Kenya’s real estate industry is set to make a recovery in 2018 following a difficult 2017 defined by a reduction in building approvals, East Africa Property Investment (EAPI) Summit Managing Director Kfir Rusin has said
According to a report by private equity firm, Cytonn Real Estate, in 2017, development activity in Kenya was scaled back, evidenced by an 18.4% reduction in the value of building approvals in the country’s capital of Nairobi between January and July of the same year.
However, in 2018, Kenya will set the agenda for the region’s real estate sector, said Rusin in an announcement issued on February 8, 2018.
Since its establishment, EAPI has grown to become the premier and largest real estate investment and development-focused conference in the region.
“Kenya is once again at the top of investors and developers lists of attractive investment destinations. We’re hearing a lot of positive news from our stakeholders, and we expect some eye-catching announcements at EAPI in April,” Rusin explained.
According to Rusin, the resuscitation of the property sector will be driven by President Kenyatta’s multi-trillion-shilling affordable homes programme, a hopeful review of the interest rate cap and a return to political certainty following the conclusion of last year’s election cycle which spooked developers, investors and home buyers. The projected gross domestic product (GDP) growth rate of 5.8% by the World Bank in January certainly aids to the increased investor confidence and appetite in the market.
“We’ve hosted our event for four years in Nairobi, and our stakeholders, which are Africa’s biggest names in development and investment are energised by these fundamentals, and also the state’s proactive approach in driving the sector forward is fuelling appetite,” he added.
Rusin’s optimism is supported by Broll Property Group’s research team’s recent briefing to EAPI organiser’s, API Events, on the region.
“East Africa continues to remain attractive due to increasing urbanisation and consumerism, private equity investment, the maturing state of the market, as well as ongoing infrastructure improvements,” he stated.
Over the past several years, the region’s property markets, Kenya in particular, have become a lightning rod for investment as both local and foreign investors have looked to diversify their investments across multiple market segments from retail, industrial, housing and office space have been attractive investments.
While the market was pummelled by political uncertainty resulting in a six-year low with numerous investors and developers employing a ‘wait and see’ approach which led to an 18.4% reduction in approved new buildings in 2017 compared to 2016, said the Kenyan National Bureau of Statistics.
Leonard Michau, Head of sub-Saharan African Operations at real estate expert, Broll Property Group believes there is an ongoing commitment to the region by various real estate investors and developers.
“The commitment of international retailers to the region, for example, points to the ongoing vitality of the retail sector,” he said.
“In addition, Broll Kenya’s research department indicates in excess of 300,000m² of retail space is under construction in Kenya. With more large retailers now in the market going for more realistic space requirements, mixed-use schemes will be able to offer very attractive convenience options and tenant mixes,” he continued.
As overall market sentiment continues to improve, Rusin is confident that the real estate sector will recover its lustre in Kenya, which will translate to its regional partners.
“We’re already seeing the signs of a rebounding market with the inception of multi-billion Kenyan shilling funds targeting mixed-use developments, as well as global equity firms investing in developers in Kenya. While Ethiopia and Tanzania’s economies continue to thrive, we still see greater value from a real estate perspective in Kenya’s more diversified and established economy,” he said.
The new developments and positive energy displayed by the industry and its public-sector stakeholders bodes well for the EAPI Summit on the 24th and 25th of April in Nairobi.