The demand for decent housing in Kenya has never been higher. As more people continue to dream of owning their own homes, the market players are keenly watching to make sure that as they satisfy this demand, they too make good profits.
Economic growth, rapid urbanization, population growth, expansion of the middle class and a well-developed financial industry are the main drivers of Kenya’s property market that is recovering from nearly three decades of under investment. These are basic fundamentals that will no doubt lead to good growth in the sector.
This has made the real estate sector one of the most lucrative to invest in, promising better returns than agriculture or stock market. This trend is being driven by increasing demand for tastefully designed and finished houses that appeal to the lifestyles of the ever more discerning households. But not just any house; apartments are the new gold mines in the sector.
If recent reports are anything to go by, house prices are not about to go down anytime soon. Therefore if you are looking for an opportunity to invest and expect some handsome returns, look no further. Put your money in apartments and reap the lucrative proceeds.
The recent Housing Price Index by Kenya Bankers Association (KBA-HPI) shows that house prices in Kenya increased by 2.75 per cent during the First Quarter of 2015 compared to the previous Quarter’s 2.18 percent increase. According to the report, although this increase is marginal, it represents steady development within the housing sector.
KBA says in the report, price movements were characterized by softening within the bungalows and maisonettes market, with apartments taking over the hearts of most home buyers. Previously, bungalows were the main attractions for home buyers.
Another interesting dimension shown by the report is that even those buying the bungalows, especially in the high-end segment, have their eyes set on demolishing them later to put up apartments, which are seen fetching higher returns. This goes to show that the future of the housing sector belongs to the apartments.
Among those attracted to apartments, the size and number of rooms are of major importance. So is the size of the land the house was stands on, social amenities in the neighbourhood, and security.
In fact, a drive through Nairobi’s leafy suburbs like Kileleshwa, Lavington and Kilimani, which until recently hosted most of the city’s finest bungalows of the 1950s and 60s where civil service top brass resided, shows that high-rise apartments are rapidly taking over. The main factor driving this trend is the need to house a rapidly expanding city population of mostly middle and mid-upper class who desire a serene environment in a crowded city, security and convenience. Then there is the increasing number of multinational organizations and other foreign missions setting up shop in Nairobi every day. These have brought with them many expatriate employees, driving developers to construct houses that match the status of this new clientele.
So if you are considering investing in the housing sector but are not sure what to put up, your worries are as good as ended. Now is the time to take that bold move. Even though high interest rates are a challenge to many first time developers, experts argue that the Diaspora community sourcing financing from outside Kenya stand to benefit given that house prices are not likely to fall due to high demand and inadequate supply. They say those in the Diaspora are in the best position to invest now using affordable foreign loans of 4 to 8 percent.