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The real estate market in KenyaReal estate investors have always been drawn to Kenya as have international tourists. The beauty and rich natural diversity of this African country are irresistible forces after all. The most popular areas for real estate investment in Kenya remain the
game reserves
and resorts all along the Indian Ocean
coast
from Lamu to Diani and beyond, but the range of micro-market sectors being targeted by the investor has diversified.
Following on from the democratic ousting of the former president in 2002, Kenya’s economic fortunes have slowly but surely begun improving and now overseas investors are beginning to plough substantial funds into Kenya’s real estate sector. Investors had a growing confidence in Kenya now that the newly elected president has made a commitment to his people to promote Kenya to the wider world, encourage donor support and strengthen the country’s economy by rooting out corruption and targeting foreign direct investment for the creation of employment and business opportunities in Kenya. Determining factors for foreign direct investment(FDI) inflows into Kenya are political stability and predictability, improved labour conditions, stable legal environment, the openness of the economy and incentives such as taxation breaks. In early 2007, real estate sector prospects looked good with immense opportunities existing in the low cost housing category after the government introduced a number of tax incentives and public private partnership guidelines to attract international investors to bridge the acute housing shortage for low income earners in most urban centers. But in December 2007, investors begun to change their minds after the post-election violence that became so sporadic and unpredictable, making it hard for anybody to conclusively assess business risks. After a month of political unrest in which more than 1,000 people have been killed, 300,000 displaced and property worth more than Sh60 billion destroyed, Kenya’s vibrant multi-billion shilling property industry is starting to feel the heat that the rest of the economy had felt. For an industry whose fortunes mirror trends in consumer and business confidence, this conflict can easily spark a recession in the sector. The last five years have been great for the industry, but as buyers start getting skittish over the political situation and credit gets tight, property developers soon found themselves holding slow moving house inventory and vacancies in residential and property markets. A number of investors who have rescheduled their exploratory schedules and postponed the travel dates to Kenya as they study the situation. But on March 3rd 2008, President Kibaki and ODM leader Raila Odinga Thursday signed a historic agreement to end Kenya’s post-election political crisis.Under the deal, the Cabinet will consist of the President, the Vice-President, the Prime Minister, the two deputy prime ministers and the other ministers. So far the new government of Kenya are holding true to their word and working on improving all of these areas and they are being financially rewarded as foreign direct investments(FDI) percentages are increasing gradually. The cost of living in Kenya is very low and now the stability of the country has vastly improved, more holiday and retirement home hunters are finding that they can achieve a good standard of living in an incredibly beautiful country and buy up property for very low prices. Property investment opportunities are in abundance in Kenya and it is an exciting emerging market for several investors. Those looking for a unique, long term residential or commercial property investment opportunity have significant choice in Kenya; those who have invested into this sector within this emerging economy are already starting to see strong rental yield returns from the growing tourism sector and also solid price growth in their underlying investment commodity. There’s an interesting and intense debate going on in Kenya right now about whether or not the Kenyan real estate sector is actually experiencing a boom. In Nairobi, where demand for property is intense, certain up market areas of the city have seen property prices increases of up to fifty percent in the last two years alone and that’s a fact.
Property in Kenya is booming – price growth is intense and the rental figures being charged for some of these properties in the most desirable areas are on a par with major cities around the world. There’s no denying the fact that investments made into certain parts of Kenya will net their owner impressive rental yields and a good level of annual growth. But on the other hand that does not mean that any investment made into real estate anywhere in Kenya is a safe bet and one that will ride the crest of the boom’s wave and guarantee the investor maximum profit. The plain and simple truth is that investing in property in Kenya can return an investor impressive rental income and substantial capital growth returns but as with any emerging real estate sector in the world, an investor has to do his/her due diligence on which areas of the country actually have the necessary demand to sustain profitability.
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