Period: January 4 to 10, 2016

‘Mall Mania’ to raise Nairobi’s stature in 2016

7/1/2016: The Standard, Home & Away magazine, page 2

• According to Knight Frank Cities 2016 survey, Nairobi has been placed among the four cities globally; Kuala Lumpur in Malaysia, Moscow in Russia and Bangkok in Thailand that will increase in importance in 2016.
• From the survey, about 1.8 million sq. feet of modern shopping mall space was opened for commercial use in the city in 2015. This revolution in the city’s retail experience, matched the huge economic and demographic changes that have unfolded in Kenya.

Kisumu’s middle class to receive stylish but affordable housing

7/1/2016: Daily Nation, DN2 magazine, page 31

• Property developers in Kisumu have promised a robust year of development with focus on provision of alternative and affordable housing, as well as office space.
• AMS properties are planning on putting up Fortis towers, a 10 – floor office apartment with 72,000 sq. feet rentable, high end work space and 15,000 sq. feet for retail space.
• Other mega projects expected to shape in the region property market are: Coromandele group’s 1.3 billion housing project, Home Africa’s 2 billion Rubby estate housing unit and 3 bedroom town houses and 3 bedroom unit apartment on a 60 – acres in Milimani West by Kisumu Real Estate among others.

High lending rates may hurt the local Real Estate Sector

6/1/2016: Business Daily, page 20

• Real estate players expect the industry to take a hit if the cost of borrowing increases, which is highly probable especially if the government decides to borrow locally.
• Should the interest rates on commercial loans go up, some of the immediate effects would be projects getting delayed as funds meant for construction would be diverted to ventures whose returns are fast and more attractive.
• It is also argued that should the rates remain high, risk of dropping of projects would be inevitable. Expensive money greatly cuts on the profit margins, which is unlikely to be recouped by passing such costs to the tenants through high rental rates.

High end developments safe bet for investors

8/1/2016: Business Daily, page 8&9

• Real estate players expect the industry to take a hit if the cost of borrowing increases, which is highly probable especially if the government decides to borrow locally.
• Should the interest rates on commercial loans go up, some of the immediate effects would be projects getting delayed as funds meant for construction would be diverted to ventures whose returns are fast and more attractive.
• It is also argued that should the rates remain high, risk of dropping of projects would be inevitable. Expensive money greatly cuts on the profit margins, which is unlikely to be recouped by passing such costs to the tenants through high rental rates.

Key drivers for the real estate in 2016

10/1/2016: Cytonn Annual Market Outlook 2016

• Growing Middle Class: The rapidly expanding middle class in the country is searching for affordable, secure, and aspirational living, which meets their housing needs. With the increased congestion within the crowded city centers, this middle class will have to be housed in the outskirts of Nairobi which have benefited from infrastructural upgrades
• Huge Housing Deficit: According to the National Housing Corporation (NHC), there is an effective housing deficit of over 200,000 units per annum to cater for the low to middle income market with Nairobi and its metro accounting for over 50%
• Continued investment on Infrastructure: Increased development along key infrastructural nodes, which have been brought about by the development bypasses e.g. Ruaka and Karen are now attractive real estate development zones. The SGR and LAPSET corridors will also experience the same effect
• Widespread Economic Growth: Increased need for real estate development in devolved units to offer accommodation to the SMEs and the County staff. This is further increased through the rapid growth of SMEs which employ up to 85% of the work force and require space for office use
• Demographic Trends: such as the youth bulge (21 to 35 years), as well as rapid urbanization, have created an opportunity for development which caters to their needs e.g. middle-income housing, and their lifestyle e.g. suburban retail malls
• Devolution and Political Goodwill: Devolution is assisting real estate development as it is placing onus on the County governments to improve the real estate landscape, which has led to reduced bureaucracy and investment in infrastructure. Nevertheless, the upcoming general election in 2017 will see a slowdown in selected markets especially areas previously affected by political tensions in the past. For instance parts of Rift Valley, Nyanza region and the Coastal regions.