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Politics and real estate in Kenya

By Francis Ayieko | January 14th 2016

For the last few years, I have heard the refrain "you can't go wrong with real estate" more times than I can count. This expression comes up almost always whenever people talk about investment ideas.

And if you go to a property consultant for advice, they are likely to explain it with another widely used industry maxim: Real estate is a hedge against inflation. This expression means that real estate is one of the few asset classes whose value never goes down when inflation hits. Usually, as inflation goes up, housing values and rents go up.

Because of that, real estate is considered one of the best ways to hedge an investment portfolio against inflation. Locally, we have seen construction activity go on even during hard economic times.

But real estate can also suffer external shocks that end up dipping property prices and rents. Politics, for instance, has a way of slowing down the property market, just like it does to other sectors. The anxiety and uncertainty that come with a politically-charged environment is usually a major disincentive to the economy as it scares away potential investors.

And we don't want that to happen to our real estate market as we approach the General-Election next year. Already, there are concerns that early politicking could slow down the property market that has enjoyed impressive growth over the last few years.

There was the same fear during campaigns for the March 2013 General-Election. Fortunately, the elections went well and the market was not affected. That can happen again next year if we conduct our politics responsibly.

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