International realtor Knight Frank says Nairobi residential properties remain an attractive buy for rich families and global investors amid a 5.4 percent price drop in the last nine months.
In its third-quarter report that reviewed high-end house prices in 45 cities, Knight Frank noted house prices were still 30 percent higher than last quarter 2010.
“The values have been declining at varied rates year-on-year successively since Q3 2016.
However, values are still more than 30 percent higher compared to Q4 2010, validating prime residential properties as a good investment for capital gains,” it said.
Head of Agency Anthony Havelock said the falling prices were caused by the prevailing cash crunch largely blamed on low business activity coupled with a lack of credit.
“We have not reached the bottom of the cycle yet and we expect to see further reductions in the near-term until the macroeconomic and local situations improve. One of the major issues right now is illiquidity in the market,” he said.
Nairobi and Mombasa remain East Africa’s most attractive destinations for global high net worth individuals pursuing investment and leisure while Africa’s wealthy fly in seeking a better education for their children as well as private healthcare.
The Knight Frank report observed the prevailing hard economic times saw banks auction distressed residential properties at discounted prices.
Mr Havelock said this adversely affected the prices of properties in prime locations with oversupply fuelling further reduction of house prices as developers made efforts to avoid the auctioneer’s hammer.
“Deals are happening but are few and far between and at discounted rates. It will take time for the economy to rebound considering it is also not immune to external shocks,” he said.
Realtors have also blamed the interest rate cap law, which stifled access to credit for the past three years as lenders shied away from ‘risky’ borrowers.
In its third-quarter Housing Price Index, Kenya Bankers Association named the first nine months of 2019 as the worst year for the real estate sector in the past five years.