Want to reap big even in chaos? Invest in real estate, experts say

A real estate development in Kiambu County. Investing in the sector during the current uncertainty places one in a much better opportunity to reap handsomely. PHOTO | salaton njau
A real estate development in Kiambu County. Investing in the sector during the current uncertainty places one in a much better opportunity to reap handsomely. PHOTO | salaton njau 

With many businesses reporting diminished earnings due to political uncertainty, real estate firms say this is the best time to buy parcels of land.

They say land is the only asset in Kenya that gains value over time, unlike motor vehicles and other properties which start depreciating immediately after purchase.

Real Estate Research Analyst Patriciah Wachira said while the overall investment environment in the country has been disrupted, real estate remains a resilient asset class that has delivered stable and attractive returns at 20 per cent in the past five years.

“This was supported by the growing population, a housing deficit and demand for institutional-grade housing and commercial facilities across the country,” she said.          

Real estate firm Username Investments Ltd chief executive Reuben Kimani said that while land prices in some areas had fallen due to low demand, among other factors, investing in real estate during the current uncertainty places an investor in a much better opportunity to reap handsomely when normalcy returns.

“Most Kenyans have in the past three months held back their money awaiting return to stability. It is better to invest when the prices are down as normalcy will create a healthy demand that pushes up the prices,” he said in a statement last week.

EnkaVilla Properties managing director Meshack Muhoho said Kenyans in the diaspora had taken advantage of low prices to purchase prime properties across the country.

“The online lands registry for searches and initiation of transfer processes has been a boon to our business. Kenyans are able to confirm the authenticity of parcels of land on sale by paying search levies online.

“Online payments also grant buyers in the diaspora proof of payment, ending incidents of fraud when they send relatives to check on properties, he said.

Daykio Properties also vouched for purchase of property during uncertainty, saying land is a long term investment and can withstand any storm.

“Even if there are price fluctuations in the short term, the general trend is, land prices will rise. Various credible housing indices suggest real estate in Kenya is the best investment channel,” it said.

Daykio said the election crisis had seen many prime properties suffer a price slump, with some agents selling at a discount to maintain liquidity due to uncertainty created by the elongated electioneering period.

According to Ms Wachira, all factors favour real estate’s resilience since Kenya is experiencing rapid urbanisation that demands an increase in residential houses and commercial centres at 4.4 per cent, compared with the global average of 2 per cent.

“Government incentives such as the 50 per cent tax cut for developers who supply 100 affordable units annually, and the ongoing nationwide infrastructure development has not only opened up new frontiers for real estate development, but has increased the attractiveness of Kenya to international investors as an investment destination,” she said.

Mr Kimani welcomed issuance of title deeds to parcels of land around Konza technopolis, saying the government had created a new avenue for individual Kenyans to create wealth as the multi-billion techno-city continues to take shape.

Mr Kimani said Kenyans should individually conduct due diligence at land registries to safeguard against unscrupulous land dealers.

He said real estate firms had also been forced to sink boreholes, erect perimeter fences and construct internal access roads to attract buyers.

Ms Wachira called for repeal of the interest capping law to spur uptake of credit, saying Kenyans have traditionally thrived via lending from banks and saccos, which in turn enjoy handsome profits from higher interest rates.