Nairobi’s prime residential market is expected to recover within the first half of 2018 as the wave of political uncertainty dissolves, a study has said.
A report by Knight Frank said that prime residential prices increased by 0.9% in the nine months to September 2017 compared to a percentage point decline in a similar period in 2016. A 2.8% decline in prime residential rents was recorded in the first six months of 2017, which was lower than the 3.2% decrease in a comparable period in 2016.
“An oversupply of prime properties for rent is behind the weaker prime rental growth, which has given tenants more leverage to negotiate with landlords. In a market dominated by expatriate tenants, corporate budget cuts by multi-national firms have further influenced the performance of the high-end residential segment,” the report states.
The inaugural Inside View Kenya report shows that despite the sluggish performance of prime residential rents in the year, it is projected that the market segment may be reaching its cyclical trough and is about to turn around. Transactional activity in sales is expected to pick up in 2018, the Inside View Kenya 2018 report notes, with Nairobi and Mombasa seen attracting interest from local and international buyers.
According to the Managing Director at Knight Frank Kenya, Ben Woodhams, Kenya has a long-standing reputation as a destination for holiday home ownership,
“With the political turbulence behind us, we are forecasting an increase in such investments in line with a strong economic recovery in 2018.” He added,
Among factors making Kenya an ideal investment destination include a projected 5.8% GDP growth rate in 2018, rapid urbanisation at 4.3% per annum versus a global average of 2.0%, an expanding middle class, and positive demographics such as high population growth at 2.6% annually against Sub-Saharan Africa’s average of 2.3%.
The report notes that currency movements over the two years to November 2017 made it cheaper for foreign buyers, as purchasers acquiring prime residential properties priced at Sh100 million would have saved up to 8.2% through euro-denominated transactions, while dollar-denominated purchases were 1.4% cheaper.
Knight Frank LLP is the leading independent global property consultancy. Headquartered in London, Knight Frank has more than 14,000 people operating from 413 offices across 60 countries. The Group advises clients ranging from individual owners and buyers to major developers, investors and corporate tenants.