Current Real Estate Trends in Kenya & How They Affect Investors
For the past two decades, the Kenyan real estate market has grown exponentially as evidenced by its contribution to the country’s GDP which grew from 10.5% in 2000 to 12.6% in 2012 and 13.8% in 2016. The growth is driven by;
- Infrastructural developments such as improved roads, utility connections, upgrade of key airports;
- Stable GDP growth which has averaged at 5.4% over the last 5 years against a Sub- Saharan average of 4.1%;
- Demographic trends such as rapid urbanization at 4.4% p.a against the world’s 2.5% and population growth averaging at 2.6% p.a; and
- High total returns averaging at 25.0% against 12.4% in the traditional asset classes.
These factors have therefore led to the development of unique trends across the various real estate themes, as investors sought to gain high returns and buyers sought aspirational lifestyles and quality products.
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- Office
The Kenyan office sector has grown rapidly over the past decade, in tandem with the improving economy, as firms expanded in their operations while multinational firms continually set up their base in the country which is considered the key gateway to the East African market and a leading economic hub in the Sub-Saharan Africa.
As the sector grows, it’s witnessing new trends due to the clientele changing its preference and international firms creating demand for something that is of world-class standard. Serviced offices are slowly gaining popularity due to the growing SMEs and as the dynamics of office space design and demands continue to unfold, more developers are offering semi-fitted offices by providing facilities such as partitions and kitchen cabinets. In a bid to reduce operating costs and provide a safe and healthy environment for workers, developers are increasingly employing green building technology as it has also been proven to increase employee productivity.
A smart office is also a new trend that has changed the office space area. With amenities like an equipped gym, Cafeterias and entryways for people living with disabilities. Nowadays, so as to meet the demands of clients, offices are designed to feel like home with modern facilities. Quality, ambiance, elegance, and serenity are the driving forces behind today’s growing modern offices.
- Retail
The retail sector has grown tremendously, characterized mainly by a continued rise in mall space. With a growing middle class, and thus more disposable income, international and local developers have quickly grabbed the opportunity to tap into the ready market with the mall concept which has seen Kenya become the second largest in mall space in Africa, after South Africa, with 391,000 square meters. The most notable developments include the Two Rivers Mall, Garden City, and The Hub. The middle class has also attracted international retailers such as Carrefour, international restaurants such as Burger King and Subway and sports shops such as Adidas. Additionally, the country is fast urbanizing and as such, technology has become a secondary need with Kenya being recognized as one of the leading technology hubs in the continent and also renowned internationally for its one-of-a kind mobile money transfer system. Consequently, online shopping is slowly gaining traction with a high internet penetration rate of 70% and has led to online sites such as OLX, Rupu and Jumia achieving tremendous success.
- Industrial
Similar to the office sector, the industrial sector has been receiving a gradual change with a changing clientele who prefer high-quality stock which allows for modern retailing, distribution and manufacturing practices and this has led into modern industrial parks such as Tatu City Industrial Park, Infinity Industrial Park, and Tilisi. The modern parks are also built in such a way that they allow for a live, work and play concept. Additionally, the new market is demanding for a serene location that is different from the congested Nairobi’s Industrial Area, Baba Dogo and Mombasa Road areas where most of Kenya’s old stock, mostly outdated warehouses, is located. To achieve this, the new industrial parks are now moving to areas within Nairobi’s periphery such as Kiambu and Machakos counties where they are easily accessible and are still in close proximity to the key airport and railway terminals.
It is our mission to serve our clients real estate needs with diligence. We know our growth will spring from our efficacy, where we shall be known as reliable partners in the real estate sector.