Property developers place Kenya highly in their radar, with keen interest on retail and residential space, according to a survey of top real estate professionals. Pent-up demand for affordable housing and high quality commercial spaces, a rising middle class and economic stability are among key factors expected to shape opportunities in the country this year.
The survey was carried out by London-based Global Real Estate Institute, the organisers of the Africa GRI 2015 conference that will be held in Johannesburg next month. “Despite recent political tensions and security issues, Kenya’s economy shows strong fundamental growth, which will enable it to weather the headwinds it faces,” said Britt Gwinner, head of housing finance for sub-Saharan Africa at the International Finance Corporation.
Gwinner said the affordable housing market provides huge opportunities, as most of the existing units in the Nairobi market are presently priced at $150,000 (Sh13.71 million) and above, which is “unaffordable to the vast majority of the population”. “Today, roughly 100,000 households in Nairobi’s informal settlements pay rent equal to the mortgage on a $35,000 (Sh3.20 million) house.Right now, these households are not well served,” he said.
“Developers and banks are missing an important opportunity to move to a large scale, low-cost business model.” James Hodell, chief executive of Mentor Management Ltd, a project management firm in Nairobi, said Kenya is a stable economy that is not dependent on natural resources and has strengthening capital markets and a robust banking system, making it a good destination for property investors.
Saul Gumede, chief executive of SA-based Dijalo Property Group, said focus on countries with best opportunities for investors “remains strongly on Ghana, Nigeria and Kenya”, but interest is growing for Mozambique and Zamabia, whose extractive industries have revved to life. “Investors are also starting to consider opportunities in Rwanda, although it remains a small market,” Gumede said. Tanzania’s attractiveness is also rising for its dollar-based rents and property transactions, and offers higher yields due to “an overwhelming undersupply of residential and retail stock”, according to Ankush Shah, managing director of Dar-based Sumaria Group.
Garden City in Nairobi, being developed private equity fund Actis, and Tatu City in Kiambu – which is embroiled in a fresh ownership dispute – have been mentioned as some of “the most interesting” real estate developments in sub-Saharan Africa. Other mentioned alongside the two include Eko Atalantic in Lagos, Nigeria, and Waterfall City, Mall of Africa and Modderfontein City developments in South Africa.