The Kenya Shilling has witnessed considerable devaluation in the last year, with the exchange rate to the dollar falling from an average of KShs 117.95 in 2022 to KShs 153.15 today.
This rapid devaluation has raised concerns among both local and international investors, but for Kenyans living abroad, particularly in countries such as the USA, UK, Canada, Australia the devaluing shilling presents a unique buying opportunity in Nairobi’s residential real estate sector.
1. Favorable exchange rates making property more affordable
The primary advantage diaspora investors have in the current economic climate is their access to favorable exchange rates. When the shilling weakens against major foreign currencies, their purchasing power in Kenya increases. Meaning that one’s income abroad can go further once converted into local currency, making all real estate sectors more affordable.
Essentially, the lower exchange rate allows the diaspora to access the Kenyan real estate market for a relatively smaller financial commitment than before. This means that investors or first-time home buyers can buy property without having to allocate a significant portion of their income.
2. Potential for capital appreciation
Real estate has historically been a stable asset class that typically sees appreciation over the long-term despite short-term economic fluctuations. For diaspora Kenyans looking to buy real estate during a period of shilling devaluation and holding it for the long-term, this could mean that their assets have the potential for significant capital appreciation in the future. The potential for substantial appreciation is further fueled by the rapid and consistent urbanization and growth in and outside the Nairobi metropolis.
3. Diversification of investment portfolio
In any investment strategy, portfolio diversification is a crucial step in better ensuring growth and stability. Tangible assets such as real estate add a layer of security and stability to one’s investment strategy. While a diaspora investor may not live in their property, coupling the potential for rental (or Airbnb) income with the opportunity for long-term capital appreciation can help in building a strong, well-rounded portfolio for those living abroad.
4. Contributing to overall economic growth
While an investment in Nairobi’s residential real estate sector not only benefits individual diaspora Kenyans, the investment plays a key role in Kenya’s economic growth and development. Real estate investments stimulate a multitude of industries and create jobs – most obviously impacting the construction industry but also making waves in the restaurant, retail, and furniture industries. This, in turn, enhances the overall economic well-being of Kenya.
Perfect Storm for Diaspora Investors
While a devaluing shilling may raise concerns among some investors, diaspora Kenyans should view the situation as giving them a strategic advantage to enter Nairobi’s residential real estate market.
This ‘perfect storm’ of favorable exchange rates and increased affordability, with the potential for capital appreciation, portfolio diversification, and positive economic contributions makes today a ‘perfect opportunity’ for Kenyans living abroad to consider real estate investments at home.
There are several ways diaspora Kenyans can begin capitalizing upon this buying opportunity. It is always recommended that one does thorough research and planning before making any investment decisions. One of the considerations one should take into account, specifically when it comes to apartments, is to know and trust your developer.
Using a reputable developer with a well-established history of on-time delivery, safe building practices, and fully-capitalized construction budgets, is prudent for ensuring one’s investment is safe.
Some developers have recognized the current situation as an opportune time for Kenyans in the diaspora and some have been catering their offerings for these potential investors.
One such developer has been Mi Vida Homes, the company behind the landmark Mi Vida Garden City development adjacent to Garden City Mall and Thika Super Highway.