The True State of Real Estate in Kenya

The True State of Real Estate in KenyaThere’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.

Some local constructors deny evidence that a boom exists while many of the country’s property speculators are talking up all the evidence they can find to prove to the wider world that the Kenyan property sector is actually the place to be right now for maximum gains and profits.

So where exactly does the truth lie and what does it matter anyway!?

Well, if Kenyan real estate agents and marketers can prove to the wider world that the property market in Kenya is interesting and offers an investor strong capital growth potential as well as substantial rental yields, then the property market will of course see a strong flow of inward investment. 

Depending on which side of the fence you’re on, this investment could either lead to a prolonging of the boom or the creation of one if, as many people suspect, local property investors are actually making up evidence that a boom already exists! 

So what evidence actually exists to suggest that investing in real estate in Kenya is a wise move to make?

Well, for example in Nairobi where demand for property is intense, certain upmarket 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.

Marketers are using this fact to prove their argument: -

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.

But constructors and those in the negative camp highlight the fact that this growth is only benefiting an elite few - i.e., those with the money to own such properties and afford to rent them out to enjoy the income from the rent together with the growth in the underlying price of the unit.

Basically because the increase in property prices is limited to certain areas of the country and is only benefiting the higher income sectors of society, it is being argued that this cannot constitute a boom.  A true boom would positively affect the lower, middle and upper end of the market - but is this just a question of semantics?

On the one hand yes.  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.

So the argument is valid - but 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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