Factors Affecting Real Estate In Kenya
Real estate is among the top contributing source of revenue for high-income earners and the government. Besides, it is among the industries working excellently to bridge the youth’s unemployment gaps.
Noting this, Kenyans have decided not to be left behind, venture into it, and benefit from its merits. It has taken a quick turnout, and within a short time, there has been a constant change, reformation, and molding of Kenya’s economy.
However, to continue seeing these benefits, note that several factors influence its operations. The factors have both positive and negative effects. Keep reading to understand this!
1. Demographics/ Population
Demographics are very significant when it comes to real estate investment in Kenya. Often, it is overlooked, and many people do not understand its effect on real estate properties.
It is the composition and distribution of people in a given area regarding age, population growth, and gender, income, and migration patterns. You will not build a 10 M mansion in an area encompassed by people earning 30 K or less per month.
Similarly, singles and bedsitters will not be the best fit for a large family. That shows why a real estate investor has to narrow down to the desired property type by a particular group of people.
2. Government policies
Government policy is yet another influencing factor in the Kenyan real estate industry. EARB, Estate Agents Registration Board, is Kenya’s regulatory and legislative body for estate agency practice.
This body gives directives on the legal housing and property investment requirements that must be followed. Besides, subsidies, deductions, and tax credits from the Kenyan government are some ways that boost or deteriorate real estate growth.
However, being an investor, be aware of all these government policies and use them as a reference in identifying potential trends in the industry.
3. Kenyan Economic Situation
For some years, the Kenyan economy has been ‘dilapidated,’ especially after the Covid-19 pandemic. Like manufacturing activities, employment, GDP, and price of goods, among other sectors affected, so is the real estate industry investment.
However, the effect is usually different from one kind of property to another. For instance, a REIT that invests in hotels is more affected by an economic downturn than one that invests in residential dwellings.
4. Concentration on Foreign Investment
The Kenyan government has been at the forefront of encouraging investors from other parts of the world to set up businesses freely. Positive and negative effects accompany this on Kenya’s real estate industry.
As an example of a positive effect, the investors require housing facilities and office spaces to carry on their operations. This fuels the demand for commercial and residential real estate properties, thus enabling investment.
On the contrary, when the investors are real estate strategists, they bring new designs and housing preferences, and Kenyans embrace them more. This is without knowing that the new designs and preferences are challenging Kenya’s real estate investment.
5. Growth of Towns
The rising Kenyan population has been in tandem with urbanization in different towns and cities. The growth is majorly attributed to the many youths seeking employment daily.
More commercial and residential houses to solve unemployment and housing challenges, respectively, have been built in towns and cities like Nakuru, Nairobi, Mombasa, Kisumu etc.
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.