Markets & Finance

Realtors play down effects of poll jitters on sector’s growth

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Ms Sakina Hassanali. PHOTO | SALATON NJAU

Realtors have played down the potential negative impact on Kenya’s real estate sector from the General Election, which has been cited as a potential risk to the economy.

The economy ordinarily takes a dip every five years as political campaigns take centre stage and businesses hold back investments to await the outcome of the elections.

The Central Bank of Kenya has projected that the economy would grow by 5.7 per cent this year, slowing down from 5.9 per cent in 2016, while bodies such as the International Monetary Fund and World Bank also project a sub-six per cent growth rate.

Real estate players HassConsult, Cytonn Investments and Knight Frank have, however, remained bullish on the sector, which has seen high growth rate in recent years.

HassConsult said investors are likely to adopt a wait-and-see stance in the run up to the elections, with a price fall in the sector unlikely even if the number of transactions reduce.

“We have not seen a drop in prices as a result of impending elections, instead we expect to see a flattening in price increases which actually lends the property market more stable price growth,” HassConsult research and marketing manager Sakina Hassanali told the Business Daily.

Ms Hassanali said the upcoming elections have so far not affected long-term investments in the real estate sector. “Long term investments such as those in the real estate sector do not fluctuate around elections given projects have a long term horizon and long term return projections,” she said.

Investment firm Cytonn Investment said the real estate sector is likely to remain bullish, assisted by election spending.

“Increased liquidity is a recipe for increased investment in the real estate sector and hence leads to an increase in property values. This has a positive effect on the real estate sector,” said Cytonn in their latest weekly bulletin.

The firm added that its positive outlook for real estate in Kenya in 2017 was informed by “demographics, high demand for real estate products especially housing units and increased infrastructure development.”

“The real estate market will remain largely stable in 2017, though there is likely to be a slowdown in transaction volumes being witnessed in the second and third quarters going to the election date,” said Cytonn.

Knight Frank Kenya said the upcoming poll would not weigh heavily on the real estate market, citing an increase in value of approved building plans in Nairobi in 2016 which indicates that developers are preparing to build after elections.