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Five Legitimate Reasons Why Real Estate In Kenya Won’t Be The Same In 2016

by Innov8tiv.com
Five Legitimate Reasons Why Real Estate In Kenya Won’t Be The Same In 2016

Global portal explores what to expect in property over next 12 months

As 2015 draws to a close, the big question on all real estate professionals’ lips is: what will 2016 hold? Migration away from metropolitan areas, infrastructure improvements and increased international interest from investors are just some of the expected developments for real estate markets within emerging nations.

App focus

Mobile is driving innovation in Kenya. Internet users in the country are skipping the traditional desktop usage, and moving straight to mobile. While 2015 saw more emerging markets-focused companies developing their Internet presence, 2016 will see real estate professionals turning their attention to apps.

As a result of high costs of Internet services in Kenya, apps are increasingly popular when it comes to interacting with online companies. As Internet penetration strengthens in second-tier and suburban areas, reduced mobile connectivity costs, more affordable data packages and the evolution of mobile technology are driving app usage.

Second-tier growth

Industry professionals have already noted the increased attraction of commuter towns in emerging urban areas. Rapid population growth has led to physical growth of urban areas in towns including Ruaka, Thika, Kitengela, and Ongata Rongai. As Nairobi become slowly saturated, real estate developers and investors alike are turning their attention to fast rising urban areas where property is significantly cheaper as a result of higher land availability and lower building costs.

According to Dan Karua, managing director Lamudi Kenya: “In 2016, we will see the development of dormitory towns around Nairobi as both local and International investors strive to improve transport services, water and electricity supplies, and develop their infrastructure. This is essential if these urban centers want to compete with bigger markets, both locally and internationally.

By shifting focus from capital cities to smaller areas, investors get more for their money due to lower costs of land, resources and building materials, and developers have more space for construction. This makes these second tier cities a very attractive option for real estate professionals,” he concluded.

Commercial property growth

As countries across Asia, Africa, the Middle East and Latin America experience rapid population growth, urbanization, and economic development, demand is increasing for commercial property. This includes mixed-use developments, shopping malls, retail space and office units.

The next 12 months will likely see an increase in commercial property developments across the emerging markets, as the sector must accommodate population and tourist growth, as well as increased interest from international corporations. These projects are not only driving economic growth, they provide employment opportunities, and boost the value of surrounding properties.

REIT availability

Will 2016 be the year of the real estate investment trust (REIT)? The last 12 months have seen a number of real estate investment trusts opening in the emerging markets, encouraging investment into the sector. In October of this year, the Capital Markets Authority approved Kenya’s first income real estate investment trust, also known as a I-REIT, to be issued by investment manager Stanlib Kenya. This marks the first ever license to an asset management firm, to list on the Nairobi Securities Exchange (NSE).

Increase in foreign investment

Laws are changing in many of the emerging markets. While it is still not legal to own property in all countries, new legislation is being drawn up to encourage real estate investment.

FDI inflow into the African real estate sector was strong in 2014, according to EY data. Real estate, hospitality and construction was in fact the fourth most attractive sector by FDI project numbers in Africa in 2014. This is expected to improve over the next 12 months. In Kenya, private and foreign investors are developing new housing projects to tackle the housing deficit of 2012. Currently, three housing projects are in the works with a total of 76,000 units.

About Lamudi

Launched in 2013, Lamudi is a global property portal focusing exclusively on emerging markets. The fast-growing platform is currently available in 34 countries in Asia, the Middle East, Africa and Latin America, with more than 800,000 real estate listings across its global network. The leading real estate marketplace offers sellers, buyers, landlords and renters a secure and easy-to-use platform to find or list properties online.

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