High-net-worth Individuals in Kenya Allocate Largest Portion of their Wealth to Real Estate Investments

High-net-worth individuals (HNWIs) in Kenya have allocated the largest portion of their wealth to real estate investments, which excludes primary residences and second homes.

According to the Knight Frank Wealth Report 2017, 28 percent of HNWIs is on real estate investments. Personal businesses make up 20 percent of their wealth, while investments in equities, bond, cash, precious metals and similar items makes up 18 percent.

Primary residences and second homes, which are excluded in calculating individual net worth in the Wealth Report, make up 14 percent, while collectables (art, wine, cars etc.) make up 8 percent of total wealth for Kenyan HNWIs.

Globally, HNWIs allocate 25 percent of wealth to investments, 24 percent to real estate investments, 23 percent to personal business, 16 percent to primary residences and second homes, 6 percent to collectables and 6 percent to other categories of investments.

The Managing Director at Knight Frank Kenya Ben Woodhams said that Kenyan HNWIs clearly realise the long-term stability that property investments offer in an otherwise volatile market together with the good returns that the sector had demonstrated in the past.

The 11th edition of the Wealth Report shows that up to 900 Kenyans became dollar millionaires in 2016, raising the tally of local HNWIs – those worth US$1 million (Sh102 million) or more in assets excluding primary residences – to 9,400 people from 8,500 in 2015. Majority of them – 6,800 – live in Nairobi.

In deciding where to buy properties to live in, Kenyan HNWIs are prioritising education for children, followed by personal security, safe havens for capital, opportunity for capital appreciation and lifestyle.

Kenya’s super-rich typically own up to three homes (primary and second homes) on average, much as their global and Africa counterparts. 74 percent of them own homes locally, 74 percent in Europe and 16 percent North America , while 5 percent have bought houses in the Middle East.

Over the next two years, 46 percent of resident Kenyan HNWIs are likely to buy additional homes within the country, while 43 percent are looking at outside the country.

In addition, 59 percent of HNWIs in Kenya are looking to invest in commercial properties locally, while 44 percent are looking to buy abroad. Globally, 44 percent of HNIWs are looking to invest in commercial property in countries of residence, while 32 percent are looking at outside their countries. Of the Kenyan HNWIs looking to invest in commercial property abroad, 53 percent prefer Europe, 12 percent North America and 6 percent the Middle East.