The Future of Property Market in Kenya
Over the last few years the property market in East Africa, and by extension Kenya, has witnessed a boom. However, it is uncertain in the minds of policy makers, investors, financiers and developers whether this exponential growth in the sector is indeed a boob or a bubble.
Key pointers that indicate this is a boom and is in fact here to stay are highlighted in this paper.
First, it is a fact that the property market growth in Kenya is demand generated. This is so as the country’s middle class, a group that is able to comfortably service their mortgages, is expanding and with this expansion comes an increase in the demand for property ownership. Due to their purchasing power, this class of property enthusiasts’ desires and demands fine infrastructure- from well designed excellently finished properties to safe and secure neighbourhoods and they are willing and able to pay premium prices for their taste.
Second, It is worth noting that Kenya’s GDP growth in the last five year stands at 4.5% and this growth trajectory is projected to be sustained or even surpassed due to the massive investment in infrastructure and the opening up of the East African Community Market, the multiplier effect of which is that investors both local and foreign will increasingly find this market attractive.
Leading East Africa in this property boob is Nairobi, the Capital city of Kenya. In a publication of the Economist titled ‘Hot Spots 2025: Benchmarking the Future Competitiveness of Cities’ Nairobi is ranked fifth in Africa for its appeal as a capital, business and talent magnet. This report confirms Nairobi’s position as the largest industrial, financial and investment hub in the region. This stature for Nairobi...
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...sumers through rationalisation of the cost of delivery.
Another driver of the property boom is the low level of property consumption in the country, with home ownership in Kenya currently at 16% this represents a huge an unexploited market. On the opposite end is the office space sector which largely remains a buyer market due to oversupply of space especially in Nairobi. However out of central business district offices are relatively more attractive due to the ample parking space and avoidance of traffic congestion.
The property sector according to Kenya National Bureau of Statistics Economic Survey highlights 2013 registered a growth of 21.9% in the fiscal year 2012/2013. The construction sector further registered the highest growth in employment rate due to among other factors Government’s on-going expansive road construction and private construction projects.
The housing market is very unique as unlike other goods and services, houses have permanence, it is a fixed location good causing the rules of supply and demand to be taken to new extremes. In the case of the Toronto housing market we can view in almost real time the role supply and demand play on he ever increasing house prices, additionally the fundamental economic issue of scarcity is made extremely apparent by the limited size of the city of Toronto.
"Famous properties: Boston's signature skyscraper." Journal of Property Management July-Aug. 2004: 8. Academic OneFile. Web. 29 Apr. 2014.
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According to John Vogel’s article “Thinking Outside the Housing Bubble” published in the US News, the housing area aids in job development and increases the opportunity for employment that will assist the United States in solving the recessi...
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... as Kenya Plans More EPZs.” East African 22 April 2002. 10 October 2002 <http://www.nationaudio.com/News/EastAFrican/29042002/Business/
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