Wealthy Kenyans look beyond the borders for luxury holiday homes

It is the new game in town. Kenyans with deep pockets are investing millions of shillings in real estate outside the country, opening a new front in the competition for property ownership that has kept the housing market growing steadily in the past seven years.

Transnational property dealers are riding on rising spending power of Kenya’s expanding middle class to open alternative channels of investment abroad promising the buyers good returns from ownership of exclusive holiday homes and the status that comes with it.

The apartment is the most popular item on the buying list but millions of shillings have also been invested in mansions, maisonettes and villas in some of the world’s top cities such as London, Dubai, Mumbai, Durban and Cape Town.

The buyers are mainly deep pocketed Kenyans seeking overseas holiday homes or international real estate investments with high returns.

“Most of these markets (Europe, Middle East and America) have yet to emerge from the global financial crisis of 2008, forcing dealers to explore new markets for their property"

"Kenya happens to be one of those markets that international dealers have identified,” said Reginald Okumu, a director at Ark Consultants Limited, a valuation and property management company.

Mr Okumu says owning a holiday or second home abroad where one can retire or spend time with family and friends is fast gaining currency among Kenya’s affluent, making it an attractive target for international vendors.

Locally, this love for second homes has seen developers come up with the concept of more holiday homes located in exclusive locations outside the main cities.

India-based dealer Emgee Group is the latest entrant into Kenya’s offshore real estate market – seeking investors in luxury apartments at the heart of the beach city of Dona Paula.

Set on 11 acres with a clear view of India’s Arabian sea, the apartments and Villa termed as The Address of Goa are breath-taking.

A two-bedroom apartment is priced at Sh27 million and promises the buyers luxury comfort in a tourist resort city located in the western Indian state of Goa, that attracts more than a million visitors annually.

This makes it an ideal destination for investors looking to earn rental income from the tourism industry and to use the same for own holidays.

Emgee joins companies such as Dubai based Emaar Properties, British firm Seer Acquisitions and South African firm Sanlam via its property fund- Sanlam Africa Core Real Estate Fund- that have published advertisements in the local press inviting Kenyans to buy property in places such as Dubai, India, London and Durban.

Local advertising

“You can see why dealers are testing the local market. Kenya is gaining a lot of publicity internationally as a country that is growing fast, and whenever people hear of growth, they come for a piece of the action."

"It also has a segment of its population that can afford to pay for international property,” said David Gikandi, a director at Rainmaker Realty, an authorized agent for DAMAC Properties of Dubai.

“Despite the millions of poor people in Kenya, there is a sizeable population that has enough cash to spend oversees,” said Mr Gikandi.

Dubai’s largest developer, Emaar Properties, has in recent months taken full page adverts in the local newspapers to promote three different projects — The Address Residence Sky View, Burj Vista II and The Hills — with a price tag of up to Sh66 million for one-bedroom units.

The group is behind the world’s tallest building, Dubai’s Burj Khalifa.

The Address Residence Sky View will be finalised in three years and comprises of a 180-roomed hotel and 532 serviced apartments.

The development will be a twin-tower complex connected to each other through a ‘Sky Bridge’. The bridge has a restaurant, spa, infinity pool and ballroom with views of Dubai’s tallest building and the Arabian Gulf.

Dubai Hills was officially launched this month by His Highness Sheikh Mohammed Bin Rashid Al Maktoum, UAE Vice President, Prime Minister and ruler of Dubai.

“The launch of The Hills highlights robust demand for world-class residential property in Dubai from all over the world,” Managing Director of Emaar Properties Mr Ahmad Al Matrooshi said during the unveiling.

Figures from the Dubai Land Department shows that 13,573 foreign investors spent over Dh36 billion ($9.8 billion) on property in 2012.

The Emaar Group is also working on the design of Mira, a gated community at the Eastern edge of Arabian Ranches –Al Reem.

The Mediterranean styled three-bedroom residences cost Sh22.8 million. The project will host an exclusively designed 18 hole golf course, GP Karting track and villas set on a 20,000 to 30,000 square feet piece of land.

So far, Kenya is the only African country where Emaar is seeking buyers for its over-the-top development.

Other players in Dubai are Damac Properties, the largest privately held property development firm in the Middle East.

London has become well known for some of the prime luxury property in the world that continues to churn out new developments as the market starts to recover from the global financial crisis.

It has always been an attractive real estate investment destination for Kenyans and most prominent Kenyan families are known to have property there.

Recently Seer Acquisition, a real estate agency, was in Kenya to woo potential investors with apartments in Nottingham, UK, priced at Sh5.1million each for one-bedroom units.

Claire Collier, the Seer Acquisition sales director in charge of Middle East and Africa, said sales from Nairobi on a global scale accounted for around 20 per cent of an entire project in some cases.

Speaking to the Business Daily in an earlier interview, Ms Collier estimated that Kenyans had participated in sales worth Sh1 billion, as of the end of last year.

Ms Collier told the Business Daily that most Kenyan buyers were purchasing homes in the range of between Sh26.3 million to Sh65.9 million (£200,000 and £500,000). A student accommodation studio apartment goes for Sh7.9 million (£60,000) in the UK.

London

“London is a very stable market with average rental yields of eight per cent,” Ms Collier said adding that Kenyan participation in London’s homes market was ‘significant.’

Unesta, a London-based investment advisory firm with real estate units in India, has recently set up a local office, on Kijabe Street and will be at this year’s Ideal Interior Homes expo at Sarit Centre selling overseas properties. 

The company is leveraging on its professional expertise and prestige to lure wealthy Kenyans to invest in India.

Knight Frank, a property management firm says Middle Eastern, Asian, African and Russian and CIS super-buyers have increased their presence in London’s real estate market riding on the UK economy’s immunity to recent fears of a possible collapse of the euro.

Most of the purchased properties are managed by the companies putting them on sale on behalf of owners.

“Demand for prime property in key locations around the world is likely to remain high as wealth creation, especially in the emerging world, thrives."

"This, along with the continued search for sheltered havens to protect assets, is likely to drive prime prices up in the short to medium term,” according to Knight Frank’s Prime International Residential Index (PIRI), 2013.

The trend is likely to keep on growing thanks to ICT and ease of movement of people and finances.

As more information becomes available about the opportunities that exist globally and international trade and movement becomes easy, the more it will be easy for investors to make comparisons and make informed choices.

"Investors will invest where they see opportunities for high returns and low risks,” he concludes.

He urges Kenyans to diversify investments and not shy from investing in the Global Real Estate Market.

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