Following onset of Covid-19 scourge and subsequent lockdowns vacant offices, empty shopping malls and supermarkets, restaurants, silent bars, and closure of learning institutions became symbols of social distancing.
These measures had a significant economic impact across the nation due to reduced productivity and as a result, the real estate sector was badly hit.
The outbreak of the pandemic led to an immediate reduction of the labour force and disruption of supply chains, which subsequently translated to longer development periods. In addition, construction activities were cut as a measure to reserve cash at a time when market liquidity was likely to reduce.
There was also the go-slow in building approvals as public offices such as City Hall remained shut. The scourge also led to a decrease in cash collections from customers who had purchased off-plan real estate on instalment module. There was also an immediate reduction in occupancy rates.
Looking at the post-Covid era, Kenya’s economy has demonstrated resilience with most sectors of the economy making a rebound to almost pre-pandemic levels. However, one thing we shall appreciate is the fact that the pandemic introduced new ways of doing things.
One of the most notable changes was the working from home policy introduced by most companies. Consequently, demand for traditional offices reduced as a good number of these firms embraced a hybrid system of work.
It, therefore, goes without saying that the commercial property developers and owners may want to consider leasing out their office space as serviced offices to attract budding SMEs and international companies.
Landlords of residential premises should also create spacious apartments that accommodate a work, live-play lifestyle that is likely to pick up among the middle-class due to the adoption of remote working.
The use of technology also heightened during the pandemic and in the real estate, property developers took up virtual reality to showcase their houses to potential clients. Prospective buyers can now take virtual tours from anywhere in the world.
This has significantly eased the process as potential buyers do not have to spend hours commuting between various properties. Real estate players should, therefore, embrace technology since it will continue to make it easier to navigate the industry.
It is also high time that players in the real estate sector join hands and form a strong association that will lobby for a favourable business environment. This will undoubtedly help cushion them from adverse policies as well as champion for subsidies that will spur growth.
The role of government in any business cannot be downplayed and it is for that reason we look at ways in which the government can support the real estate sector to boost its earnings
And with the current high inflation rates, which translates to high-interest rates, people are shying away from taking up economic and costly projects. The government should, therefore, intervene and put in place fiscal measures to control the rising inflation levels.
The government’s initiatives in helping stimulate growth of the real estate sector are indeed beneficial.
However, it faces various challenges in its plan to realise some of its ambitions, especially in the wake of huge budget deficits, which have resulted in various fiscal consolidation measures such as a reduction in funds meant for affordable housing initiative.
Therefore, there is need for continued multi-sectoral, government, and all stakeholder’s intervention to ensure that the real estate sector realises its full potential and remains unshaken throughout any other unforeseeable future challenges that may arise.
Ruth Nyasinga is a senior tax consultant at EY. The views expressed herein are not necessarily those of EY