Real Estate News, Reviews and Investment
Article: Luxury housing is a buyer’s market in Kenya.
2012 was not an outstanding year for the real-estate market in Kenya but neither was it particularly bad. Prices are beginning to reach maturity and remained stagnant though they did not actually decline. The volume of activity is influenced by the state of the mortgage market and the increase in interest rates means that they are not affordable for many people. As a result, volumes declined though there was an upturn in the rental market as people opted to rent rather than buy.
Typically, during election cycles in Kenya, buyers and investors tend to put decisions on hold—the first quarter of 2013 is expected to be quiet. Because some developers have stopped activity on projects, prices should climb again at the end of the year, as the supply of new units on the market is restricted.
Some people have concerns that property prices in Nairobi in particular are becoming too high to be sustainable. An expert points out that this is true if looked at in isolation, but they are actually at the same level as South Africa and lower than Tanzania.
The residential real estate market
It has been reported that many developers are unable to sell their houses because prices are simply too high. These developers borrowed money for their developments and were then forced to hike prices to cover the increase in interest rates.
A real estate agent says that developers are paying more to service their mortgages than the prevailing rentals and that the program is caused by speculation on the development of luxury real estate where supply is in the process of overtaking demand.
Commercial real estate
Real estate managers say that there is plenty of vacant office space available for renting in Nairobi but there are few takers.
Office spaces on the outskirts of Central Business District (CBD) are seen as more attractive than the CBD area because of the easy availability of parking space.
The people occupying these offices also prefer offices outside the CBD because it enables them to escape traffic jams. Commercial property owners are banking on an upturn in economic activity, which would result in increased office occupancy.
The bottom line
The commercial real-estate market situation means that there is no potential in commercial real-estate investment. However, there could be potential in investing in luxury real estate because it is a buyer’s market and, if you are planning to use it as a first or second home, you could get a really good deal.