While the real estate industry in Kenya is on a slow-down due to a weakening economy, matters have been made worse by the activities of speculators, ill-gotten cash and lack of reliable and updated data on Kenya’s real estate market.
“We have a huge segment of speculators who do not test market fundamentals before making their entry into the property market. There are also individuals, who have acquired wealth through dubious means and would like to launder the cash in the real estate business,” James Juma Absaloms, Project Manager at Karen-based Apollo Associates Limited, says of the developments in the real estate market.
He added that there is no reliable data from planning departments at many County Government offices, indicating what developments such as flats, bungalows or detached housing units are suited for which zones or sub-zones.
“We thus have a situation where, for instance, a plan that is suited for Kileleshwa areas is extrapolated and then used in another area, say Karen or Muthaiga,” says Mr Absaloms.
He attributes the oversupply of housing units in parts of Nairobi such as Kilimani or Kileleshwa and undersupply in other areas to unrealistic rental charges or prices and use of inappropriate models.
Under the new constitution, County Land Management Boards are in charge of county planning, land survey and mapping within their jurisdictions. Subject to physical planning and survey requirements, the board also processes applications for allocation, change, and extension of user and for the subdivision and renewal of leases of public land.
Figures from Kenya National Bureau of Statistics (KNBS) show that the real estate sector experienced a reduction in growth to 4.2 % in the first quarter of 2019. This is compared to a growth of 5.3 in the past six months of 2018.
Experts on real estate industry in Kenya and project management firms agree that the country’s property sector is slowly crumbling as the general economy hits new lows. Matters have been made worse in areas such as Kajiado County where unfriendly policies has led to an investor flight to more attractive destinations.
Property sector is slowly crumbling as the general economy hits new lows
The residential market has actually been one of the key drivers of the property market. There has been a significant number of development projects coming up both within the Greater Nairobi Area and other urban areas such as Mombasa, Naivasha, and Kisumu.
The real estate industry in Kenya in 2018 experienced highs and lows. The country witnessed high mortgage rates averaging between 12% and 15% and there was demand for affordable housing.
Major cities such as Nairobi, Mombasa, and Kisumu have witnessed a rise in property prices due to the huge competition among workers looking for jobs that pay well. This has put a strain on the real estate market in these cities, such that, new construction is not able to keep up with the demand due to lack of available land.