REAL ESTATE: Nairobi still a darling of top investors
Nairobi is among the most sought after cities by high-net worth individuals looking to invest in real estate. This is according to a survey by property developer Knight Frank.
The report says Nairobi grew in appeal last year despite high interest rates which analysts said could immensely hurt Kenya’s fast growing economic sector.
According to the Knight Frank’s Wealth report, Prime International Residential Index (PIRI), Nairobi ranked third in African cities as one for the world’s most important prime residential markets.
Nairobi scored 2.9 per cent growth in appeal ahead of Lagos which lost 20 per cent in attractiveness to high net-worth individuals.
The Kenyan capital ranked 33, behind South Africa’s Cape Town at 13 and Johannesburg which was ranked 26.
South Africa’s economy is however going through a rocky period while Nairobi is only hampered by political risk which Knight Frank refers to as muted geopolitical issues.
The escalating cost of land seems to have done little to dampen Nairobi’s attractiveness to top investors.
In just seven years, according to Stanlib, prices of land have risen by 535 per cent in Nairobi, making its sale the most profitable business in the capital.
High interest rates also appear not to have dented investors’ interest in East Africa’s leading economy.
“It is important to remember that not every market internationally has been waiting for the transition away from ultra-low interest rates – some never experienced them. In Kenya, for example, rates are in double-digits. The main theme in Nairobi is the impact of weaker oil prices, which has undermined demand from employees of oil firms and related businesses,” said Knight Frank’s Managing Director in Kenya, Ben Woodhams.
The firm notes that the first phase of Nairobi’s 33,000 square miles Garden City mall which opened last year was one of the largest malls in East Africa.
“Large, fast-growing cities, such as Nairobi, Lagos, Dar es Salaam and Luanda will continue to offer the clearest investment,” the report read.
The real estate industry has recently witnessed phenomenal growth in the housing sector leading to gut in the supply of office space and residential houses.
The same report also indicated that 202 Kenyans have joined the elite group of dollar millionaires.
A majority of the wealthy in Kenya — 6,527 dollar millionaires — reside in Nairobi, 952 live in coastal town of Mombasa while the remaining 1,483 are dispersed across the country.
Knight Frank’s annual Wealth Report says the number of dollar millionaires in the country rose to 8,962 up from 8,760 reported the previous year when the economy is estimated to have grown at a moderate pace of 5.5 per cent.