Super-rich reduce appetite for homes in foreign cities


Delegates during an investor briefing. PHOTO | DIANA NGILA | NMG

Kenya’s super-rich are beginning to cut appetite for offshore property investments with a rising focus on foreign stocks and bonds.

Wealthy Kenyans are known to own property in cities such as London and Dubai, and have been targeted by top developers seeking buyers for holiday villas, apartments, bungalows and penthouses.

Dubai developers such as Emaar Properties, which built the world’s tallest building (Burj Khalifa), and Deyaar, have in the past targeted Kenyans in road shows for their property.

But interest in equities and bonds in emerging markets including China, India and Brazil, is growing as they look to diversify from local portfolios amid political and inflationary risks.

“The natural starting position is to have a home and then equities and bonds, and often people will also have significant real estate as well,” William Wells, a director for Middle East at Schroders, said on the sidelines of a breakfast for fund managers in Nairobi.

“What we are seeing from clients in this region is greater interest starting to develop for emerging markets to diversify just from their local portfolio. There have been people seeking alternative ways to deliver higher levels of income.”

The London-headquartered Schroders manages and administers wealth in excess of $604.7 billion (Sh61.23 trillion) for clients around the world, including those under Standard Chartered Bank’s Wealth Management Business in Kenya.

READ: Kenya third most preferred property hub for super-rich

Most of the interest is in bonds issued in local currencies in emerging markets, which are appreciating against the US dollar, hence giving them additional returns from the yields offered, Mr Wells said.

“We are building relationships in Kenya but still at relatively early stage. We see the growing wealth and the development in middle classes being important for the growth (in wealth management solutions) here (in Nairobi),” he said.

“Most of clients will have big homebuyers in their portfolios. We feel it is important to diversify your portfolio internationally across the equities and fixed-income markets to reduce the overall risk.”

The NSE-20 Index, an indicative measure of returns on Nairobi bourse, rose 16.5 per cent last year.

Pension schemes in 2017 earned an average return of 30.4, 22.2 and 14.7 per cent on their investments in equities, offshore assets and fixed-income securities, respectively, according to a survey by Zamara, a fund administrator.