_Inside View Kenya 2018: Market overview

The tourist season is also one of the longest anywhere at 40 weeks a year, with no typhoon season or extreme weather conditions to trouble it—only the rainy season around Easter.

At other times during the year, the trade winds that once powered commerce between Africa and India fuel a booming kitesurfing industry on the powder-white beaches.

Among them is Diani, which has just been voted one of the best beaches in Africa by TripAdvisor.

Its popularity is on the rise again too, with occupancy rates in its beachfront resorts having doubled since 2015. A new bypass road under construction will also provide a direct link to the south coast from the western side of Mombasa city.

Kenya’s second home market is largely internal, with demand mainly from wealthy Nairobi families seeking a beachfront holiday home. Whilst house and apartment sales are typical, it is increasingly common for buyers to invest in a beachfront plot and build a holiday home.

Overseas interest in Kenyan holiday homes comes mainly from British buyers, but we also see a sizeable number of Italians and other nationalities drawn to the coast around Malindi.

Watamu and Lamu, as well as the countryside such as in Nanyuki close to Mount Kenya, and within private game conservancies. Nairobi is a different residential market altogether.

Overseas interest in Kenyan holiday homes comes mainly from British buyers, but we also see a sizeable number of Italians and other nationalities drawn to the coast around Malindi.

As a fastgrowing melting pot and major regional hub with a strong economy, Nairobi attracts international corporations looking to set up their headquarters in Africa.

The biggest employers are those in the FMCG (fast moving consumer goods) sector who are tapping into new wealth and spotting the country’s massive growth potential.

The city’s hotel industry is growing fast, as is the technology industry, which attracts many young Americans straight out of college who want to embrace exposure to this rapidly expanding market.

While many expatriates will live in high-end residential areas such as Karen, Runda or Muthaiga, these young tech workers tend to rent apartments closer to work and enjoy Nairobi’s burgeoning youthculture in the form of trendy bars and clubs.

The Kenyan capital is also on the radar of many high net worth investors, as seen in the Knight Frank Wealth Report 2017. Among the global HNW population, 4% look to own homes in Kenya—led by the UK’s HNW population, 63% of whom express interest in Kenyan property, followed by 16% of South African HNWIs and 11% of Spanish, Mauritian and US HNWIs.

About 5% of the super-rich in Uganda, Tanzania, Nigeria, Ghana, Switzerland, France, Canada and Lebanon are also likely to invest in homes in Kenya. The country as a whole is among the top five most popular second home locations for Africa’s wealthiest.

New construction of prime residential properties is continuing apace in Nairobi and the abundance of supply ensures availability for those seeking bargains.

However, affordability remains an issue for the local market, with much of the new stock beyond the means of most people. The biggest issue is access to credit. In a country of 48 million people, less than 30,000 have mortgages.

Interest rates are currently capped at 14.5%—as they would usually be closer to 16%—in a political move to free up mortgages, but the cap slashes the margins for banks.

Lenders are tending to put their money into government bonds rather than get involved in the private mortgage market.

Many overseas investors will buy with cash or get dollar denominated mortgages at far better rates, but the lack of liquidity in the Kenyan property market is a major obstacle.

There is optimism that the market will pick up in 2018, however. Nairobi is a key regional centre that offers good prospects for investors, and Kenya’s relations with its neighbouring countries has never been better. O

n the coast and in the bush, buyers will be drawn by their hearts as much as their heads—and as history has shown, little will stop them.

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