Abstract
Gated communities have become part of a global lifestyle for most residents. The study extends the literature on this global phenomenon by investigating the impact of gated developments on property values and rents using Accra, Ghana, as our study area. Applying a propensity-score matching technique to 2620 housing transactions and 811 rental units, our results reveal that houses in gated communities sell at 42% and 48% more than non-gated properties. Additionally, property owners charge 48% more for rent in gated properties when compared to other non-gated houses in our sample. The sales premiums we find are larger than premiums documented in developed economies. The article provides nascent evidence about rental premiums in gated communities. We posit that the sales and rental premiums we observe in gated properties in Accra are driven by the need for quality housing services, prestige, personal security and security of tenure. This work should be of interest to real estate developers and policymakers.
Acknowledgements
We would like to thank the Editors, and the three anonymous reviewers whose helpful comments substantially improved this paper. We are also grateful to Franklin Obeng-Odoom and participants at the American Real Estate Society's 35th Annual Meeting, 2019, for feedback on an earlier draft of the paper. We are responsible for any errors.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes on contributor
Paul K. Asabere is now an Emeritus Professor of Finance & Real Estate, Temple University.
Notes
1 Ghana’s 2019 full profile can be found here https://www.heritage.org/index/country/ghana, accessed on January 20th, 2020.
2 Aside from patronizing gated properties, their remittances from countries such as Australia, Canada, the Netherlands, the United Kingdom and the United States have been noted to be a source of financing for building in Ghana (see, for example, Diko & Tipple, Citation1992; Firang, Citation2011; Mazzucato, Citation2005; Obeng-Odoom, Citation2010; Riccio, Citation2008).
3 Although Grant (Citation2005) and Obeng-Odoom et al. (Citation2014) argue that personal security is not the main driver of why people elect to live in gated communities in Ghana, one of the authors of this paper, who is a gated resident, has found through informal conversations with other residents that the need for personal security is one of the primary reasons for residing in the community.
4 The Government of Ghana, through the Local Government Authority, publishes an annual bulletin containing property tax rates for various local governments including the Accra Metropolitan Assembly. The property rates are for different property use classes, including residential, commercial and industrial zones.
5 The residential areas in our sample include areas such as East Legon, East Legon Extension, North Legon, West Legon/Westlands, Roman Ridge, Kanda, Airport Residential Area, Dzorwulu, North Dzorwulu, Achimota Forest Residential Area, New Achimota, Kotobabi, Kaneshie, North Kaneshie, Tesano, Abelenkpe, Abeka, Christian Village, Katamanso, Kwashieman,Kisseman, Dome.
6 PSM has been used extensively in real estate research including Liu & Lynch (Citation2011); Nanda & Ross (Citation2012); Liu et al. (Citation2015); Soyeh & Wiley (Citation2019).
7 Class one residential areas in the study include Achimota Forest Residential, Roman Ridge, Airport West Residential and East Legon. These areas are rated as Residential Class 1A (highest rating) by the Accra Metropolitan Assembly for property tax purposes.
8 Based on the Bank of Ghana’s Daily Interbank FX Rates, US $1 = GHC5.27 as of 22 August 2019.
9 To ensure that the matching procedure worked, we reran the probit model again after the matching. The results confirm that the matching procedure is successful. Specifically, the coefficients either become insignificant or reduce in statistical significance. In addition, the Pseudo-R squares reduce for both the sales and rental samples. For brevity, the results are not reported here but are available upon request.
10 Evidence suggests that the residents in these exclusionary communities include returnee migrants, individuals with high disposal incomes, employees of Ghanaian based foreign companies and foreigners based in Ghana, whom all share a transnational orientation or an aspiration for a western lifestyle (Grant, Citation2009; Obeng-Odoom, Citation2018; UN-HABITAT, Citation2011).