High end homes prices plummet as oversupply bites

Kenyans have moved to take advantage of the low demand for houses which has left real estate firms with no other option but to sell them at lower prices than they would have preferred.

The 2019 Knight Frank Wealth Report makes similar observations as the Kenya Market Update for the second half of 2018 by revealing that wealthy Kenyans took advantage of the price slump and acquired homes at bargain prices as prices softened in 2018.

“Amid an oversupply in the high-end segment market, tighter liquidity and a general correction, high net worth individuals snapped up the houses making it a buyer’s market,” Knight Frank Managing Director Ben Woodhams told journalists during the launch of the report on Friday.

Some 18% of Kenya’s wealthiest individuals bought the homes while another 8% of them bought homes abroad. 22% of Kenyan’s richest individuals plan to buy the homes in Kenya in 2019 and 2020.

The drop in the house prices in Nairobi is further manifested by the fact that Kenya’s Capital slipped to 92^nd in the Knight Frank Residential Index (PIRI) from 75^th the previous year, which ranks cities based on how prime they are in terms of property value.

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The market update had revealed that prime residential prices fell by 4.5% in 2018, compared to a 0.9% drop in 2017, as the segment tilted in favour of buyers.

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It further revealed that rents in the top-end of the market also dropped by 1.3% in 2018, although a slower decline compared to the previous year’s 2.8%.