The Future of Property Market in Kenya
Over the last few years the property market in East Africa, and by extension Kenya, has witnessed a boom. However, it is uncertain in the minds of policy makers, investors, financiers and developers whether this exponential growth in the sector is indeed a boob or a bubble.
Key pointers that indicate this is a boom and is in fact here to stay are highlighted in this paper.
First, it is a fact that the property market growth in Kenya is demand generated. This is so as the country’s middle class, a group that is able to comfortably service their mortgages, is expanding and with this expansion comes an increase in the demand for property ownership. Due ...view middle of the document...
Finally, with the rise of devolved governance the general demand for housing units in all the 47 counties of Kenya is at a record high. This is because County governments are on a hiring spree in a bid to set up operations in their respective units of administration. All this new hires need and demand housing, and are further empowered to take mortgages so as to develop or even buy property. This frontier of property boom could be described as extraordinary as it might not happen again, since the county government will only be set up once.
It is worth mentioning that neither the private developers nor the government has been able to satisfy the current property demand to date, as the housing deficit is estimated to stand at 100,000 units per year, and growing. With the market for the middle income housing described as far from optimal, the shortage on the housing for the low-income group is even deplorable. The demand for low income residential housing way exceeds the supply. It is estimated that over 2million Kenyans, approximately 400,000 households, living in Nairobi are in need of decent and affordable housing. This compared to the 6,000 low income units produced annually lives a gap that can only be filled through informal settlements that are ever mushrooming.
These gaps have led to exorbitant charges from financiers, developers and investors and if all...