International Conference on Financial Technology and Business Analysis, 2025)  https://direct.ewa.pub/proceedings/aemps/article/view/29583/pdf (accessed 2 December 2025)

[19] https://www.bog.gov.gh/economic–data/interest–rates/ (accessed 2 December 2025)

[20] https://blog.meqasa.com/gcb–reit–reshaping–home–rental–and–ownership/  

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