A view of Mathare slum in Nairobi. FILE PHOTO | NMG
Kenya’s real estate sector growth has worryingly been dwindling
at an alarming rate owing to the recent economic trends both locally and
internationally.
Barely had the dust on interest rates cap and Brexit settled when we moved into an election period with no end in sight.
HassConsult
research findings found that in 2017 the opportunities to buy
properties and then sell them at a handsome return are progressively
becoming difficult to get as prices become static over the last few
years.
Also, owing to the stout economic environment,
the value of building plans approved by the county authority dropped by
16 per cent in the first quarter of 2017 compared to the same period in
2016.
Total value dropped to Sh105.7 billion from Sh126.3 billion last year, indicative of a slackened construction activity in 2017.
The
writing is therefore on the wall, the real estate sector is on a
downward trend unless strategic economic decisions are put in place to
even it out.
In an effort to save this, the rule of the thumb is to stop and re-strategise.
“When you find yourself in a hole, stop digging”. In this case,
digging would mean a reduction of further developments of housing that
do not match demand, which is the greatest problem the sector is
currently experiencing.
A keen analysis of the Kenyan
demand for property in real estate portals like Property24 has time and
again exhibited an unmatched national thirst for low-priced and
affordable housing.
This is vis a vis the sporadic
increase in housing developed for the upper-class market. For instance,
there are 70 per cent more visitors on property24 who filter apartments
less than Sh10 million compared to those that are not price sensitive.
Agents and developers listing the former have month by month continued to make a kill, to the benefit of the investors.
The
causal problem is that developers have unwittingly established high
priced housing (In Kenyan terms) that have remained on the market for
quite some time.
In
light of the above, the government, which is the major stakeholder in a
sector that contributes nine per cent to the country’s GDP, owes its
urgent efforts to set ship back afloat.
For starters,
developers within the “Affordable and low-priced housing” category
should momentously be incentivised. This could be in form of tax
exemptions, tax reductions to loan guarantees.
In
conjunction with county government and various interested stakeholders,
they can offer to develop amenities like boreholes, feeder roads to
offset the total cost to developers. This in turn, would be reciprocated
to the buyer who would get an opportunity to access affordable housing.
Lastly, there should be a shift in mindset from “You
can’t go wrong with real estate”. Its on this unfounded premise that
anyone with ‘money’ inadvertently uses to invest in the sector.
The
consequence herein is an increase in all manner of housing that do
nothing to alleviate the real issue; Insufficient Affordable Housing.
Githinji wa Muhoro, customer relationship manager, Property24 – Kenya, via email
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