A leading property developer in Kenya on Tuesday, January 26, announced it had refunded Ksh40 million to a section of its homebuyers.
According to the Chairman of the Ksh5.2 billion, 44-floor apartment building at Upper Hill, the individuals who were granted the refund explained the harsh economic impact they had been going through during the Covid-19 pandemic.
“We refunded the deposits in full ranging from Ksh5 million to Ksh12 million,” he said.
The real estate sector has been one of the worst-hit by the pandemic.
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Workers pictured at a construction site.
According to data published by the Kenya National Bureau of Statistics (KNBS) covering the second quarter of 2020, the real estate sector growth slowed to 3.9% compared to 7.2% expansion in a similar period of 2019.
Covid-19 has caused unprecedented disruption to the Kenyan economy over the past few months.
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Workers pictured at a construction site.
The immediate impact on the sector has been a reduction of the labour force and disruption of supply chains, which is expected to translate to longer development periods.
Kenya has also witnessed a negative impact on the supply chains as most developers source construction materials from nations such as China.
This translated to longer development periods owing to a shortage of resources and ultimately reduced building completions.
The market is expected to experience a slow recovery post-Covid-19 as uptake will be subdued due to depressed income levels and changed priorities by prospective investors.
The government is expected to continue putting in place sound fiscal policies to cushion businesses and people’s disposable incomes.
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Workers pictured at a construction site.
The price of properties in Kenya dropped to a great extent in 2020, with many property sellers providing huge discounts.
Many real estate companies are providing personalized plans so that none of their clients feels any burden on their pocket when making a purchase.
In terms of rent concession, reductions, and holidays, there has been no single basic formula applied by landlords. Rather, each and every landlord is dealing with their individual tenants on a case-to-case basis.
Consumer behaviours are clearly being forced to change, which will result in a very different demand profile for property going forward.