Kenya’s County land prices jumped by an average 7.37% in 2017, compared to a 12.07% rise in 2016, suffering a general slowdown due to election uncertainty and the country’s new interest rate cap.
This was revealed during an annual event known as the 2018 East Africa Property Investment (EAPI) Summit held this week.
Kenya had a prolonged election in 2017 after the results of an August poll were disputed by the country’s opposition party. The East African nation had also put a limit on the interest banks could charge borrowers, forcing lenders to re-evaluate their policies.
The Summit, which kicked off on April 24th, 2018 unveiled an industry analysis known as the new Hass County Land Prices Report. This came as the event launched two days of intensive sessions on the regional real estate industry’s most pressing challenges, and greatest opportunities.
The County survey delivered evidence of ongoing market strength, as well as underlying patterns pushing land prices in sometimes opposite directions.
“Countrywide, infrastructure development continued to drive strong price growth,” said Head of Development Consulting at real estate firm, HassConsult, Sakina Hassanali.
“For many investors, the magical key still remains ‘follow the roads’,” she explained.
It emerged that local economic growth also continued to drive land prices upwards.
“We see clearly from price growth of 12 to 14% in Nakuru and Kisumu last year that areas enjoying an influx of business and finance, and underpinned by robust agricultural economies, were only slowed marginally by the elections and rate cap,” said Kfir Rusin, EAPI Managing Director, who was referring to two of Kenya’s Counties.
The county land report, which covers 10 counties and 75 towns across Kenya, also analysed the towns and suburbs that experienced the greatest growth in land prices, and those that suffered falling land prices, finding evidence of pricing cycles playing out within multiple counties.
Commenting on these urban cycles now playing out in Kenya, Mr Rusin noted that East Africa was now running a full cycle from initial generation of new urban areas, to the regeneration of older centres.
“This latest survey and it’s wealth of data show a clear picture of early waves of development driven by advantages of accessibility, location, local activity, and resources such as strong water supply. But as development intensifies, many conurbations experience an evolving character that triggers waves of buyer flight and then a new type of influx,” he said.
“Investment into such cycles requires far more insight into the nature of specific areas than was previously the case, when all land prices were rising exponentially,” he continued.
The county land survey also identified several spots where land prices appear to have overheated, only to sink thereafter, among them Kenya’s Thika area, where land prices rose by more than 30 per cent in 2016, only to fall by more than 4 per cent last year, in the biggest price fall of the year.
“Investors need to be wary of surges that fly over and above any development norm, as spots that will very often suffer subsequent price corrections, or, at the very least, subdued and even depressed pricing for some years to follow,” said Ms Hassanali.
The East Africa Property Investment Summit will run up until 25th April, 2018 in Nairobi, Kenya. The two-day conference hopes to provide a deep understanding of issues affecting the East African real estate market, and bring about discussions geared at coming up with solutions for the sometimes volatile sector.