A Personal Take on Kenya’s Property Market

innocent mwangi

By Innocent Mwangi Gathungu, Director, Jacent Properties Ltd.

Kenya, an emerging market, has continued to post impressive economic growth over the last few years. And despite the unstable political environment, coupled with spiraling economic crimes such as corruption, this sub-Sahara nation is attracting international investors in their dozens.Evidence of a nation on a growth trajectory are everywhere, and even the world’s economic institutions such as the World Bank have given Kenya’s economy a thumbs-up.

From the on-schedule standard gauge railway line that is set to replace the current rusty and dilapidated colonial relic of a lunatic railway line, the construction of an ultra modern superhighway that connects Nairobi and Thika town; to the LAPSSET project that will connect Lamu Port with South Sudan and Ethiopia, Kenya is undoubtedly headed for great tidings. Add to this the robust roads upgrading projects dotted throughout the country and you will get a veritable environment for economic take-off.

Kenya Real estate industry
Attracted by an enabling economic and political infrastructure, the real estate industry in Kenya has witnessed an upward swing. This has been partly fueled by an emerging middle class with disposable incomes, and partly by an ever increasing international interest from profit-seeking global investors.

In a bid to eliminate cases of land fraud, the Kenya government embarked on the digitization of land records so as to enhance transparency in the real estate industry.

Return on investments continue to appreciate as office rents in Nairobi’s central business district keep on rising by more than 15% every year.

As a result, European and American investors have flocked into the country; and the Chinese have not been left behind either. It is worth noting that China has been aggressive in pursuing and concluding business contracts in Kenya; a case in point being the standard gauge railway which has China’s imprint all over it.

High-end shopping malls such as the Garden City on Thika Road and swanky supermarkets are now the order of the day in Kenya as investors rush to satisfy Kenya’s middle class’s thirst for Western lifestyle. This trend has also attracted international citizens to Kenya.

Besides, upcoming mega complete-lifestyle-projects such as the Tatu City and Konza City, among others, are set to change the country’s urban and upcountry lifestyle. Resort themed cities such as Isiolo and Kilifi will also have a huge impact on Kenya’s tourist industry; and greatly contribute to an even more robust economy.

Kenya’s 2017 General Election
Despite all the good news, a dark cloud however looms over the country as the 2017 general elections draw near. Although the 2013 elections passed without the usual violence, the political warlords appear to have forgotten the post election violence that occurred in 2007-2008. However, despite all the chest-thumping by political actors on both divide, it is highly unlikely that this country will be forgetting the post election violence any time soon. And that can only be good news to investors seeking to cash in on Kenya’s tripling economic fortunes.

Taking Vantage Positions
As an investor, one would be well advised to take positions early before the train goes too far. Already, investors such as Europe’s Kempinski Hotels, a luxury hotel group, have taken the Kenyan high-end hospitality market by storm. Chinese companies have also taken a firm foothold in Kenya’s economic growth; and their investments spawn the real estate, hospitality and infrastructure, among other domains.

As one of Sub-Saharan Africa’s fastest growing economies, Kenya is a crucial commercial and financial hub in Eastern Africa. Her capital city, Nairobi, is home to over three million residents and hosts a highly developed middle class.

It is therefore a no-brainer that Kenya’s real estate industry is a prime candidate for REITs, and investors have already taken positions; and you should too before it is too late!