Developers project high demand for residential, rental housing this year

An aerial View of Nakuru City’s Central Business District. [Ben Ahenda, Standard]

If you are seeking to invest in the real estate sector this year, then the satellite towns of Ngong, Kajiado and Rongai should rank top on your list.

Also, if you expect prices of land and buildings to dip this year so that you can purchase some property, then expect bad news.

They will not, especially if you plan to invest in Nakuru County which received the city status last year.

“We also see an increase in uptake of office space in certain cities where white-collar jobs are growing fastest. This, for instance, is an opportune chance to invest in Nakuru City,” reads the real estate outlook by Lesedi Developers, a real estate firm.

“Real estate will appreciate at an above-average rate through late 2022 for three reasons–scarcity, utility and demand.”

The real estate firm predicts that buyers who are waiting for prices to plummet this year will likely be disappointed. “Yes, prices and demand are higher now and will keep going higher in months to come,” says the firm.

It adds that looking ahead into the year, land buyers, sellers and investors can expect some more of the same when it comes to continued demand, with some return to seasonality as well as a rise in interest rate.

This may have a mild impact on real estate transactions. “Rising prices will put pressure on affordability. Interest rates will rise, but wage growth may help to provide a balance for buyers,” says Lesedi Developers.

The firm notes that the rental market will see continuous growth throughout the year as demand remains high.

It points out that land prices have become inflated such that the percentage of people who can afford have reduced and will continue to do so.

“We are becoming a renter nation, particularly in the urban and peri-urban areas and this trend will keep growing into 2022,” it says.

According to Olive Limited, a firm that deals in land, consultancy and construction, the demand for land will continue to grow. “Land proved to be a resilient asset even as the pandemic sent the economy into disarray,” says Olive Limited in its 2022 outlook report.

Investment savvy

Projects like the Nairobi Expressway and the expansion of major highways such as Waiyaki Way are expected to increase the demand for land.

With increased urbanisation and the growing population, Kenya’s young and investment savvy population will continue driving the growth of demand for land.

“Satellite towns such Kimuka and Ngong remain appealing to potential investors. Kimuka has the fastest appreciating land prices while land prices in Ngong have been on a double-digit growth trend over the years,” the firm notes.

“For investors looking for land that can make them passive income, the opportunity lies in acquiring and developing land in areas such as Ngong, Rongai and Kajiado.”

While the experts agree that prices of land will continue increasing this year, demand for residential houses will also rise.

This is backed by a recent report by the Kenya National Bureau of Statistics, among other State agencies, which detailed the difficulty some Kenyans had in raising rent during the pandemic period.

“This has made it clear for thousands of Kenyans that owning a home is not a goal that should be postponed until retirement age,” says the report by Olive Ltd.

It adds, however, that affordability is key for the thousands of Kenyans looking for an opportunity to own a home. “Satellite towns such as Ngong will continue to attract young and old investors. The infrastructural developments in these towns characterised by the development of roads, electricity, and other amenities have made them attractive for potential homeowners,” reads the outlook.

For holiday homes, sandy beaches, road trips and nyama choma at resorts and lodges will not be the usual rendezvous for those seeking recreational activities and places.

Olive says Airbnb will become a more popular option for holidaymakers as more Kenyans take advantage of its offers.

Uptake of office spaces will be shifting, says the firm, as the sub-sector is still trying to get its footing following a drop in demand in 2020 when Covid-19 struck as many organisations resorted to working from home.

“The disruptions in the supply chain and economic recession further fortified the need for organisations to re-evaluate their working models,” says the firm.

Organisations will continue to find ways of reducing their overheads by seeking affordable options and adapting work from home models.”