Real Estate Trends in Kenya 2019 | BuyRentKenya
The real estate industry in Kenya in 2018 experienced highs and lows. The country witnessed high mortgage rates averaging between 12% and 15% and there was demand for affordable housing. Another major thing that was going on was the political unrest that took place in 2017 with the effects spilling over into 2018. There was a lot of tension in the country and investors didn’t want to commit to undertaking huge, money-intensive projects.
Businesses adopted a wait and see attitude in hopes that things would get better. And then the handshake happened and brought about some sort of stability. Different areas of the economy started picking which lead to a change in real estate as well. Most investors came back to Kenya and businesses started experiencing growth.
What should investors, home buyers and sellers expect to see in the real estate trends in Kenya 2019?
To invest in real estate, you need high capital and good interest rates when borrowing money. Banks use stringent guidelines during the vetting process before granting Kenyans loans to invest in property.
In an effort to limit borrowing costs for individuals and businesses, the Central Bank of Kenya lowered the interest rate from 9.5% to 9% with a capping rule which limits lending rates to 4 percentage points. Let’s wait and see if the changes in the interest rate will make it easier for homebuyers to purchase homes they want to live in.
Major cities such as Nairobi, Mombasa and Kisumu have witnessed a rise in the price of property. This is because of the huge competition in workers looking for jobs that pay well. This has put a strain on the real estate market in these cities, in that, new construction is not able to keep up with the demand due to a lack of available land.
Kenyans will opt to move to further cities such as Juja, Kiambu, Thika and Kitengela where land is affordable. This means that land in those areas will become pricier, a trend we will see in 2019.
Another worrying trend that will occur is gentrification – the wealthy people will improve and buy property meant for the middle class.
You’ve probably heard about the projects the President plans on implementing before he leaves office in 2022 – the Big Four Agenda. These are universal health coverage, food security and nutrition, enhancing manufacturing and affordable housing.
The government needs to raise money to fund these projects. Ordinary Kenyans will face difficult times ahead due to the different tax measures that were put in place by the government. Like we mentioned earlier, investing in real estate requires huge investments. The lack of disposable income will make it more difficult to invest. Will the government rethink it’s tax policies in 2019? We have to wait and see.
Most people dream of owning their own homes at some point in their lives. A dream many won’t see come true because they can’t afford to buy a house. For instance, a three bedroom apartment in Kilimani goes for Ksh 11 million up to Ksh 30 million.
The affordable housing project will aim to reduce construction costs, unlock land for development and grow the mortgage finance market. Because of the government’s support, investors are happy that this will give them more assurance in putting their resources behind the low-cost housing projects.
The cost of construction still remains high when building a house because of the outdated British Standard Codes which regulate the type of material used during construction, and the rules and regulations which should be followed during the construction process. Kenya needs to change the current construction codes to Eurocodes by January 2021.
Kenyans prefer houses built from stone and mortar. They are not open to more modern ways of construction which are usually faster. This means that the cost of material will continue to rise due to the high demand in the material.
With the massive affordable housing project which will start being implemented in 2019, the government hopes to introduce new construction methods to construct many houses within a short period.
Let’s wait and see the changes that will happen in the real estate industry in Kenya this year.
This content was originally published here.