While Kenyans are struggling to access mortgage loans due to the capping of interest rates, property in Nairobi is attracting the attention of the world’s richest people.
A report by Knight and Frank, dubbed Inside View, Kenya 2018, reveals that Nairobi is on the radar of many High Net Worth Investors (HNWIs) with 4% of the global HNWIs looking to own property in Kenya’s Capital.
UK’s upper class leads the pack of foreigners seeking to acquire property in the country with 63% of its HNWIs population expressing interest.
The UK tycoons’ interest is closely followed by 16% of South African HNWIs and 11% of Spanish, Mauritian and US HNWIs who have all been lured by Kenya’s projected Gross Domestic Product (GDP) growth of 5.8% this year.
About 5% of the super-rich in Uganda, Tanzania, Nigeria, Ghana, Switzerland, France, Canada and Lebanon are also likely to invest in homes in Kenya.
Kenya’s projected 5.8% projected GDP growth is significantly above Sub-Sahara Africa’s projected growth rate of 3.5%.
Other factors making Kenya an ideal proposition for investors include the country’s rapid urbanisation rate which stands at 4.3% per annum versus a global rate of 2.0% as well as an expanding middle class.
Kenya as a whole is among the top five most popular second home locations for Africa’s wealthiest.
While the report ranks Kenya as being a prime destination for investors, it also notes that most Kenyans are unable to afford most of the houses being put up on sale by real estate companies due to lack of access to credit.
“New construction of prime residential properties is continuing apace in Nairobi and the abundance of supply ensures availability for those seeking bargains. However, affordability remains an issue for the local market with much of the stock being beyond the means of most people,” reads the report.
The lack of credit for Kenyans has been precipitated by the capping of interest rates. The report states that banks are now opting to bet on government bonds as opposed to investing in the private mortgage market.