The Star (Nairobi)

Kenya: Real Estate Agents See a Vibrant Market Ahead

Real estate consultancies in Nairobi expect the market to pick up faster this year than in 2013, betting on higher demand for residential, office and retail space.

Some of the property agents who responded to the Star's sentiments survey are hinging their verdicts on improved security, demand from multinationals eyeing East Africa, the emerging oil industry and local-driven demand to spur uptake.

Knight Frank Kenya managing director Ben Woodhams said the overall residential market was last year impacted on by high mortgage rates that locked out many potential buyers.

"This meant that the rental market was stronger than the capital market - buying of houses - and we didn't see the volumes of sales we were hoping for. But once this aspect improves, we are hoping in 2014 there will be more people buying houses," he said.

Woodhams said Nairobi functions as a capital for the East Africa region and a logistical hub which will see more multinational firms either expanding bases or setting up operations for the first time in the city.

This, he said, will boost sale and letting of houses, offices, and industrial and retail space. Expansion of the JKIA is also expected to play a significant role by cementing Nairobi's position as a regional hub.

"Demand for offices was quite high last year and we let our entire grade A office space - both towers at Delta Corner, 9 West, West End Towers and so on - and we anticipate that the trend will continue, driven by global companies and the oil industry," said Woodhams.

He said despite the Westgate Shopping Mall incidence, which shook investor confidence a bit, November and December ended up being the "busiest than ever before" for tenants at all other retail malls handled by Knight Frank.

"Kenyans still went back to the malls and we anticipate that some of the tenants of Westgate will drive uptake of space at new retail malls coming into the market such as Garden City, The Hub and Two Rivers," said Woodhams.

Steve Mbugua, Realcom's managing director, said 2013 was "a buyers' market" and good for bargain hunters, but this did not necessarily impact on asking prices.

"Prices in the high end market continued to rise especially in Karen. It was a very good year though for buyers as some got great deals by pushing for huge bargains," said Mbugua.

He said the high end market got a huge boost from Asian buyers from India and China, while the lettings segment - which relies heavily on European expatriates - was hurt by the economic woes in Europe.

"2014 is full of promises and everyone you talk to is anxious and eager to get into the market. We are expecting locals to be quite active this year," Mbugua said.

The high-end rentals market was slightly shaken last year by undertones of non-renewal or refusal to issue new work permits to foreigners by the new government, slowing demand.

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