While buying land ‘back home’ has always been a top priority for many Africans in the diaspora, trends are beginning to shift away from idle land toward cash-flow generating assets such as apartments and townhomes.
- •By 2050, half of all Kenyans are expected to live in urban areas fuelling continued demand for high-capacity, low-footprint developments in centres such as Nairobi, Eldoret, and Kisumu.
- •Particular neighbourhoods and satellite cities have become increasingly popular investment destinations among diaspora Africans around Nairobi including Riuru, Kiambu Road, Roysambu, Garden City, Limuru, Ruaka, and Ongata Rongai.
- •There are an estimated 4 million Kenyans living abroad, with the United Kingdom, United States, Canada, Australia, and Germany making up the top five non-African destinations for the diaspora.
The diaspora has a tremendous impact on the Kenyan economy, injecting over $4.95B USD (KShs 641.5B) into the economy in 2024. This makes up 4.6% of Kenya’s GDP and is now the largest earner of foreign currency for the country. CS John Mbadi recently announced plans to launch a diaspora bond in an effort to raise $3.8B USD (KShs 500B) from Kenyans abroad.
There is no doubt that the diaspora plays a massive role in the Kenyan economy – now it is playing an ever increasing role in Nairobi’s real estate sector as well. Not only have Kenyans abroad found investment opportunities in Nairobi’s real estate, but so has much of the African diaspora from Nigeria, to South Africa, and even many African Americans.
Why is the global African diaspora making investments in Nairobi’s real estate space?
Evolving Yield/ROI Opportunity
According to a recent report, rental prices for apartments in Nairobi have been increasing more rapidly than sales prices, steadily increasing yield potential in a time where the CBK’s interest rate cuts have caused a slow down in T-bill and treasury auctions.
In late 2023 and early 2024, diaspora real estate investors had a particularly exciting time acquiring real estate as the USDKES rate hit record highs. For the diaspora earning in dollars, pounds, and euros, this was a unique buying opportunity. However, since mid-2024, the USDKES rate has remained fairly stable, providing diaspora investors with some of the most important things all investors look for… stability and predictability.
Diaspora investors have also found that cash flow yielding assets like apartments, which provide monthly rental income to the owner, are far easier to sell in case of an emergency than idle land. While land investors often chase long-term asset appreciation, apartments include the added benefit of monthly cash flow, making liquidity and due diligence of the asset far easier than that of land.
In neighborhoods such as Garden City, yields in dollar terms are up to 15% due in part to the area’s proximity to many NGO’s and embassies in addition to the accessibility of Nairobi’s CBD and Westlands. This trend is likely to continue as the United Nations continues moving thousands of UNICEF, UNFPA, and UN Women staff previously located in NYC to Nairobi, enhancing demand for middle and upper-middle class housing solutions significantly.
For a discerning investor, high yield paired with population growth projections and a stabilized currency are providing the right mix to attract the global African diaspora into Nairobi’s blossoming real estate sector, making financial freedom and homeownership for many in the diaspora a more achievable goal.
Change in Preferences
Alongside the improvements to yield, the diaspora is also looking for more efficient opportunities than traditional, independent land investments.
In a conversation with Mi Vida Homes CEO, Samuel Kariuki, told The Kenyan Wall Street that, “[w]e are witnessing a tremendous shift in investor preferences over the recent years. A larger and larger proportion of our sales each year are made up of diaspora investors who tell us they are looking for ‘cash flow’ investments. What most people often don’t see as well is that our buyers aren’t just diaspora Kenyans, many of whom are from other parts of the continent yet they value Kenya’s stability and choose to invest their money here.”
Continuing, “…this is why Mi Vida has been working hard to enhance the value it provides to diaspora Africans. By pairing with a reputable developer such as Mi Vida, investors can have confidence in both their investments and their future.”
Fraud, inconsistent construction quality, and land theft are only a few of the challenges the diaspora faces when trying to acquire land and build independently. This is why investors search out reputable developers and management agencies who act as experts on the ground who can help shield their investments from adverse actions.
Another reason diaspora investors have been shifting toward apartment investments has been the maintenance and management of their properties. When acquiring an apartment, many buildings have management already in place with security and some even offer rental management services, making an apartment investment far more convenient for many investors who don’t reside within the country.
The Near Future
It is expected that the diaspora will continue to grow as a segment of Nairobi’s residential real estate sector. With numerous developments coming up across Nairobi and a diaspora hungry for profitable investment opportunities, the future of residential urban real estate is expected to continue upward.
