Ben Woodhams, Managing Director of high-end real estate consultancy Knight Frank’s Kenya office has offered some interesting insights on the Nairobi’s market landscape.
He dismissed the theory that the Nairobi real estate market was a bubble that had burst. “There was no bubble,” he asserted in a conversation with Spice FM, stating that the contraction witnessed in the past few years was more of a price correction driven by oversupply than a bubble.
Woodhams noted that the city’s real estate market had grown massively and steadily for fourteen years, between 2003 and 2017. The market contractions which began being felt in 2017 were further amplified by the impact of the p******c from 2020 onwards. The Knight Frank MD however voiced a positive outlook noting momentum in areas including more global firms setting up shop in Nairobi.
Interestingly, Woodhams mentioned three real-estate subsectors driving a new wave of investment and proving especially lucrative. They are;
1. Student Accomodation
Student accomodation is shaping up to be a fast-growing multi-billion shilling real estate sub-sector in Kenya. Universities are struggling to accomodate over 500,000 students currently enrolled in institutions across the country.
Qwetu is the poster child of the burgeoning industry. Acorn Investment Management Ltd [AIML], behind Qwetu and Qejani residences, in March 2022 announced a Ksh1.16 billion net profit for their Real Estate Investments Trusts [REITS] in its first year of operation.
Woodhams noted that more investors were becoming alert to the opportunity that lies in offering specialized accomodation for Kenya’s large student population and professionals.
2. Data Centres
Woodhams stated that legislation requiring banks and financial institutions to store customer data within the country was driving increased investment in data centres in Kenya.
Increased focus on privacy and data protection is also driving corporates to invest in securing important data. The Data Protection Act 2019 had numerous implications for banks and other financial institutions.
Some of the rights contained in the law include the customer’s right to request a bank to erase their data, update their data or share their data with another bank other than the one they are currently banking with.
3. Assisted Living
Woodhams disclosed that while they are still few and far between, assisted living communities in the country were showing good returns.
These facilities offer the elderly the chance to live dignified lives with the ability to socialize and enjoy various activities while receiving the care they need. Woodhams noted, however, that they were not yet popular in the country compared to markets in the West due to differences in cultural norms.