How to predict the real estate market

In Kenya, the real estate industry is a free market in that the price of housing is driven by supply and demand. The higher the demand, the higher the prices with the inverse also applying. Over the last couple of years, the Kenyan economy has witnessed exponential growth of the middle-class. What this means is that as the disposable incomes of more Kenyans increase, many people are able to construct their own homes and are also able to get mortgages to buy houses. This, in turn, fuels the real estate sector. As the real estate industry appears to be more lucrative and with limited supply, speculators come in, further driving the prices higher. A housing bubble comes about when the market prices reach unsustainable levels and naturally decline. According to the International Monetary Fund (IMF), the bubble is a temporary event which may last up to several years. The property sector exists in relation with other sectors and one can predict the trend of real estate with other factors in the economy. With these, you can identity a housing bubble. But how can one predict the markets? How can one differentiate the realistic price rise from the bubbles? Read more……

Kenya requires one-stop shop for building permits

The 2018 World Bank report on the ease of doing business in Kenya based on the parameter of acquisition of building permits and development approvals ranked the country at position 124, below Rwanda (112), Botswana (59) and Namibia (107). The poor ranking was attributed to the long processes and lengthy periods needed to acquire a development permit with some applications taking up to 156 days. A recent survey conducted by the Architectural Association of Kenya (AAK) indicates that while Nairobi, Mombasa and Kisumu counties had e-construction permit systems, users still face a myriad of challenges including frequent downtimes and delays in processing of applications. The average time taken to acquire a building permit in Nairobi ranges from between three months to two years. The delays a largely due to the human interaction with the portal. These delays not only impact negatively on investor confidence and ease of doing business in Nairobi, but also serve as a precursor to the construction of unauthorised structures and urban sprawl. The Central Bank 2018 fourth quarter report revealed that real estate developers were the biggest loan defaulters at Sh44.4 billion, a 15.8 percent rise outpacing non-performing loans by manufacturers (11.7 percent) and traders (7.3…

6 Things to Know About Ongata Rongai

You cannot be Kenyan if you have never heard of Ongata Rongai town, popularly known as just Rongai or Ronga. It is a favourite subject by savvy social media users always creating ridiculous memes about it, mostly about its distance from Nairobi town. History Ongata Rongai is a peri-urban settlement at the outskirts of Nairobi located in Kajiado County and is situated 17 km (10.6 mi) south of Nairobi town. Although largely located within Nairobi metropolitan, it does not fall within the administrative boundaries of the city and is separated from Nairobi city proper by the Mbagathi River. It is divided into two administrative locations, Nkaimurunya and Rongai, which are separated by the Magadi road. Historically occupied by the Maasai people, present-day Ongata Rongai grew from a meeting of a cattle market in the northernmost tip of Kajiado County and the quarry township in present-day Kware. The cattle market and the quarry spread rapidly and joined in the late 1950s. Community The Maasai people occupy majorly the rural parts of Rongai where they still practice their major economic activity, livestock rearing. However, the town has a diverse population due to its proximity to Nairobi. Economy Ongata Rongai is mostly dominated by middle-income earners and is…

Indian firm to build Sh12bn homes at Garden City in Nairobi

Shapoorji Pallonji Real Estate, the property development arm of Indian Shapoorji Pallonji Group, has entered the Kenyan market with plans to build a multi-billion shilling estate in Nairobi. The Mi Vida Homes project at Nairobi’s Garden City Mall on Thika Road will be developed through a Sh12 billion fund established by Shapoorji Pallonji and its joint venture partner Actis. The joint partners will develop some 624 apartments, which will be sold to prospective buyers for Sh6 million (one bedroom) and Sh9 million for a two-bedroom unit. A three-bedroom unit will be sold for Sh14 million. The Mi Vida Homes project’s chief executive Chris Colson says the partners will next month open an experiential facility on-site to showcase the proposed homes to prospective buyers. “This August will see us open customer sales and an experiential facility where showroom houses will be built. We want to avoid a scenario where buyers hardly know what they are buying,” Mr. Colson said on Wednesday. Mi Vida (Spanish for ‘my life’) will be built in three phases. The first phase includes the construction of two blocks rising 13 floors with a total of 208 one-, two- and three-bedroom units. The segment will be completed in 26 months…

Top 5 Places With Affordable Land Near Nairobi CBD

Kangundo Road and Kitengela are among the most popular regions to invest on land Demand for land as a real estate investment continues to rise in satellite towns around Nairobi. Over the last few years, this rise can be attributed to increased infrastructural development by both the county and the national governments. Generally, if you were to compare the prices of an eighth of an acre across different satellite towns, the prices would vary depending on where the land is located, availability or different social amenities and how far the land is from the tarmac. In a number of these towns, completed and ongoing construction of bypasses and link roads continue to decrease congestion, thus lowering the commute time to and from the Nairobi CBD. This makes the majority of the towns more attractive for those looking to build residential homes and those seeking land investments. Here are the five best places to buy affordable land near Nairobi CBD: Kamulu Kamulu is a satellite town along Kangundo road located less than 30 km from Nairobi CBD. The town is in Nairobi County with access to a number of amenities such as hospitals, schools, tarmac roads, churches, mosques, supermarkets, etc….

Rate of growth in house prices drops 2.78%, largest decline since 2013

The Kenya Bankers Association-Housing Price Index shows that growth in house prices declined by 2.78 per cent in the first quarter of 2019. It is the largest decline since 2013, the base period for the Housing Price Index. The slowdown is attributed to the drop in access to credit in the building and construction industry. Between July 2017 and June 2018, the rate of credit growth to the housing sector averaged at 1.2 per cent, a significantly low growth rate. According to a report by the Bankers Association, the volume of cement used between July 2017 and November 2018 dropped from 553,631 metric tonnes to 460,967 metric tonnes. “The influence of the credit supply to this sector, a good proxy of availability of funding for housing construction, manifested itself in the supply constraints after a period of one year,” KBA noted. On the side of home buyers, demand was low due to limited access to bank loans and decreased spending as a result of the harsh economic environment. Although the movement in house prices has been stable since Q2 2018, KBA findings note that if the price stability is sustained, it could be an indication of a depressed market. In…

Are You Aware of These 6 Costs When Buying Property?

Are You Aware of These 6 Costs When Buying Property?It is interesting to note how so many buyers and investors at large experience a total blackout when it comes to the transaction fees related to buying property. When you get to the point of buying a house, the devil is in the detail. You need to be aware of the amount of money you will spend throughout the entire buying process. Apart from the sale price, there are other real estate transaction fees you should keep in mind: mortgage fees, paying for a lawyer, and taxes related to property. Not forgetting to mention the hidden costs you might not be aware of. These pointers will help you make the right decision when the time to buy a house comes. In turn, you will make the right investment decision knowingly. What fees should you keep in your mind when buying property in Kenya? You Have to Get a Lawyer The importance of getting a lawyer is like having oxygen: you can’t do without one. Lawyers in Kenya are regulated by an Act of Law known as the Advocates Remuneration Order. Sometimes, the fees that the lawyers charge are regulated by ethical principles and…