Kenya’s middle class spurs growth of real estate sector - CNBC Africa

Kenya’s middle class spurs growth of real estate sector

East Africa

by Elayne Wangalwa 0

Kenya’s growing middle class has led to a demand for residential and commercial real estate, says a report by property website, Lamudi.

According to the global property portal focusing exclusively on emerging markets, the Kenyan property market has increased by 25 per cent, including increases in commercial and residential real estate.

“I think it [real estate] is looking quite good, that is one thing we have going for Kenya. It is a very vibrant market, you have a lot of investor confidence especially with how the trend has been in the last couple of years and it has grown immensely,” Dan Karua the managing director for Lamudi told CNBC Africa.

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East Africa’s biggest economy is growing at a rate of 2.7 per cent annually. During the country’s rebasing – replacing of the old base year used for compiling the constant price estimates to a new and more recent base year – that saw the country attaining a lower middle income status, the real estate sector contributed 5.9 per cent accounting for most of the change in the level of the country's GDP.

Meanwhile, a survey by the country’s central bank revealed there were less than 20,000 mortgage loans in the country in 2013, a fraction to that of the population of the capital city, Nairobi at over four million.

Nonetheless, the real estate sector in the country grew by 2.6 per cent in the second quarter of 2014 according to the county’s statistics bureau.

Lamudi co-founder Kian Moini said in a press statement, “The Kenyan real estate market is focused on renting properties, with 70 per cent of house hunters looking to rent. Although there is an imbalance between the supply of housing and the current demand, this gap provides investors and developers with a great opportunity to make capital gains and fuel the economy. Especially with lower interest rates, the real estate market has great potential for growth.”

 A housing price index is set to be launched this year to help policymakers take a broader view of changes in the economy and to assist investors in managing risk as the country currently has no independent tool for tracking real estate prices.

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