Kenya dollar millionaires rent out their second homes
Knight Frank Kenya CEO, Mark Dunford (right) is flanked by other officials during the launch of the 2024 wealth report firm’s Wealth report on April 30, 2024, at Capital Club in Nairobi.
Photo credit: Photo | Billy Ogada | Nation Media Group
Nine out of every 10-dollar millionaires in Kenya are renting out their second homes, according to findings from the Knight Frank Wealth report.
The report published on Tuesday notes that the high-net-worth individuals (HNWIs) whose assets stand at Sh133.27 million ($1 million) and above have turned their additional residential properties into income-generating assets.
“Eighty to 90 percent of the high-net-worth individuals follow a strategic approach to their secondary homes. Instead of maintaining these properties solely for personal use, they rent them out, leveraging their real estate assets to generate income,” the report notes in part.
Renting out secondary residential properties is seen as a move by Kenyan-dollar millionaires to diversify income sources away from traditional investment avenues.
The majority of Kenyan millionaires own at least two residential properties, with only five percent of the ultra-rich owning just a single home.
Investments in residential properties represent between 50 and 60 percent of the wealth held by high-net-worth individuals mirroring the significance of real estate as a strategy for wealth management by the Kenyan rich.
“Because the Kenyan threshold of joining the high-net-worth individuals’ rank is low relative to the rest of the world, the reality is that a lot of this wealth is tied up in residential real estate. We have a quite common trend of investors having a home in Nairobi, another back home, where they are from and a holiday home at the coast. Some might even have two homes in Nairobi,” noted Knight Frank Kenya CEO Mark Dunford.
About 20 percent of the HNWIs bought a home in 2023, according to a survey accompanying the wealth report while 30 percent of the individuals plan on buying a new home this year. Most of the acquired residential properties are in the country with only 10 percent of the survey’s respondents indicating home ownership abroad.
The preference to have the properties in Kenya is backed by the considerable returns on offer and a sense of security in the country.
Convenience and familiarity with managing properties in close proximity have also contributed to the inclination towards domestic holdings.
The Knight Frank wealth report does not specify the number of HNWIs in Kenya.
Mr Dunford, however, said HNWIs in Kenya managed to grow their wealth last year amid headwinds such as exchange rate shocks and higher interest rates.
Nearly one-third of the HNWIs, or 31 percent, expect a substantial increase in their wealth in 2024 by at least 10 percent.
The Knight Frank Kenya CEO says Kenyan dollar millionaires navigated the currency turmoil by holding forex-earning assets.
“The fluctuations in currency was an opportunity as much as it was a risk. If you are at the sharp end of the investment market, there are a lot of opportunities to create wealth where the currency is sliding, especially if you have forex-generating assets,” he said.
