Investors say volatile dollar hurting investments
Real Estate
By
Nanjinia Wamuswa
| Mar 14, 2024
Moses Muriithi, CEO Fanaka Real Estate Ltd. [Nanjinia Wamuswa, Standard]
The fluctuation of the dollar against the shilling has resulted in a wait-and-see attitude by investors - affecting businesses in the real estate and construction sectors.
Fanaka Real Estate Chief Executive Moses Mureithi said the volatility in the exchange rate has slowed down investments in land.
He said some of their clients who had shown interest in purchasing the land have since held back until the exchange rate stabilises. The CEO says the most affected are their foreign investors.
"The dollar fluctuation has caused confusion and uncertainty in the real estate and land investments industry. We have some clients who have decided to hold onto their planned investments in lands at least for some time to see how the dollar behaves," he explains.
"Initially, these investors had shown interest but when fluctuations set in, they decided to hang onto during this period of uncertainty."
Mureithi says investors don't want to put money where they don't know what tomorrow looks like. "In a normal curve, we should expect the shilling to continue gaining against the dollar. Unfortunately, for now, it's not the case, hence the uncertainty," he explains.
Mureithi explained that over five per cent of their foreign investors in land are in dilemma. "What we are waiting for is to see the response from diaspora clients. Initially, when the dollar was high, we saw an influx of people from the diaspora taking advantage and investing more in real estate," he noted.
He reveals, that some clients have also decided to diversify their investments, instead of land, they are also putting their money in stock.
Mureithi says the construction sector has been the most affected.
"A stronger shilling puts us in a better position because our operation cost reduces when the shilling gains."
The strengthening of the shilling has also seen the cost of construction materials go down.
For instance, a month ago, D12 was going for Sh1,460 but now costs Sh1380.
For D10, it has dropped from Sh1,070 to 970 while for D8, it has reduced from Sh730 to Sh640, and these benefits developers.