Kenya’s Real Estate Sector Grew By 5.2% Despite The Pandemic

Stats compiled by Cytonn Investments indicate that in 2021, the Kenyan Real Estate sector witnessed increased development activities with a general improvement in Real Estate transactions, attributed to the improved business environment.

The reopening of the economy also facilitated numerous expansion and construction activities by investors, in addition to various businesses also resuming full operations.

The Real Estate Sector in Q3’2021 grew by 5.2 percent, 0.3 percentage points higher than the 4.9 percent growth recorded in Q2’2021, according to the Quarterly GDP Report Q3’2021 by the Kenya National Bureau of Statistics (KNBS).

In terms of performance, residential, commercial office, retail, mixed-use developments, and, serviced apartments sectors realized average rental yields of 4.8, 7.1, 7.8, 7.2, and 5.5 percent, respectively.

This resulted in an average rental yield for the Real Estate market at 6.5 percent, 0.4 percentage points higher than the 6.1 percent recorded in 2020. The table below is a summary of the thematic performance of average rental yields in FY’2021 compared to FY’2020.

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Cytonn say that they have a NEUTRAL outlook for the Real Estate sector in 2021 supported by factors such as;

i) Government’s focus on implementing affordable housing projects coupled with improved investor confidence in the country’s housing market

ii) Increased demand for office spaces

iii) Rapid expansion by local and international retailers

iv) Increased visitor arrivals into the country hence boosting the performance of the hospitality sector

v) Government’s aggressiveness in implementing infrastructural projects

vi) Positive demographics

However, factors such as i) financial constraints, ii) oversupply in the commercial office and retail sectors, and iii) low investor appetite in Real Estate Investments Trusts (REITs) are expected to continue impeding the performance of the sector.

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