July 18,2018..A good year for real estate investors. Yes, you heard it right! Kenya is the top investment choice for both local as well as foreigner investors with the most attractive investment destinations of the times.
Mr. Kfir Rusin, EAPI (East Africa Property Investment ) Summit Managing Director Says “Kenya has become a lightning rod for investment as both local and foreign investors have looked to diversify their investments across multiple market segments from retail, industrial, housing and office space.” – as reported in Business Today Kenya.
After experiencing a slowdown in 2017, there is optimism that the market will pick up in 2018, however. Nairobi is a key regional centre that offers good prospects for real estate investors. It is a real estate hub comprising of top notch brokers, agents & real estate developers in Kenya
Are you a keen Kenyan real estate investor looking for opportunities to invest in real estate in Kenya? In this article, we will reveal all the Real Estate Investment Opportunities you need to Venture Into Real Estate Business In Kenya.
Real Estate & Property Investment Options in Kenya
There are three major investment options in Kenya Real Estate Market 2018 are:
🎯 Buying And Selling Land For Profit In Kenya.
Buying land or Investing In Land In Kenya is not always the right investment in Kenya. If you buy a piece of land with the thought of selling it after a few years, there is no guarantee that its price will only rise with the growing years. Typically the land economics says something different.
As per thumb rule of land economics, “If you buy a piece of land and its appreciation rate is slower than the rate of inflation, then you are actually making a loss on that investment, even if you sell the land for a profit”.
Due to inadequate understanding of property market, people end up losing money by purchasing land. This is a huge investment business so a person must be aware of the stats that a location’s property market will soon decline and, therefore, avoid buying land there when the only aim of buying land is to earn profit by selling it after a few years.
🎯 Buy Land and Build property for Rent or Sale.
Building property is another property investment avenue in Kenya. Building any property like school, college, hospital or even apartments may seem a profitable investment but it requires a lot of expertise and huge capital investment. In fact, if one has the finances, one can buy land and build residential units which in future will offer higher returns when resale or to let.. This strategy is capital intensive.
🎯 Investment in R.E.I.T:
Among the three options, investing in joint venture or R.E.I.T is the best. The investor doesn’t have to physically deal with architects, quantity surveyors, structural engineers etc as in the case of buying land then developing.
Another advantage with the joint venture option is that the pooling of resources from like minded investors can help to reduce the capital required from borrowing from banks significantly, hence an easier and cost effective source of development financing.
The investor also benefits from shared risk where property and conveyancing lawyers , land surveyors and land valuers have advised on the conveyancing process , ensuring the land is clean and without any encumbrance, ready for development.
🏘️Low Income Housing Development –
A significant decline in supply of low to middle income housing is spotted in the Government’s plan. As per statistics, development of a million units of public rental housing is required over the next five years. This sector is undersupplied because margins remain extremely thin. If the government creates the relevant incentives to widen this margin, Low income housing could be a boom market for 2018.
🏘️Existing Commercial Properties –
A major upswing in office enquiries is therefore expected in 2018. Now that 2018 is expected to be a rebound for real estate investments therefore, businesses looking to move office are firmly adopting the “wait and see” election approach. Presently the existing commercial properties backed with impatient capital is proven to be reasonable. A right property purchase should be able to provide 12%+ yields over a 5+ year horizon.
🏘️Student Housing –
We have seen a hold back in the business potential of student accomodation in Kenya though it may yield high returns.Student housing in Kenya is now a powerful alternative asset which if developed attractive will definitely guarantee tenanting., Hence, the development of student accommodation will prove to be the next big thing in the real estate.
🏘️Warehousing and Factory Development –
The slow investment in the industrial sector has lead to a chronic shortage of good warehouses that has presented new opportunities for growth in the country. The increase in manufacturing will increase demand for warehouses. Long lease warehousing is one of the most attractive Real Estate investment opportunities in the continent. Thus, setting up warehouses and industries will be an indication that industrial sector could be the next frontier for growth in Kenya.
🏘️Secondary City Retail –
Nairobians now are enjoying ample options for consumers needs like supermarkets, outlets and a broad range of shopping options are available in urban cities of country, however the majority of the small towns remain undersupplied. The county retail must be customized to fit its demographics. We have seen several untapped opportunities in the region’s secondary cities and towns to better serve consumers. Increasing urbanisation should fuel growth in Kenya’s retail sector as there are significant growth opportunities in Kenya’s second-tier cities.
Know more about best places to invest in real estate in kenya.
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Property Investment in Kenya
Kenya’s real estate sector is accelerating at a rapid pace making a substantial contribution to the GDP recorded as 13.8 per cent in 2016 rose from 12.6 in 2010 by the Kenya National Bureau of Statistics’ (KNBS) under its annual Economic Survey 2017. The construction industry grew by 9.2 per cent in 2016 from an expansion of 13.9 percent registered in 2015.
Planning to invest in Real Estate Kenya? Here is what all you need to know about, before you start:
- StartUp Capital
- Real Estate Training
- Property Evaluation
- Make the Down Payment
- BuildUp Equity
Let’s discuss in detail.
☀️StartUp Capital Required
Startup capital refers to the money required to start a new investment. To begin with, you have to start building up startup capital. You should start saving a fixed amount every month from your wage. Why not set up an automatic transaction of your salary to a savings account? You can also enquire loan offers for property investment in local banks.
Hence, get ready with an effective financial plan that will enable you to contribute at least 25 percent of the down payment on the residential real estate you’re planning to invest in.
☀️Real Estate Training – Get trained
As a beginner in the real estate industry, it is necessary to be well aware of the latest Real Estate trends and opportunities available in the Kenyan Real Estate market for new investors, only then you can make a smart move. Therefore, find some well-reputed real estate investors that offer real estate seminars to help you learn more about property business and its essentials.
Besides, you can also purchase books on real estate and read more about real estate market in Kenya.
Before you invest into any property, you must know about property assessment. Hire an appraiser who has good experience of property sector. Thus, you can seek guidance from him in evaluating the value of a particular property.
This is important because this will help you understand the financial viability of the property.
If the value of the property meets your standards, you can head on over to due diligence to ensure that the property you’re investing in is free from any type of encumbrances. Once verified, you can move ahead with the down payment. Once the payment is done and the property is handed over to you, this is entirely your decision to either rent the property or build it anyways.
Now, the final step is building up equity for your investment. How will you manage to build this up? Well, one of the solution is to let your property and get mortgage paid by the tenant. Equity is basically the amount of the property you own whether it is a home or just a land. It is important because if the value of home increases which means debt decreases and thus, equity again rises up and you can utilize this amount for investing in other property. This will create a foundation for a successful real estate business. But wait wait wait….Make sure while you are building it up, you definitely have contingency purposes.
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🏙️ Want to invest in Kenya real estate in 2018?
🏘️ Need to know, How To Invest In Kenyan Real Estate easily and in best possible way?
Most of the Kenyana are believing the real estate as the most profitable business in Kenya. Though an investment made in kenyan real estate market has its own advantages, there are certain things one needs to understand.
Like any legitimate business in Kenya, there is a high probability of getting exploited. For professional advice on property market you can contact us.
In this blog you will learn about:
🏗️🏘️ Property in Kenya | Kenyan Real Estate Investment
Let us give a brief overview on purchasing the property in Kenya:
To avoid any sort of complications, keep a check on the following things:
- the validity of the title deed (a title search is must before making any real estate purchase).
- zoning of the property ( it is better to be aware of zoning laws that simply specifies the areas where residential, commercial or recreational activities may take place).
- land rates and taxes are paid or not
- check if there are any caveats against the property or any pending disputes on ownership.
And once you are sure for the aforementioned things, check out the entire process of purchasing the property.
Nest is the financing of the land you are opting for. In case, you are preferring a loan or mortgage for financing your property investment in Kenya, make sure you fully understand how much amount you are going to pay back.
The last step is the consideration of security and insurance. Real estate investment, as any other asset, should ideally be insured. Shop for the best property insurer.
Check online quotes for an estimate of insurance premiums you will be paying. Last, but not the least, you must know the terms and conditions, claim settlement and then buy the right insurance.
🏗️🏘️ Real Estate Investment options in Kenya:
There are three major types of property options where one can invest in Real Estate Kenya:
Buying a commercial property:
One of the most reliable option available for Kenyan investors is investing into a business property. Such an investment is looked upon as a more stable income source. This is because the lease agreement is for the period of not less than the five years and involves a rent increment clause over the lease period.
Buying a residential property:
Residential property is another property investment avenue in Kenya. One can purchase apartments, built houses or land and then construct building. The only thing is that it will be lot of expertise and is capital intensive.
Buying the land:
Now the most important real estate investment avenue in Kenya i.e. Land. Once you buy a land, you can do anything with it. Mostly people purchase the land and then wait for the right time to sell in order to earn higher returns. As there is a common phrase
Don’t wait to buy. Just Buy and Wait.
Apart from this, there are several ways to add value to your purchase. Of course, in case of real estate business, terrain is ‘KING’ Consider the terrain while buying the land. You can develop the land the way you want. Although it will include expenditure at its initial stage but definitely will end up paying you handsomely.
🏗️🏘️ How To Invest In Kenyan Real Estate? 7 Important Facts To Consider
Now that you are aware of how to invest in Kenya Real estate and what are the options available, if you intend to venture into Real Estate business in Kenya, here are 7 important facts one must know before starting your investment journey in the country:
Nothing Like Small In Real Estate Avenue:
Many of us think that a huge saving is required to invest in a real estate business which is a big misconception. People think that the money they have is too insignificant to buy a property. We would like to advise them that they should seek guidance from a real estate agent. One can lose several investment packages and opportunities to get into this business due to the obscurity of real estate market.
Real Estate – NOT A GETTING RICH SCHEME:
Many of us think that a real estate business requires a huge saving which is a big misconception. People think that the money they have is too insufficient to buy a property. We would like to advise them that they should seek guidance from a real estate agent. One can lose several investment opportunities to get into this business due to the obscurity of real estate market.
Never Start it as a Primary Business
It is really a bad idea to quit your present job and directly indulge yourself completely into the real estate world, especially if your job is providing the initial capital for your investment,. An initial start with the business is going to take time for ripping good results. Further, you can’t predict whether the results are going to be in favor or not. We would recommend to hire professionals to manage your investments. Property agents are much experienced for the reason they are been into this industry from a long time and thus they can effectively handle the investments for you.
Create a team of trustable and capable persons:
Having a right team is the biggest support in case of risk management. Before making any big move, they can guide you for the right decision.. You must look for following persons:
- a property valuer,
- a conveyancer,
- an accredited contractor
- a loan adviser
These are the professionals one must involve in the team. This might seem you an expensive deal but building a right team of professionals will actually save you thousands and millions of shillings when it comes to high financial expenditures.
Understand the importance of location in a Real Estate Investment:
There is a famous saying for Realtors:
Buy the Worst House in the Best Neighbourhood.
What it conveys is that the importance of a property is not measured by the cost of construction when we talk about prime locations instead it is measured by the value of land where the property exists. So, while investing in a property, it is not obvious to always look for a beautifully constructed buildings or apartments. Investing in a simple establishment at a high-end locality always pays magnanimously.
The 1 PERCENT Rule:
Always seek advice from your property valuers while putting up any property to let. No matter whether it is a residential apartment or a commercial building, make sure that the monthly rent of the property once lent is always more than 1 per cent of the total investment cost. This will enable you to redeem your investment in less time.
Never Love Your Property:
Most of the times when people redecorate or redesign the building or redesign, they fall in love with it. They do everything to give it an appealing look but end up paying inflated prices when they are not able to sell those buildings at a profitable price. Here is when emotions come between your business and we all know there is no place for an emotional investor in a real estate business.
Therefore, we always advise our readers to keep a hold on your feelings. Real estate is not an sentimental business. One should not always try to give visual; appeal to the building in order to fascinate the clients but look out for ways how to earn profit from any type of building.
🏗️🏘️ Best Areas to invest in Kenyan Real Estate
So, which are some which are some of the best areas to invest in real estate in and across kenya? We takes a look at the most preferred hotspots for real estate developers with an eye on mid level to lower segments of the market.
- Nairobi’s satellite towns
These include Kitengela, Kiserian, Athi River, Juja and Kangundo Road.
Land availability and reasonable prices in these locations – commonly referred to as Nairobi’s bedrooms – are key drivers for developers looking to cash in on the growing middle class.
Recently, the area has seen an influx of real estate developers who are attracted by the area’s natural attractions. Mount Kenya, the Aberdares and Loldaiga Hills loom large over the region.
The Rift Valley region has been attracting high end developers. Naivasha’s scenic landscape, wildlife parks and a lake popular with holidaymakers
Apart from the well known, high-end products, the area has a growing appetite for middle and low end developments.
Finally, before you dive in, get some professional help and advice from a real estate developer in Kenya.
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