The need for premium residential real estate in central Africa

Introduction

Anyone who knows about premium residential real estate in Central Africa will tell you that luxurious homes and estates offer serene vacation retreats and shelter from the mind-boggling activity of city life.

Definition of premium in residential real estate

It’s the money paid for residential real estate, which is above the expected prevailing price. Premium residential real estate is a popular asset class for Central Africa’s affluent, specifically luxury residential apartments, homes in residential estates, in addition to beachfront villas.

Which countries make up Central Africa?

The African Development Bank defines Central Africa like Cameroon, Central African Republic, Chad, São Tomé & Principe, Congo Republic-Brazzaville, Gabon, Democratic Republic of Congo, Equatorial Guinea.

Types of premium houses in high demand in Central Africa

• Mansions. Mansions are very huge luxury homes often above 5000 square feet in size. But, what qualifies as mansions depend on user opinion. We know a mansion is big. It’s identical to a big house. Merriam Webster dictionary establishes a mansion as an extensive imposing residence. Calling a home a mansion stipulates a certain level of quality, style, and grandeur, which is above the ordinary in a particular area.

Whereas older mansions may more likely look like the Clue game board having a billiard room, lounge, ballroom, and live-in quarters made for staff, cooks, and butlers, newer mansions typically have more modern features. For instance, a mansion can include game rooms, theatre rooms, pool rooms, gyms, and spa facilities.

Another distinguishing attribute of true mansions is the quality of building materials. Mansions are typically built using premium building materials like high-grade wood, superior stonework, customized fabrics and furnishings, marble countertops, and ornate granite mantelpieces, in addition to top-of-the-line appliances.

Most modern mansions in Central Africa are made using sustainable building materials and they include smart and energy-efficient technologies.

Mansions can be built using exquisite architectural designs using only one style or an eloquent combination of colonial style, classical style, or Victorian style. Mansion architecture exhibits a sense of grandeur with tall ceilings, mega windows, and beautiful facades.

Many mansions in Central Africa are built on large properties, which contain other luxurious amenities such as swimming pools, tennis courts, large gardens, walking paths, water features, and large car garages.

What makes your house a mansion?

No hard and fast rule exists, but usually, a mansion will sit on at least 5000 square feet. Most realtors consider homes above 8000 square ft to be mansions.

How many bedrooms are found in a mansion?

There is no hard rule here either. Most mansions comprise at least 5 to 6 bedrooms but can have as many as 10 bedrooms.

Mansions Vs Estates

Estates(land) comprise houses, outbuildings, supporting farmland, and woods, which surround the gardens and grounds of an extensive property such as a country house or mansion. The term estate is a modern term for a manor, although it lacks a manor’s currently-abolished jurisdictional authority. Manorialism also termed the manor system or manorial system was the approach of land ownership in parts of Europe, notably England, during the Middle Ages (from the 5th to the late 15th centuries).

A manor’s defining attributes included a large occassionally safeguarded manor house in which the lord of the manor and his subordinates lived within and supervised a rural estate, and several labourers who worked the surrounding land to support their livelihoods and the manor lord.

The estate is called so because the profits coming from its produce and rent are adequate to support the household living in the house locatedin the centre of the estate. Therefore, the estate may refer to all other cottages and villages in the same ownership as the mansion, and it can cover more than one former manor. Examples of such great estates include Blenheim Palace, in Oxfordshire, England, which was built to replace the former manor house of Woodstock.

• Bungalows. Bungalows are typically one-story homes, cottages, or cabins. They can either be detached or semi-detached. Bungalows originated from South Asia, with their name coming from the Bengal region of India.Bungalows are typically small, although there are some large bungalows. Most bungalows located in high-end residential areas of Central Africa are integrated with technology and splendid architecture, to cater for the necessities of today’s everchanging modern life.

• Apartments or flats. These are among the most popular kinds of premium housing in Central Africa and the world at large. One apartment building is a combination of several separate homes stacked on top of each other and built next to each other. Every apartment acts as an independent dwelling or living space.

As every apartment constitutes just one section of the whole apartment building, it offers less privacy as there are many facilities, which are shared by the entire neighbourhood such as playgrounds, kids’ play area, gyms, and rooftops.

The need for owning premium apartments in Central Africa has increased because people want to live in more urban spaces than they did in the past. Generally, it’s cheaper to own apremium apartment than to buy a premiumstand-alone house.

For an apartment to be categorized as a luxury or premium apartment, it should have different characteristics including; stainless steel appliances, stone countertops, high-end tiles or hardwood floors. You can expect the exterior of your premium apartment to have professional landscaping.

If you decide to reside in a premium apartment, you should be given premium amenities including sports facilities, rooftop decks, fitness centres, small dog parks, and swimming pools. If you work in a large city, premium apartments are usually situated in prime locations, which can give you easy access to your place of work. Most premium apartments will also come with sizable floor plans, high ceilings, and large windows that allow in significant natural light.

Today premium apartments are prevalent in every major city in Central Africa and even if you move to the outskirts of town, you will find several luxury apartment complexes.

• Penthouses. According to the Oxford Dictionary, penthouses are expensive and comfortable flats or sets of rooms located at the top of tall residential buildings. Penthouses are usually differentiated from other apartments on the market by their luxury features. Penthouses don’t occupy the entire roof deck of high-rise buildings in most cases.

Penthouses are symbols of luxury living and comprise high-end appliances, finest material fittings, and luxurious flooring systems and amenities. Penthouses can have two or more floors and can have swimming pools, private entrances or elevators, higher ceilings, terraces, fireplaces, large windows, gardens, several owner suites, office space, jacuzzi, and fireplaces.

Access to a penthouse apartment is typically enabled by a separate elevator and the penthouse resident can utilize several residential building facilities such as laundry, reservations, restaurants, and gyms.

However, the definition of a penthouse is constantly changing as the phrase “penthouse” is typically more of a marketing term, which refers to a residential unit with a distinct layout from others in the building. The penthouse can have ample outdoor space and magnificent views even when it’s not situated on the top floor. The evolving penthouse terminology can sometimes help real estate agents to sell apartments for higher prices, although it can be confusing for buyers.

Today, nearly all brokers in Central Africa define a penthouse as anywhere in the building where the building starts to ‘set back,’ or when the building starts to have terraces. So, if you own a building, which has the shape of a wedding cake, you may count yourself as having many penthouse apartments there.

• Terraced houses. In architecture and city planning, terrace houses, terraces, rowhouses, linked houses or townhouses are a style of medium-density housing, which originated in Europe in the 16th century where a row of similar-looking houses share sidewalls.

Most terraced houses are situated in towns and cities where terraces provide sufficient use of the available space for housing. Terraced houses are typically more affordable than detached and semi-detached houses, which is why most people love them in many cities of Central Africa

What is a mid-terraced house?

This is a house that’s attached to other housing units on both sides. The housing unit situated at the end of a row, which is only attached to one other house is called an end-terrace.

Are End-terrace houses superior to mid-terrace properties?

End terrace houses typically have bigger listprices than mid-terrace houses. According tomost buyers, end-terrace houses are the best since they only have one set of attached neighbours to their houses.

• Semi-detached houses. A semi-detached house is one family residence built as one of a pair, which shares one common wall. Often, the two housing units are twins where every house’s layout is identical to the other. Semi-detached houses are also called semis and are different from terraced houses.

On the market, you can find single-storied semi-detached homes or bungalows and semis that are spread over two floors. Because of modern architecture, some of the semi-detached houses being built in Cameroon today are so attractive.

• Detached houses. Such houses don’t share walls with other neighbouring houses. Often detached houses in one neighbourhood resemble one another. In most cases, one house is not attached to another physically or legally and one house’s title isn’t registered as part of a condominium or strata.

• Duplexes. A duplex is one residential building, which is split into two distinct units. Every housing unit has its separate living space, kitchen area, and bathrooms. The housing units can be arranged side by side or stacked one on top of the other. Each unit on a duplex has a separate entrance, which contributes some bit of privacy.

In most cases, a duplex is owned by one person, although some units can be owned by different people. If the duplex is owned by different individuals, they all share the same title as duplex owners.

• Townhouses. These are distinct housing units located in one building. Townhouses sound like duplexes, although these two are different in terms of ownership of outdoor spaces. In the case of townhouses, ownership includes the interior and exterior. Note that if duplexes are owned by two different people, the outdoor spaces are co-owned.

Townhouses usually comprise more units than duplexes.

How to make money while investing in premium residential real estate in Central Africa

• Contract Flipping. Flipping real estate contracts can be a great way for residential real estate investors to start with no money and no experience. When you flip real estate contracts, you transfer the rights of a purchase contract to another buyer. The procedure involves establishing properties for sale, signing contracts for the residential real estate, and then flipping that contract to a new buyer to realize a profit.

Contract flipping requires no cash in that you can put down as little as $15 on a contract with No risk, and if you don’t flip the deal, you can’t lose anything. This is partly why many beginner real estate investors are attracted to contract flipping.

• Lease options. A lease option is an agreement, which gives a renter a choice to buy the rented property during or at the end of the rental period. Lease options are also known as leases with the option to purchase. The price of the home is agreed upon upfront by the buyer (renter) and the owner. The price is usually set at the current market value of the home, allowing the renter to buy the home in the future at today’s price.

For that option, the renter is typically charged an upfront fee by the owner, which maybe 1% ofthe home’s sale price. The upfront fee is regarded as the down payment if the renter decided to buy the home at the end of the lease.

Leasing options come with a tradeoff for property owners because they may lose the opportunity to sell the property for a higher price. In exchange, tenants pay more money to rent with a leasing option than they would pay otherwise.

The residential property owner charges a premium alongside the standard monthly rent for the option to buy at today’s price once the lease ends. The premium may be a percentage added to the current rent such as a 20% surcharge of the standard monthly rent for a home of that size.

The premium, which is commonly known as rent credit becomes part of the down payment for the home in case the option is exercised to buy the home by the renter. But, the renter forfeits the extra money paid above the standard rent if the home isn’t purchased at the climax of the lease.

Some residential property owners may take a one-time cash payment usually called “valuable consideration,” which is identical to the premium paid for an option in the financial markets. This isn’t a deposit on the purchase of the property, meaning that it’s not refundable. The cash payment amount ranges from a token fee to around 5% of the expected purchase price.

• Short sales. Short sales are best for homeowners who are in dire financial shortages. A short sale happens when a homeowner or seller doesn’t secure enough cash from a buyer to settle their mortgages. A short sale can only occur if the lender agrees to accept less than is owed on the existing mortgage.

Short sales are not the same as discounts. Lenders typically only accept short sales when the home is worth the short sale price, which is equivalent to market value. Banks are eager to lend money in a rising market. Because of this, they might give out a loan that’s too much for the buyers to handle. If the market finally drops, the homeowner is left with little equity and a mortgage that a sale won’t fully pay off. In the end, homebuyers end up owing more to the home than its initial worth.

• Vacation rentals. Vacation rentals are a lucrative path to profits in real estate. Vacation rentals involve renting out apartments or bungalows for a short period. Africans with vacation rentals in and out of town can earn lucrative passive income from these properties. And best of all, Africans don’t need to own these properties to earn passive income from them. Great communication and negotiation skills come in handy, especially when dealing with homeowners having potential vacation rentals.

• Home-renovation flips. Home renovations are a smart choice if you’ve recently bought an older house and need to restore it or if you’ve been living in an older home and are finally ready to upgrade certain features in that home. The good thing about renovations and all home improvement projects is that you decide on what you want.

It doesn’t help to consult a contractor and or an interior designer before attempting anything yourself but it’s attainable to do some restorationprojects yourself. A home renovation could also be regarded as a flip in case you buy a residential property with the intent of restoring the home to its original condition and then selling it at a higher price point.

But, most home flips are remodels. Home remodels are usually utilized interchangeably with home renovation, although the two terms are different. A home remodel is when you are changing the form of some area in the house or forming something new in the house. When you are considering whether to undergo a home remodel or not, you’ll probably utilize the same thought procedure as a home renovation. It makes sense to remodel your home in case you wish to incorporate additional functionality, value, and space. When remodelling your house, you should consult a contractor to ensure that you aren’t taking out any load-bearing walls or not breaking specific codes and regulations.

Unlike home renovation and remodelling, flipping a home is where you buy a home at a lower price, upgrade its interior, and its surface, and then re-list that home at a higher price point. When flipping homes, most flippers don’t wholly buy a home and create main structural changes. It can be more of a home remodel, but can sometimes involve restoration elements such as flooring, built-in bookshelves, countertops, and other house elements.

• Real estate ETFs and mutual funds. Real estate Traded Funds (ETFs) and mutual funds are professionally managed pooled investments. Investing in premium real estate in Central Africa adds stability to one’s portfolio majorly because volatility in home property prices is far lower than what’s experienced by stocks. Therefore, investors interested in holding long-term positions would do well to consider real estate mutual funds as these add stability and yield steady returns.

Investors buy ETFs and mutual funds to obtain Real Estate Investment Trusts (REITs) without evaluating individual REITs. Real estate Exchange Traded Funds trade like individual stocks, and Africans with market experience can profit from the system.

What is a REIT ETF?

Real estate investment trust (REIT) ETFs aretermed as Exchange Traded Funds, which invest most of their assets in equity Real Estate Investment Trust securities and connectedderivatives. REIT ETFs are inactively operatedaround an index of public marketed real estate owners and proprietors.

Conclusion

The need for premium residential real estate in Central Africa is rapidly increasing and the significant profits that investors are getting from their premium real estate investments are worth it. If you’re confused by the current deluge of premium residential real estate in Central Africa, contact Financely to help you today!