- Real Estate
http://gkerosi.hubpages.com/hub/ Key Figures and Facts about Real Estate Industry in Kenya
According to Kenya National Bureau of Statistics (KNBS) real estate has contributed a lot to the growth of Kenya’s GDP as shown below.
According to Kenya National Bureau of Statistics report (2012), in 2008, real estate contributed 107, 323, 000 shillings to the country's GDP. In 2009, that value reduced slightly to 116,657,000 Kenyan Shillings. The following year, 2010, the real estate contributions to GDP increased to 123,173 shillings and finally in 2011, the portion increased further to 134, 746, 000 Kenyan shillings.
In 2011 alone agriculture and forestry was the leading contributor towards GDP. It contributed 726,160 as compared to 134,746 from real estate during the same period of time.
Growth Rates of GDP in the real Estate Industry
The real estate has done well in Kenya. In 2008, the growth rate was 3.7% followed by a 3.0% in 2009 and 3.2% in 2010. The year 2011 the growth rate reached 3.6%. There was positive growth all along.
There was a slight decline in the growth rate of the real estate industry due to many factors but most the post election violence that led to destruction of property and in the 2007 General elections. Later on the growth resumed its path.
Real estate, renting and business services play a crucial role in the Kenyan economy. In 2008, it contributed 5.1% of total GDP, in 2009 it reduced to 4.9% of GDP, 2010 it was 4.8% and finally in 2011 it reached 4.5% of the GDP.
Property market Trends in Kenya
According to a report by the National Housing Corporation (NHC), the Vision 2030 estimates that the country requires 200,000 new units of housing but only 35,000 units have been produced to date. That means we have a deficit of 165,000 housing units. This is a sure sign that real estate has a great potential here Kenya.
There is a serious shortage of housing units in the low income areas in Nairobi as compared to the high income sections of the city. In these low income areas, only 6,000 units are produced per year.
To show you the extent of housing shortage, the National Housing Corporation approximates that there are over 2,000,000 in Nairobi comprising of 400,000 households who are in dire need of decent and affordable housing. The level of home ownership in Nairobi is very low at 16%.
There is an excess supply of office space in Nairobi. This makes it possible for the buyers or lessee to have a say. The offices located outside the Central Business District are very attractive to office owners. There are many reasons cited for that preference such as plenty of parking spaces and less traffic jams.
There is a great demand for low-income housing which currently outstrips the existing supply. This is an area where new entrants into real estate business can capitalize on. The mortgage houses have made it easier for investors to participate in the construction of housing units by reducing the rates for investors. These are mostly flats. This area is not fully exploited.
This is not the case for the high income residential market. Here there is plenty of vacant houses but few people seeking to purchase of rent.
There is a great demand for housing units from both the Kenyans in the Diaspora and the locals. This high demand has made the prices for land and housing units to go high.
The data below will give you an overview on the amount of money that you need to spend on rent and purchasing houses in specific areas on Nairobi City.
This are is found within Nairobi city. Here you will pay a rent of Kshs. 100,000 per month to rent a 4 bedroom house per month. Purchasing the 4 bedroomed house will require your to part with Kshs 15 million shillings. A 3 bedroom house in the same area will cost you Kshs 60,000 in rents while you will pay Kshs 11 million to buy the property.
There is humble accommodation in Langata Area of Nairobi. In this area a Maisonette will cost you Kshs. 40,000 in paying rent every month for 4 Bedroom house. This house can be purchased at Kshs 8.5 million. There are also 3 bedroom apartments which cost Kshs 35,000 per month in rents. To buy an apartment, you will pay Kshs 7.5 million.
Note: It has been noted that those areas where there is low rental levels have more people who are interested in home ownership that those engaging in commercial activities. The figures presented above are just approximations and are subject to change depending on the scheme involved.
There are many factors that enhance real estate in Nairobi. There are but not limited to: promising economic growth, political stability, favorable rental market, beautiful coastline, incentives that encourage investments in real estate and foreign investments from the Somali and Chinese nationals.
THE REAL ESTATE INVESTMENT INCENTIVES IN KENYA
There are a number of broad incentives focused on real estate in Kenya such as:
· National Land Policy 2004
· Vision for a world Class Metropolis 2008
· Nairobi Metro 2030
· Constituency Development Funds – established in 2003.
· National Housing Policy 2008
Below are some of the specific incentives that have promoted real estate in Kenya. These incentives play a crucial role in facilitating private sector involvement in real estate.
· Civil Servants Housing Scheme
· Diaspora and Capital Markets Resource Mobilization and
· Housing Finance Mobilization