This archive report was first published on 3 September 2019.
As the country grapples with an oversupply of residential and commercial housing units, coupled with a credit crunch, property owners and developers are counting their losses. The latest market update from Knight Frank reveals that property values in Kenya have fallen by more than six percent in the past year, dashing hopes of a long-anticipated recovery.
According to Knight Frank's market report, the price of prime residential property fell by 1.8 percent in the first half of 2019, increasing the annualized decline to 6.7 percent in the year to June. Prime residential rents also reduced by 1.7 percent, taking the annualized decline to 3.3 percent in the year to June.
The average rental rates for office space in Westlands, Upper Hill, Kilimani, and Nairobi's Central Business District (CBD) have all plateaued, with some hitting a five-year low. Cement production has also decreased by 5.8 percent, from 1.55 million tonnes in the first half of 2018 to 1.46 million tonnes over a similar period this year, indicating a slowdown in construction projects as developers sit out the current glut.
Landlords are under pressure to attract new tenants and retain existing occupiers, leading to a decrease in rents for prime spaces in shopping malls by 5.9 percent in the first half of 2019 to Sh480 per square foot per month.
As a result, listed property firms have also felt the squeeze, with Stanlib's Fahari listed real estate investment trust (I-REIT) posting a 14 percent drop in earnings from operations. Home Afrika's share price closed in June at Sh0.62, which was 95 percent lower than its initial listing price of Sh12.00.
