Rent on Kenyan high-end property has fallen by 6.55 percent over the last six months as foreigners returned to their countries during the coronavirus pandemic, dragging down the value of the real estate.
According to Knight Frank’s Africa Residential Dashboard for the first half of 2020, upmarket rental property have been losing tenants as expatriates leave the country pushing a decline in rents.
Coupled with oversupply of housing units, the valuations for the property in lavish Nairobi neighbourhoods is down 2.9 per cent in the six months to June.
“There has been a surge in the exit of expatriates from the continent due to pre-existing economic challenges but enforced by the Covid-19 pandemic which has resulted in subdued demand in the prime residential sector,” Tilda Mwai, Knight Frank Researcher for Africa said.
Governments imposed restrictions on foreign travels prompting foreigners to exit so as not to end up locked up away from home for uncertain periods of time.
Foreign governments including the European Union countries and the United Kingdom, organised for charter flights from firms, including Kenya Airways and Ethiopian airlines, for a one way ticket out of the country.
Tourists who usually take up residence in holiday homes and Airbnb have stayed away further hurting occupancy.
Knight Frank reckon that a quarter of high-end homes are vacant given the average occupancy of 73 percent in the six months to June .
Knight Frank said the decline in both prime residential rents and prices is mainly attributed to the continued oversupply of residential developments, unfavourable economic climate, low liquidity and expatriates returning to their home countries.
The real estate consultants say they expect prime residential rents to decline in the second half of 2020 due to the reduced economic activity, tighter liquidity, continued relocation of expatriates and less disposable income from potential tenants. Prime residential prices are also expected to decline at a slower rate.
The situations is an indication that lower segments of the market remain unserved even as high end real estate runs out of steam.
The firm says there is an increasing number of young professionals in African cities and the need for space in the wake of the Covid-19 pandemic who will anchor affordable housing market even as we see renewed government interventions towards ensuring affordable housing delivery.