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 interest rates to blame for real estate market woes?

There is a lot of discussion regarding the implementation of interest rate cap law and how it has affected the economy and the real estate market over the last two years. However, it’s important to understand if (IRC) interest rate cap is the reason behind the industry’s stagnation and bad performance, or if it is simply used as an excuse. The reality is that Kenya’s real estate market has been struggling to avoid a total market collapse for the last almost three years. Even some of the most positive market reports clearly state that the market is under pressure. Hass Property Price Index for the second quarter of 2018 shows that while there was a marginal 3.6 percent increase in apartment rental prices in Nairobi and satellite towns, land prices stagnated. KBA latest house price index also shows that despite the high expectations for a market recovery after elections, the market does not seem to respond or to be able to reverse the negative trend of the last two years. Before analyzing the actual correlation of interest rate caps and the Kenyan property market, it is important to understand what exactly is the interest rate cap law, its history and…

Real estate market posts improvement in first half 2018

Absorption of Grade A and B office space in Nairobi rose by 12% in the first half of the year compared to the second half of 2017, according to Knight Frank’s Kenya Market Update – 1st Half 2018. Increased uptake of office space followed the improved political climate and economic recovery in the period, with the country’s Gross Domestic Product (GDP) having expanded by 5.7% in the first quarter. A decline in prime asking rents for offices to US$1.3 per square foot per month, from US$1.4/sqft/m in the latter half of 2017, also boosted uptake. The Kenya Market Update report showed prime residential prices increased marginally by 0.4% in the period compared to a 1.8% decrease in the second half of 2017, while prime residential rents rose by 0.33%. “The increase in prime residential prices and rents is attributed to an improved political climate and the thawing of the wait-and-see attitude among buyers and occupiers,” the report notes. In retail, prime rents remained flat at US$55/sqm/month, with footfall in major shopping malls having increased slightly in the review period as expanding retailers took up anchor tenant spaces vacated by ailing rivals. Occupancy levels remained high for established malls at 90% and…

Sacco turns home ownership dream into a reality

Are you in a SACCO? Here is why you need to join one as soon as possible! As the world marked the International Day of Cooperatives locally known as Ushirika Day two weeks ago, Urithi Housing Cooperative Society handed over 100 affordable homes to families in Juja, Kiambu County. The houses, each sitting on a 1/8-acre land, are three-bedroom master ensuites. The gated community is also served by a new commercial centre and a children’s playground along Juja Farm road. The construction of the new Juja Plainsview Estate began in 2015. It is the fourth project under the Nyumba Mia affordable housing concept, which Urithi has been handing over to Kenyans in the last two years. Read more

6 tips from top entrepreneurs on turning real estate into real wealth — even if you start with nothing

At least 30 U.S. billionaires made their money from real estate; some say that it’s the greatest way to create real wealth and financial freedom. These six tycoons and members of The Oracles suggest how you can invest $100,000 or start with nothing. 1. Start small. Courtesy of The Oracles Tai Lopez, investor and advisor: Although I’m a businessman first, I’ve always been a part-time real-estate investor. You can do both, too. Have a business or career that creates positive cash flow, which you can diversify into part-time real estate investing. I’ve done it for many years. If you’ve never invested in real estate, start small and don’t use all your money. No one’s ever looked back and said, “My first deal was my best.” You’ve got to learn how to read the contracts, build your network of specialists — for example, lawyers and realtors — and develop a good eye for it. This only comes from experience. The beauty of real estate is that you can learn the ropes while starting small: Find some cheap properties, like single-family homes, renovate-and-flips, multi units, or commercial properties. Try to commit as little as possible while you get some notches under your belt. Joel…

Real Estate Investors Urged to Tap Into Mixed-use Property to Reap Maximum Returns

Real estate developers should diversify into mixed-use developments, serviced offices and commercial buildings in the counties from rental apartments to get better returns on their investments, consultants at Cytonn Investments said yesterday. Cytonn Real Estate’s annual Nairobi Commercial Office report shows the market is transitioning to a buyer’s market, where investors should look into putting upgrade A offices in zones with low supply. “Investors should consider mixed-use developments as they have been doing significantly better,” Cytonn Investments real estate service manager Johnson Denge told a press conference in Nairobi yesterday. “We are also yet to see full benefit from devolution, but that is where the opportunity is.” He cited Kiambu, Kajiado and Murang’a as counties which are in short supply of quality offices. The firm’s survey showed that retail space generated a return of about 10 percent followed by commercial office space (about 9.3 per cent) and residential (about 5.6 percent). MORE