Design & Interiors

Luxury homes take over Sh10m price cuts

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Summary

  • The reason why real estate in Coast is doing better is that Nairobi’s luxury property market is mainly homes.
  • People like to live in Nairobi, says Mr Gross.
  • However, Diani, Watamu, Kilifi and Lamu’s luxury property market attracts second home or investment buyers, meaning that people would buy holiday houses to escape Covid woes or to rent out to those seeking an escape.

For years, Nairobi mega-mansions attracted enormous price tags. But when they did not sell in the last five years or so, they are getting massive price cuts.

Marketed as upmarket homes located where luxury and nature blend, near the best international schools in Kenya, golf clubs, sitting on half-acre or one-acre plots and built with the rustic theme and English manor-look in mind, some of these houses previously priced at Sh120 million and above have gotten few to no buyers.

Tarquin Gross, the head of the residential agency at Knight Frank Kenya says as the real estate sector reels from the pandemic, developers have had to start paying attention to changes in people’s disposable income.

“During Covid, some people took salary cuts. What we are seeing is sellers lowering their prices for apartments and even unique homes in Karen and Runda. The pandemic has shrunk the gap between buyers and sellers. Prices are now more realistic,” he says.

For instance, he points out that in Nairobi’s Karen, a large house sitting on one-acre pre-Covid that was priced between Sh100 million to Sh120 million. However, now the same property is priced reasonably between Sh90 million to Sh100 million.

Furnished units

“Pre-Covid, people’s expectations on what they could achieve price-wise had gone out of hand. Sellers were asking for too much money and buyers were not willing to match it, thus things got a bit slow. But that isn’t to say deals weren’t happening. As much as there was a market, it wasn’t consistent,” says Mr Gross.

He adds that now that prices are more reasonable, the sector is bound to grow. And as the economy gets out of the jaws of Covid-19, many people now like the idea of ‘my home is my castle,’ forcing developers to also adjust to meet buyers’ new preferences.

“Developers are in tune with what the market wants, whether it is health and well-being, working from home, or outdoor space,” says Mr Gross.

Interestingly, things are a bit different along the coast, at least for My Space Properties, a real estate company.

According to Mwenda Thuranira, the CEO of My Space Properties, a real estate agency, the luxury market at the Coast grew during the pandemic.

“The luxury market, especially furnished units, experienced growth. During the pandemic, people stopped going to hotels, clubs were closed and people preferred furnished living and renting. Even now, furnished units are doing way better than unfurnished units, particularly in Nyali, Vipingo in Coast, Kilimani and Westlands in Nairobi,” he says.

The appeal of buyers and users is that when you pay for a furnished house and not a hotel, you have the luxury of “waking up and eating at your own time, you don’t have to follow any procedures and you get your privacy. This is something many people crave.”

Why Coast

The reason why real estate in Coast is doing better is that Nairobi’s luxury property market is mainly homes. People like to live in Nairobi, says Mr Gross.

However, Diani, Watamu, Kilifi and Lamu’s luxury property market attracts second home or investment buyers, meaning that people would buy holiday houses to escape Covid woes or to rent out to those seeking an escape.

Interestingly, realtors are seeing more Kenyan citizens buying luxury properties than foreigners. Typically, the experts say, well-priced and well-marketed houses take between one week to three months before selling.

However with the lull in luxury home sales, developers have had to contend with monthly maintenance costs which include gardening and security, in addition to loan repayments.

“But this is part of the game. In the long-term, every property has a buyer, and it is just a matter of finding the buyer. 2022 might just be the year where luxury property buyers are easier to find,” Mr Gross says.

Towards the end of 2021, foreign travel was made easier and Knight Frank started seeing multinational employees coming back to the country.

“We started to see our rental market pick up at the tail-end of 2021 and this gave us confidence. If you start seeing the high-end residential market pick up, you know the market is slowly coming back,” says Mr Gross.

This year, he says, they have seen a lot of offers, particularly for Karen homes and inquiries along the Coastal region.

“Occupancy levels in our rented properties have also shot up and I am confident we’ll have a good first and second quarters before we get to elections which usually causes uncertainty in the market,” he adds.

However, the coming election is not something that worries Mr Thuranira.

“I don’t expect the elections to have a big impact on the luxury market. Yes, elections tend to slow down every market but at the end of the day, people have to live somewhere,” he says.