Terrorism, oversupply blamed for sluggish property market in Kenya

A Knight Frank development, Osero in Amboseli.  [PHOTOS: COURTESY/STANDARD]

NAIROBI, KENYA: The second quarter of this year saw a lethargic property market with reduced take-up rates for prime retail and office space and shift of focus in the residential segment to smaller residential apartments, says Knight Frank.

In their Second Quarter 2014 Kenya Market Update report released last week, the real estate giant said the reduction in take-up rates for prime retail space was blamed on insecurity and terrorism. “The knock on effect is it has led to the slowing down of the take-up rates in major malls, under construction,” said the update.

On the reduced take-up rates for prime office space, the most notable decline was experienced in Nairobi’s Upper Hill that showed a 90 per cent drop. This was mostly attributed to ongoing road and infrastructure works.

 Lethargic market

The firm noted that the lethargic prime residential market was occasioned by a saturation in the market, with developers switching from three and four-bedroom apartments to studio, one and two-bedroom apartments.

There was, however, a positive movement with an increase in land values in prime low residential areas.

At the same time, Knight Frank unveiled the inaugural edition of Africa View, a publication dedicated to showcasing some of the very best residential properties for sale in key destinations across Africa.

Speaking at the launch, Ben Woodhams, managing director of Knight Frank Kenya, noted: “Africa View demonstrates the exceptional quality not only of the houses themselves, but of the incredible surroundings in which they are located. From stunning Cape Town villas to exquisite Kenyan coastal homes, as well as game lodges and bush hideaways for those looking for a close encounter with Africa’s exciting wildlife.”

“Looking at Kenya specifically, after a period of unprecedented growth with property prices increasing by over three-fold since 2008, we are seeing some signs of the market slowing down. There is still very high demand for good development land but for new build and re-sale houses we are witnessing an oversupply in some areas and in general vendor expectations becoming too unrealistic,” he said.

However, he said, with exceptional properties market interest has not diminished, with substantial interest being recorded: “The Kenyan coast in particular has been hardest hit due to the well-publicised insecurity issues. However, there are signs of some recovery.”