Property Futures

Real Estate News, Reviews and Investment

You could find luxury real-estate bargains in Kenya

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.

Kenya property market analysis

Kenya real estate market analysis

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.

  • Typically, prices in big cities are high but tend to drop if you move into the outskirts.
  • There is also no likelihood of a real-estate price bubble because bubbles are created by speculation which is in turn fueled by easy access to financing.
  • Mortgages in Kenya are not easily available and many Kenyans prefer to pay cash.

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.

  • Besides luxury real estate, there is also oversupply in some middle class as prospective tenants are put off by the high rentals demanded.
  • There is much demand for low-income residents’ housing and, in cases like Nairobi, the demand is far higher than the supply.  In fact, even slums are attracting tenants.
  • The government has promised 150,000 new units in urban areas every year but it would still take many years for supply to equal demand.
  • One reason for the predicament is the unprecedented increase in migration from rural to urban areas.

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.

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2 comments on “You could find luxury real-estate bargains in Kenya

  1. moses ngumo
    July 3, 2013

    We as a property marketing agent are proud to say that we have advertised our sites and used many sites for our advertisment.

    We have not seen any other good advertising and marketing site as this one

    Mark is a Real Estate agent working with Nariobi Real Estates and focuses on Property for Sale in Nairobi Kenya. Nairobi Real Estates keeps a large inventory of Apartments to rent in Nairobi, Properties for Sale in Kenya and Diani Holiday Rentals.

    • PropertyFutures
      July 4, 2013

      Hi Moses, I am now living in Nairobi maybe we should meet to discuss your marketing needs. James

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