Everywhere you go around Nairobi and all the major towns in the country, there are numerous real estate projects going on. Shopping malls, residential apartments, gated housing projects, high rise office buildings and single housing projects are coming up at an alarming rate. The construction of roads, especially by-passes is opening up the interior areas for serious real estate development.
The big question is; will the Kenyan middle-class population demand for housing exceed the growing supply? or will the supply become surplus and prices will start dropping like hot-cakes to accommodate the lower middle class and upper lower class?
Going with the below report, I am foreseeing a drastic drop in prices for rental houses. people who construct high-end housing for sale will find it hard to get buyers when the market floods. they will have to rent out at a through away price.
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http://www.businessdailyafrica.com/Apartment-rents-in-Nairobi-decline-for-first-time-in-15-years-/-/539552/3048626/-/rubt2az/-/index.html
High land prices will make construction of rental units unattractive, guys will have to explore other avenues to make money.
There was a time when, if you wanted to move, you had to contract an agent to find you a house. Sikuizi you just step out and are immediately accosted by all these “To Let” signs, not to mention all the buildings that are still coming up. Maybe the experts can tell us what that means.
Not bursting. More like stabilising.
We’ll see a lot of units ranging from Kes 6 to Kes. 15m. For 2 bed to 4 bed units.
Yesterday there was an article on the nation about the same by Knight frank or hass. It said of how rent has dipped by like 2% or thereabouts for the first time in a long time. Though it might seem negligible, I belive there will be some further dip before going forward. A burst is highly unlikely. 2cts.
Hii bubble haifiki?
[SIZE=5]This bubble has been “busting” for the last 10 years, as for reports from knight frank or any other company that has interests in real estate being stable are to be taken with a pinch of salt, they will always say everything is ok while you walk around you see empty office space for rent or sale in upper hill ngong road, kilimani, westlands , parklands etc this has been like this for quite a while now[/SIZE]!
Nobody can predict an economy or where it’s headed, it’s too complex, analysts just follow trends
If you look at the billboards, all these office blocks and apartments are always “50% booked”, yet they remain unoccupied for months/years. Example: If you’ve ever used the Capital Center rear gate, as you pass Souty B, there are two apartment blocks. One is for 2 bedroom rental houses @45k, it’s fully occupied. The other is 3 bedroom apartments for sale @13 million. None is occupied, more than 1 year after completion.
Meanwhile, acha sisi watu wa upper lower middro class tungojee hii bubble mnasema
Itaburstia wapi na vile watu wanangangana kubreed? All an average african thinks about is breeding.
there is no bubble. the way kenyans like land, it will not happen.
plus demand FAAAAAAAAR outstrips supply.
demand is stemming from thieves who stole money from sgr, eurobond etc that is coming back into the system. Once these guys tighten loopeholes for corruption then we might see a go slow in the construction. Otherwise, this is not likely to stop any time soon. Labda time ya election.
We would probably talk of a bubble bursting if we had a significant number of mortgages. As it is, the number is negligible. I don’t see a bubble happening soon.
What created a bubble in the USA… the banks used to give mortgage to clients who couldn’t define their income source, also the rates were so affordable people used to re-mortgage their houses or take two or even three plans… the banks were making so much money from the interests paid they didn’t care about the bubble bcoz they know there would be a government bail out… (it was a well planned out strategy by the banks(top bank officials) to make crazy cash)
The situation in Kenya is different. It does not concern mortgages. It is simply an over-investment in real estate business. The social class disparity enables the rich to invest billions in real estate with the hope that the rising middle class will readily purchase or rent out the premises. However, when the process slows down, the rich, especially those who had taken up loans to construct the projects, will have to target the majority low class with a drastic drop in prices.
Kenyas real estate market is affected by high land prices and alot of easy money from corrupt deals. The easy money pushes land prices higher since the corrupt do not feel the pinch of paying high land price. The govt is also lethargic in creating infrastructure eg roads and sewers so very few plots have this service, pushing the demand even higher. The few employed kenyans who r middle class then rent these houses owned by the rich. With such a distorted economy where productivity is low, this leads to fewer employed people hence the rich who still have access to huge monies, continue building but with fewer potential tenants.
http://www.nation.co.ke/business/House-rental-costs/-/996/3048592/-/r3piuk/-/index.html
Sakina Hassanali of Hassconsult was interviewed, she said that cost of rent went down by 0.1% in 2015, I highly doubt she highlighted the real picture in the industry, she couldn’t whistleblow and chase away potential investors.