Kenya’s housing and real estate sector is on the right track after facing a tough and uncertain economic environment in 2017.
In 2017, the activities in the sector slowed down following a long electioneering period characterized by uncertainties that dominated the last four months of the year.
The Kenyan shilling was also on the receiving end against the US Dollar, the Sterling Pound, and the Euro, scaring away various investors.
Most investors had also adopted the wait-and-see attitude in 2017 and had postponed most of their investment activities for fear of the unknown following the unending political season.
In 2018, however, most stakeholders have said that the sector is set to rebound in 2018 because of the following:
- The political uncertainty is now over and investors are now willing to invest in the sector.
- The shilling has started showing resilience against the US Dollar, the Sterling Pound and the Euro and the continuous weakening dollar on the global market is working to the advantage of the shilling.
- The government has shown willingness to support the real estate sector through the construction of more than one million affordable houses in the next five years.
In a report released by Barclays Bank of Kenya, Kenya’s economy was resilient in 2017 and 2018 holds a lot of hope for the rebounding of the economy. According to the BBK Macro Economic Report, the global economy was estimated at 3.9 percent in 2017 but there is a resilient recovery, positive momentum and tightening labor markets and 2018 is going to be a year of rebound.
Back to the housing and real estate sector, according to Cytonn Investments, the real estate sector is set to recover in 2018 due to high housing demand, improved infrastructure and the expanding middle class in Kenya.
“Despite the setback in 2017, we expect the residential market to pick up in 2018 especially in the mid and low mid-end segments as investor appetite for the same continues in a bid to curtail the housing deficit while also gaining impetus from the expected government’s affordable housing initiative and probable increase in credit to the private sector, if the interest rates cap law is revised, which is set to encourage more activity from the developers’ side,” said Johnson Denge, Cytonn’s Real Estate Manager.
The opportunity in the sector lies in Grade A office space, with 10.0 percent yields, as it accounts for only 10.0 percent of office space in Nairobi and in serviced offices which have high yields of 13.4 percent compared to conventional office space at 9.2 percent,” added Mr. Denge