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Thinking of investing in real estate? Put your money here

The real estate sector is a large field, we look at the areas that are worth pumping your money into and the risks involved

Real estate is one of the most stable, highly profitable and secure forms of investment. Whether you are young and starting out, or old and thinking of how to invest your life savings, or if you are in the village or the city, one can never go wrong with real estate.

Locals, diaspora returnees and those still abroad, in their quest for a more stable and financially secure life, are increasingly turning to real estate. But, they are new to the market, with little intimate knowledge of the market. Somalia has a population of 14.998 million according to UN estimates, and will clock 15.182 by July 1st 2018. Mogadishu is a city of 2.587 million people and growing; the opportunity to reap big is there, just how does one go about partaking in it? If you are keen on having a piece of the real estate pie in the country, where do you invest?

Where should you put your money for maximum profits? Which type of investment is least demanding in terms of personal involvement? How long are you ready to wait, before you can begin recouping your initial investment? Which real estate, which property has the best current income (monthly income in the form of rent from the property)?

Here is a quick look at the available areas that one can invest in;

Commercial Property

This is where you put up property in the city or in the estate but with the specific aim of selling or leasing commercial space. With the current vibrant business climate in Mogadishu, this is a sure thing. Companies-both local and foreign, shops, supermarkets, embassies or international NGOs, hotels and restaurants, corporate offices, government institutions and learning institutions like Universities and colleges are constantly looking for space to lease or two floor to rent.

Whereas it is capital intensive, the property owner can come to an agreement with an anchor tenant (often times this is a known brand or known entity that foots part of the construction bill while they are assured of a floor or two or a few offices upon completion-their presence in the property should attract other tenants).

Industrial Property

Investors with little capital can go for this type of property. Here, the investor puts up storage spaces, warehouses, large scale parking lots, depots, and distribution centers among other ‘light’ properties. They are referred to as light because there is little investment in terms of construction that go into them. The most important thing is to get the right location, such as at the port, downtown Mogadishu, at the center of Bakara market etc.

Once the investor has set up, all that remains is leasing periodically to small and major clients alike. It is however advisable to have at least one large client to rely on and since they are used for storage of cargo, the rate of rent default is low.

Land

Land is always a smart investment. With an appreciation rates that can be startlingly high, land is one the best and safest ways of holding your life savings or doing straight up business.

Purchasing land and selling it later, i.e. after five years or just developing the piece and the area around it by improving security, availing water, electricity and improving accessibility then selling can lead to enormous profits. One can also purchase land, break it down into smaller parcels before selling. Since land regulations and zoning issues have not been set out clearly in Mogadishu, land ownership or transfer of a piece of land from one party to the other depends on mutual trust, this line of investment is risky but the rewards are high. The value for the land is relative based on its location from the city.  

Property Flipping

This works for those who are in the business for short term gains and quick profits. Here, an investor can purchase land from the owner with the aim of re-selling it to the next willing buyer. Often times, the investor makes a few improvements on the property, like increasing security in the area around the land, piping water to it etc. Because there is little regulation when it comes to price negotiation, a piece of land bout at 200,000 dollars can be sold for 500,000 dollars in a time frame of two months.

The same can be done to houses. Buy it, renovate it and flip (re-sell) it. Mogadishu has so many houses that have been ruined but are still standing; house flipping can easily work in Somalia.

Residential Property and Personal Homes

The United Nations estimates that Somalia will have a population of15.182 by July 1st 2018. The annual population growth is believed to be about 3%, the fourth highest in the world with an estimated 6.26 children per woman. Most of these people will require houses to live in. In Mogadishu city, there are an estimated 2.587 people. There is demand for residential housing. Even better, there is demand for affordable residential housing. Any investor who puts his money in reasonably done and averagely priced apartment will not lose.

Equally enticing is the idea of putting up one’s own home. A personal home is a long term investment, and when constructed in the city, one can always sell it, at a hefty profit of course.

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