Kenya’s wealthy prefer investing in real estate than any other assets

What you need to know:

The survey says that of those eyeing the real estate sector, about 63 per cent are likely to get into residential developments.
The survey also says that four per cent of the global super rich from the UK, South Africa, Ghana, Nigeria, Mauritius, Greece, UAE, Germany and Canada were likely to get into Kenya’s commercial property sector.
Kenya’s super rich grew by eight per cent from 2015’s total of 8,500 to 9,400 in 2016.

Real estate is the investment of choice for Kenya’s super rich who prefer to put their money in property more than in personal businesses, government bonds and precious metals.

The Kenyan chapter of the 2017 Knight Frank Wealth Report launched Wednesday says the country’s high net worth individuals (NHWI) allocated 28 per cent of their cash to buying prime residential and commercial property.

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The dollar millionaires set aside 20 per cent of their money for personal businesses while other venture options like equities, bonds, cash and precious metals accounted for 18 per cent of their total investments.

The survey says that of those eyeing the real estate sector, about 63 per cent are likely to get into residential developments, as 56 per cent channel their resources into building office blocks, 31 per cent into retail, 25 per cent in leisure while 13 per cent eye industrial property.

“Kenyan HNWIs clearly realise the long-term stability that property investments offer in an otherwise volatile market together with the good returns that the sector has demonstrated in the past,” said Knight Frank Kenya MD Ben Woodhams.

Dollar millionaires are classified in the report as individuals with assets worth more than Sh102 million ($1 million at current exchange rates) excluding assets such as their primary homes.

Kenya's super rich

Kenya’s super rich grew by eight per cent from 2015’s total of 8,500 to 9,400 in 2016.

READ: Kenya mints 900 new dollar millionaires as wealth gap widens

Out of those eyeing the commercial properties space, 59 per cent were considering getting into the local space while 44 per cent in foreign markets.

Europe was the most preferred foreign market, accounting for 53 per cent of invest in commercial property abroad, with the US and the Middle East taking up 12 per cent and six per cent respectively.

The survey also says that four per cent of the global super rich from the UK, South Africa, Ghana, Nigeria, Mauritius, Greece, UAE, Germany and Canada were likely to get into Kenya’s commercial property sector.

However, the study projects that four per cent of the global HNWI are looking to own a home in Kenya.

“The current foreign interest stems from the east, with investors from India and China making inroads, whilst much of the interest from South African funds seems to have been distracted by opportunities in Eastern Europe,” Woodhams said.