Prices and rent of high-end houses have dropped on reduced demand as expatriates flee from Kenya due to Covid-19 in the six months to June in a period that also saw demand for business and office space reduce.
Half year report released Wednesday by Knight Frank shows that prices of prime residential houses in places such as Karen, Lower Kabete, Runda and Muthaiga dipped by 2.9 percent in contrast with a 1.8 percent decline in same period last year.
The realtor firm adds that rent for prime houses also dropped by 6.55 percent, being a faster pace when compared with a 1.67 percent drop that was seen in a similar period last year.
Knight Frank says the decline in rent and sale prices was mainly due to low liquidity and exit of expatriates, who are the main target for this niche houses.
Covid-19 pandemic struck in Kenya mid-March leading to the disruption of economic activities at a time residential prices were on a softening trend due to oversupply.
“Additionally, due to Covid-19, fewer transactions were finalised as a result of land registries being closed and potential buyers opting to postpone land purchases,” said the report,” said Knight Frank head of agency Anthony Havelock.
The latest development means that sale prices of prime residential houses have now declined by 5.1 percent in the year to June while rent for the same houses is down 7.62 percent.
Knight Frank does not see a rebound of prices in the second half of the year as Kenya’s Covid-19 cases continue to pile, extending the financial crisis.
“We expect prime residential rents to decline in the second half of 2020 due to the projected negative economic growth, tighter liquidity, continued relocation of expatriates and less disposable income from potential tenants,” says the realtor.
Knight Frank managing director Ben Woodhams (left) said the rent for office space in prime areas remained unchanged at $ 1.3 (Sh140) per square foot per month as many firms allowed staff to work from home.
“Most organisations put on hold office space requirements as they focussed on operational rather than capital expenditure,” said Mr Woodhams.
Relocation of expatriates also reduced economic activities in high end estates, knocking down the rental prices of business spaces.
The report says that prime rental rates decreased from $4.6 (Sh495) per square per month to $4.2 (Sh452).
“Landlords over the review period provided concessions and incentives to retain and attract new occupiers,” says Knight Frank.
Footfall in retail centres reduced heavily in April and May due to curfew restrictions and other government directives that aimed at achieving social distancing to bring down Covid-19 infections.