Property consultancy firm Knight Frank has predicted that Kenya’s real estate market will pick up later this year.
Knight Frank’s Africa Report 2013 says that recovery it expects recovery in construction of residential houses from March this year when the effects of falling interest rates become palpable and after the General Election mood passes.
“With interest rates slowly falling and a relatively stable economy, a post-election recovery is expected in this sector in the second quarter of 2013,” says the Africa Report 2013.
Data from the Kenya National Bureau of Statistics (KNBS) shows that indicators such as cement production and consumption have been on the decline.
Between December and November 2012 cement produced dropped by 14.1 per cent to 357,212 metric tonnes from 415,866 metric tonnes while consumption decreased by 18.8 per cent to 310,639 metric tonnes from 382,400 tonnes over the same period.
(Read: Poll jitters slow down real estate investments)
Earlier KNBS data shows that the construction sector recorded a 0.6 per cent growth in the third quarter of 2012 against 3.6 per cent recorded over a similar period in 2011.
Bankers have said that deposit rates increased in tandem with the high base rates and the ripple effect was an increase in cost of loans. The Central Bank Rate stood at 18 per cent then but it has since been cut to 9.5 per cent.
Lending rate have however been cooling off at a slower pace, with Knight Frank predicting they should begin to be felt from the end of this month since deposits, from which loans originate, had been locked at high rates.