Milliam Murigi @millymur1
Nairobi’s prime residential market is anticipated to recover within the first half of 2018 as the wave of political uncertainty dissipate ending a period of price correction experienced in 2016 and 2017.
A new report by Knight Frank Kenya dubbed Inside View Kenya 2018, says prime residential prices increased by 0.9 per cent in the nine months to September 2017 compared to a percentage point decline in a similar period in 2016.
“Transactional activity in sales is expected to pick up in 2018, with Nairobi and Mombasa seen attracting interest from local and international buyers,” said Ben Woodhams, Managing Director at Knight Frank Kenya.
He said despite the increase, the sector experienced a 2.8 per cent decline in prime residential rents in the first six months of 2017 due to oversupply of prime properties for rent, which has given tenants leverage to negotiate with landlords.
“Despite the sluggish performance of prime residential rents in the year, it is projected that the market segment may be reaching a cyclical trough (low) and is about to turn around,” he added.
The report says exhchange rates over the two years to November 2017 made it cheaper for foreign buyers, as purchasers acquiring prime residential properties priced at Sh100 million would have saved up to 8.2 per cent through Euro-denominated transactions.
US dollar-denominated purchases were 1.4 per cent lower. “Factors making Kenya an ideal investment destination include a projected 5.8 per cent GDP growth rate in 2018, rapid urbanisation, an expanding middle class and positive demographics such as high population growth at 2.6 per cent annually against sub-Saharan Africa’s average of 2.3 per cent,” he said.
He said Kenya has a long-standing reputation as a destination for holiday home ownership. “We are forecasting an increase in such investments in line with a strong economic recovery in 2018,” Woodhams said.