are people who require prime properties
in Kenya.
The country has also been witnessing a lot
of diaspora inflows. According to CBK,
Kenya received Kshs. 274 billion in 2018
and it is being projected that the country
will receive more. If you look at countries
like Nigeria, they received USD 25 billion
in 2018 (according to a recent report by
PriceWaterhouseCoopers (PWC), and
Kenya is close on the heels. 60% of the
remittances in Kenya goes to property
with the other percentage going to
support families and these are the people
who are making the real estate prospects
to continue looking up, way into the
future.
Exponential infrastructural
Growth
supported by a study titled ‘The home
ownership survey’ that was conducted
by the Centre for Research on Financial
Markets and Policy, and that was carried 4
years ago which found out that mortgage,
as a home financing alternative was taken
up by only 6% of respondents, compared
to a whopping 54% of Kenyans who
preferred personal savings that are not
attached to any loans as their mode of
home financing.
Indeed, Kenya is in ‘kindergarten’ in terms
of the property market, an economy that
is too young to experience what happens
in Europe. These are matured economies;
these are economies where credit is
available at the lifting of a phone.
You call and you get money into the
account, you don’t need to go and
negotiate for the credit, you can apply
online. Things are different in Kenya,
because getting significant credit here is
not easy.
So, there are two key indicators of a
property bubble: Number one, people are
unable to service their mortgages. Once
they are stuck here, banks come in calling,
to repossess the property. T
hey will go out there and try to resell
this property but it will not be taken up,
because everybody is under economic
pressure. So they end up selling these
properties at a throw away price.
Number two; property prices drastically
drop because there is oversupply and less
demand. A bubble is characterized by
poor property uptake or as low as 0% to
10%. And Kenya is way off this line; there
is more demand and under-supply. There
The fundamental pillars that hold the real
estate growth in Kenya are so well cemented
and continue to be galvanized by a positive
growth that is so palpable. Bottom line, the
possibility of whether there is a potential
property bubble burst in Kenya is just but a
far-fetched theory.
62 MAL29/19 ISSUE
is a shortage of 250, 000 houses annually!
Kenya’s Growing
Population
The demand for real estate is increasing
and it is first being fueled by our growing
population. With its current 51 million
people; this East African nation currently
ranks number 27 in the list of countries
(and dependencies) by population in the
world. 27.1% of this population currently
lives in the urban areas (14,149,974 people
in 2019). All these people, obviously,
require habitats. And we are growing so
fast that every 20 seconds, one birth is
registered, according to the CIA World
Factbook.
There has been exponential middle class
growth in this country. These are the
people who are easily able to construct
their own homes. This middle class is
fueling a lot of growth in the real estate.
We have a huge number of expatriates.
These are people who are working for
international organizations like the
United Nations, the IMF, and the World
Bank and for big multinationals that have
established their regional hubs in Kenya
like Google Kenya, Foton East Africa,
Visa Inc, Volvo, amongst others. These
There is huge amounts of infrastructural
developments, which translate to further
augmentation of real estate in the country.
The Government of Kenya (and partners)
has been rolling out huge projects that
range from LAPSSET Corridor Program,
the Standard Gauge Railway, major by-
passes around its capital city, the Turkana
Wind project, amongst others.
Many more projects aimed at making
Kenya’s infrastructure much smoother
and more interconnected are coming up
at a higher rate than has been seen in post
independent Kenya. Take for example;
the Kenya National Highways Authority
(KeNHA) recently launched beaconing
of a mega 8-lane expressway that will
connect Mai Mahiu-Suswa to Chumvi,
Mombasa Road, near Machakos Junction.
This road corridor will greatly boost
many real estate projects that are already
sprouting along its way. Funded by the
US Government, the expressway will ease
traffic along Mombasa Road and make
movement of persons and goods much
easier.
In the recent past, property appreciation
has been experienced in Kenya, for
instance during the expansion of the
Eastern and Northern Bypasses as well as
Thika Super Highway. Construction work
for this expressway is projected to start
early 2020.
Another development, which also has
a direct positive bearing on real estate
growth in Kenya, in the next couple of
Kenya is in ‘kindergarten’ in terms of the
property market, an economy that is too
young to experience what happens in Eu-
rope. These are matured economies; these
are economies where credit is available at
the lifting of a phone. You call and you get
money into the account, you don’t need to
go and negotiate for the credit, you can ap-
ply online. Things are different in Kenya,
because getting significant credit here is not
easy.
years is the construction of the Western
Bypass which has just commenced and is
expected to take 39 months.
This will be a four lane expressway of
16.5KM and service roads of 17.4KM,
six interchanges and overpasses at Gitaru,
Wangige, Kihara, Ndenderu and Ruaka,
each with a configuration of traffic lanes
and 11 traffic bridges and underpasses;
Separate foot paths, cycle tracks and street
lighting.
With regards to its funding, the project
is financed by Government of Kenya and
the China Exim Bank at a cost of KES. 17
billion. Kenya’s President Uhuru Kenyatta
is expected to launch the project officially
soon.
Indeed, the fundamental pillars that hold
the real estate growth in Kenya are so well
cemented and continue to be galvanized
by a positive growth that is so palpable.
Bottom line, the possibility of whether
there is a potential property bubble burst
in Kenya is just but a far-fetched theory.
George Wachiuri is the Chief
Executive Officer, Optiven Group.
You can commune with him on
this or related matters via email at:
[email protected].