- The price of prime residential properties recorded a 3.77 per cent annual increase in Q4, 2022.
- It follows a 2.87 per cent annual increase recorded in Q3, 2022.
Image: PATRICK VIDIJA
The cost of acquiring a prime residential property in the six months to December 2022 witnessed a consistent rise, depicting a growing demand from high net worth individuals.
Latest market update report by estate agents Knight Frank, notes that the hike in prices has majorly been driven by lack of high-quality stock of homes for the rich.
“This has led to this market almost becoming a sellers’ market, a case where there are many interested buyers, but the real estate inventory is low. Therefore, since there are fewer homes available, sellers are at an advantage," the report says.
Knight Frank said this triggers the faster selling of homes and hence the buyers must compete with each other in order to score a property.
According to the report, the price of prime residential properties recorded a 3.77 per cent annual increase in Q4, 2022, following a 2.87 per cent annual increase in Q3, 2022.
Overall, the prime residential market has been on the upward trajectory since Q1, 2021.
The growth of multinationals in Kenya and a calm electoral period also contributed to the price hikes in the sector.
According to the firm, this could be a driving force for more investment into the market, as investors are always searching for the most profitable asset to invest in within their risk acceptance.
According to the report, a field that could also attract much investment in the property sector is the real estate assets.
Specifically, the Purpose-Built Student Accommodation (PBSA) which has proven to be marginally above traditional real estate classes, a trend that is widely observed worldwide.
In Kenya, PBSA generally registers a return of about eight per cent while prime residential attract returns of about four per cent.
“As investment in this sector increases, the returns may minimally fall. It is expected that in the foreseeable future PBSA will remain more profitable as universities, both public and private struggle to accommodate the ever-increasing number of students,” the report reads in part.
This may provide the developers of PBSA with increased demand in a market that is dominated by Acorn Holdings Limited (AHL), the promoters behind Qwetu brand of hostels.
The report further notes that housing generally has been a persistent challenge in African urban centers, and yet good housing remains an inherent right and a necessity to every human being.
This has since led to attempts by the government to spearhead the concept of affordable housing.
In government’s financial year 2022/2023, about Sh27.7 billion has been earmarked to promote affordable housing projects.