Kenya’s real estate industry has remained resilient in the face of a prolonged electioneering period, which began on August 8th and ran until October 26th.
A new report from financial services company, Cytonn Investments, reveals that the month of November was also characterized by heightened political tensions following a repeated election that caused some turmoil between the country’s two major political parties.
Nonetheless, Kenya’s property market has shown signs of resilience demonstrated by heightened activity registered in the residential, hospitality and retail sectors.
The Kenya Bankers Association (KBA), a financial services industry regulator, has now confirmed that house prices increased by 0.4% in the third quarter of 2017 compared to 1.0% increase in the second quarter of the same year.
The results were published in the KBA’s Housing Price Index (KBA-HPI), which tracks both qualitative and quantitative factors that determine pricing in the housing sector.
KBA researchers determined that the slow growth was due in part to a wait-and-see approach adopted by investors during the electioneering period, which pitted Kenya’s ruling Jubilee Party against the National Super Alliance (NASA) coalition.
The report found that in the third quarter of 2017, apartments accounted for 82.7% of the total number of units sold, with maisonettes and bungalows accounting for 10.7% and 6.6%, respectively. KBA researchers said this was due to affordability of apartment units compared to maisonettes and bungalows.
The housing sector has continued to attract investment from companies like Shajanand Holdings, a Kenya-based construction firm that recently announced its operations in the Western part of the country. Other firms like Britam, a diversified financial services group and is listed on the Nairobi Securities Exchange, have also been keen to cash in on the lucrative industry.
Meanwhile, in his inauguration speech last week, Kenya’s President, Uhuru Kenyatta, announced an affordable housing programme for 500,000 units, due to be implemented by the year 2020.
However, the African Development Bank (AfDB) says Kenya’s government will have to address key factors that have been hindering the successful provision of affordable housing such as prohibitive land costs, unfavorable policies and costly construction materials, among others.
“We maintain a positive outlook for the residential sector given the large housing deficit that stands at 200,000 units per annum,” said Cytonn Investments in a recent statement.
It has emerged that Kenya’s housing deficit is as a result of the country’s expanding middle class and its rapid urbanization rate of 4.4% per annum against a global average of 2.1%.