The Uncertain Future of Real Estate in Nairobi
It is likely to assume that during an election period, investors delay investing in new properties and the spending rate decreases.We see a lot of property with the ‘for sale/rent’ signs. Apartments, houses, villas and bare land around Nairobi. Nairobi, has some of the most expensive property, land and housing.
On Mombasa Road, an acre goes for about 480 million, and for the same amount, you can get a quarter in Upper Hill. In Muthaiga where ambassadors, top politicians and CEO’s reside, an acre goes up to 300 million shillings.
Going by the house pricing index released by the Kenya Bankers Association in 2016, there is a reason to turn a blind eye, not really by being ignorant, and have a bit of doubt. In the past three years or so, there has been an increased supply, surpassing demand, and is now working against the developers, since it’s an inflated supply, which leads to losses.
Price drop and stagnation are being witnessed in some parts of Nairobi and the market is being termed as not lucrative, at least at the moment.
Two things involved :
People are not spending but they are preparing to spend after the elections
Prices will shoot up after the elections and into the new year
According to Dan Karua, Jumia House Managing Director, “ the demand for housing, selling or buying is there. The question to ask is – Will people be moving? Not only during that period of time but also before and after. This is a perfect time for agents and developers to plant the plans they have so that by the time things are ‘settled’ then there will be certainty in people paying up.”
Nairobi city
Too much is being provided, and with high prices to go with it, which is not what most people can afford.With banks trying to lure people into signing up for mortgages, they also have an uncertain future, bearing in mind that just about 20,000 mortgages are on, currently.
This simply means they will stagnate and decrease if the current market ‘value’ remains the same, longer.
With the rising supply and falling demand, especially of property developed by a third party e.g a bank, real estate agents, the market could witness a down turn sooner or later. For most industry players, professionals included, nobody, knows what to think of the fact at hand. Inflated market demand will only result to disappoint.
Currently, the banking sector is unfriendly in the sense that financial access is a nightmare and interest rates are over the roof. Most struggling real estate markets around the world also have a volatile banking space.
If this is eased and access to finance made possible, the property markets will still push through.
As Kenya prepares for elections this year, a business may stagnate and prices drop further. As is every other year, there shall be uncertainty soon enough.
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