Kenya’s Real Estate Market Set to Bounce Back in 2018
Nairobi, Kenya, February 8 – In 2018, Kenya will set the agenda for the region’s real estate sector says the East Africa Property Investment (EAPI) Summit’s managing director Kfir Rusin. Since its establishment, EAPI has grown to become the premier and largest real estate investment and development focussed 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.”
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 per cent 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 adds. 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.”
Over the past several years, the East’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 per cent reduction in approved new buildings in 2017 compared to 2016, said the Kenyan National Bureau of Statistics. From a retail perspective, the demise of Nakumatt shook the market; however, the big box retail space remains healthy with numerous international retailers increasing their investment with the likes of Carrefour, Shoprite and Massmart increasing their investment and the vacated retail boxes left by Nakumatt becoming hotly contested assets, said Broll’s Research team.
Leonard Michau, Head of sub-Saharan African Operations at 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 says. “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.”
Michau also notes that a number of high profile office projects are due to be completed in 2018. The vision and confidence shown by various developers point to a realistic assessment of Kenya’s growing regional hub status, he says. “This will require the development of further ‘International Grade A’ office projects able to cater efficiently to the needs of the multinational corporations likely to establish or expand their operations here.”
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.” 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.
Mindful of the growing demands and appetite due to the improved outlook of the economy and the resilience shown in the face of political strife. This year’s summit theme, ‘Paving Forward, Where to Next for East Africa’s Real Estate Market?’ will look at key trends and factors likely to shape the real estate markets in 2018, and beyond. The two-day agenda will feature in-depth discussions and forums on topics such as the impact of the Kenyan elections, debt and equity financing; a reveal of the significant infrastructure projects such as the Kampala City Transformation Project and Dar Rapid Transit System. Additional focal areas will also reveal opportunities in Kenya’s counties, pension funds, the retail shake-up, housing and Nairobi’s transformation into a global hub.
“This year’s theme and agenda have been positively received by both private and public-sector stakeholders, and we’re pleased that a number of senior officials representing numerous public offices will be in attendance in addition to our usual high calibre of private sector stakeholders. While 2017, this year is set to be a positive year in which the real estate sector rebounds strongly driven by investment, demand and political certainty,” says Rusin.