The emergence of new urban locations, the availability of new investment opportunities and access to new technology are set to shake up prospects for Kenya’s real estate sector, new research has revealed.
A recent report released by leading real estate portal Lamudi has found that 2016 will be a year of significant change for the housing industry.
“Migration away from metropolitan areas, infrastructure improvements and increased international interest from investors are just some of the expected developments for real estate markets within emerging nations,” the report which was released yesterday, stated.
Lamudi’s research shows that Kenya’s housing market is shifting towards a focus on real estate applications (Apps). It indicates that mobile is driving innovation in Kenya since internet users are skipping the traditional desktop usage, and moving straight to mobile.
While 2015 saw more companies focused on emerging market developing their Internet presence, 2016 will see real estate professionals turning their attention to apps, according to the report. In Kenya alone, Mobile penetration stands at 83.9 per cent of the population while there are 26.1 million internet representing 69 per cent of the total population of Kenya.
Due to the high costs of Internet services in Kenya, apps are increasingly popular when it comes to interacting with online companies. As Internet penetration strengthens in second-tier and suburban areas, reduced mobile connectivity costs, more affordable data packages and the evolution of mobile technology are driving app usage.
The next element set to shake up the real estate sector is Second-tier growth.This is because industry professionals have already noted the increased attraction of commuter towns in emerging urban areas. Rapid population growth has led to the physical growth of urban areas in towns including Ruaka, Thika, Kitengela, and OngataRongai.
As Nairobi become more saturated, real estate developers and investors alike are turning their attention to fast-rising urban areas where property is significantly cheaper as a result of higher land availability and lower building costs.
“In 2016, we will see the development of dormitory towns around Nairobi as both local and International investors strive to improve transport services, water and electricity supplies, and develop their infrastructure. This is essential if these urban centers want to compete with bigger markets, both locally and internationally,” said Dan Karua, Managing Director of Lamudi Kenya.
Commercial property growth is the third element set to reinvigorate the housing market. the research shows that the next 12 months will likely see an increase in commercial property developments across the emerging markets, as the sector must accommodate population and tourist growth, as well as increased interest from international corporations. These projects are not only driving economic growth, they provide employment opportunities, and boost the value of surrounding properties.
The availability of the recently-introduced Real Estate Investment Trust (REIT) is also set to change the face of the industry. In October of this year, the Capital Markets Authority approved Kenya’s first income real estate investment trust, also known as a I-REIT, to be issued by investment manager Stanlib Kenya. This marks the first ever license to an asset management firm, to list on the Nairobi Securities Exchange (NSE).
Foreign Direct Investment (FDI) inflow into the African real estate sector is the final element set to shake up the sector. FDI inflow was strong in 2014, according to data from Ernst and Young (EY), one of the world’s leading professional services organizations.
Real estate, hospitality and construction was in fact the fourth most attractive sector by FDI project numbers in Africa in 2014. This is expected to improve over the next 12 months. In Kenya, private and foreign investors are developing new housing projects to tackle the country’s housing deficit. Currently, three housing projects are in the works with a total of 76,000 units set for development
