Has the Kenya real estate bubble burst? Or are we still in boom mode as far as the Kenya real estate market is concerned?
Before I even go further, let me first say that all these are legitimate questions; and depending on which side of the Kenya property market you are on, your answer will be either yes or no; perhaps even somewhere in between.
For those who feel that the Kenya real estate bubble has gone bust, their arguments could be hinged on the numerous projects in the country, some of which have been completed, while others are still underway. This over-supply has been witnessed at a time when demand, according to this school of thought, has declined.
A look at the various advertising platforms, including online Kenya real estate classifieds, reveals an over-supply of apartments, especially in Nairobi, stand alone houses and villas, commercial and residential properties, holiday home rentals, etc.
The same argument has also been used by proponents of a real estate boom in Kenya. They contend that the very fact that there are numerous real estate projects in the market is enough evidence that the Kenya real estate industry is booming. They argue that this situation has been motivated by increased demand and therefore evidence of a country riding atop a real estate boom.
This argument, although plausible, has also been challenged by others who place the boom in the many real estate development projects in Kenya on the corruption issues in the country. They contend that the many billions of shillings that are reported to disappear from government coffers end up in Kenya’s real estate industry. For instance, there are some real estate companies in Kenya with more than three multi-billion projects that are running simultaneously. It’s an open secret that corruption proceeds often find ready absorption in the real estate sector in Kenya. This is because real estate investments are some of the most predictable and reliable investment options.
All these arguments notwithstanding, it is a fact that Kenya’s economy has been growing by over 5% in the last five years, and projections for the coming years are even higher; although not anywhere near the 10% that the Jubilee government promised during her pre-election campaigns. It’s also a fact that the real estate industry has been the main driver behind Kenya’s booming economy.
For instance, the mega real estate projects underway in Kenya have boosted the real estate industry in Kenya. These include the Tatu City, Konza City, Garden Ciy, The Two Rivers Mall, which will be a mixed-use development and is going to be the biggest in East and Central Africa when completed.
Others include the Comesa Shopping Mall, which, when complete, will be the largest in Nairobi’s Eastleigh area; the Karen Waterfront; Ananas Mall in Thika; Crystal Rivers in Athi River; and the Cedar Mall to be built in the resort town of Nanyuki, targeting the many holidaymakers who flock this town.
Besides, the major infrastructure projects in the country such as the Standard Gauge Railway (SGR), the Lamu Port and Lamu-Southern Sudan-Ethiopia Transport (LAPSSET) corridor, and the many roads under construction across the country, makes the case for a booming real estate industry even more convincing.
Again; boom or bust? It’s your call. But I believe that everything that rises falls at some point. It is therefore not a question of ‘if’, but ‘when’ the real estate sector in Kenya will burst.