13 August 2018

Kenya: 5 Reasons Why Investing in Kenya's Real Estate Is Better Than Stocks

Kenya's need for housing is growing at an amazingly accelerated rate creating a shortage which has driven rents and real estate prices up.

This means that it is extremely difficult to get a decent house especially if you are a low-income earner.

The Kenya government has promised to bridge this gap by building hundreds of thousands of units to provide citizens with decent housing.

Affordable housing is one of the main pillars of the President's Big Four Agenda under which the government intends to build 500,000 new houses by 2022.

To make this realistic, Kenyatta authorised a 15 per cent tax relief for affordable housing beneficiaries and looped in investors.

Mortgages in Kenya have become increasingly unaffordable with house prices increasing in 2018, and, this may not change any time soon.

And it is at this point where the advantage to investing in Kenya's real estate is revealed.

For those interested, here are five reasons why you should invest in providing Kenyans decent housing.

The government has promised to work with real estate investors to make housing affordable. With this, an investor can take advantage and get better rates guaranteed by the government. This assures returns when it's time to harvest from the investment. The government has promised to give investors a good deal if they are part of the big four agenda of providing housing.

It's a relatively safe form of investment in Kenya since the country has a relatively safe and vibrant property market. The market offers investors an opportunity to invest safely. Comparing the property and shares return and risk, property easily wins. While shares have a higher capital growth, the difference in risk is enormous. The risk for shares can range from +40% in a year to -40% in a week! Property, on the other hand, does not experience that kind of variation which is an assurance that it is a safer bet.

It's easy to get started... almost! While it may seem like a straightforward kind of investment, you do need specialist knowledge to know which is genuine and which is not. Getting information from the right offices is better than trusting your gut or friends' recommendations. While the value of real estate keeps increasing, it is good to do due diligence to ensure that you do not invest where you will not reap.

And to avoid the demolition man, real estate is easy to research. Unlike investing in stocks and shares, you can get all the information you need by both hitting the ground running and asking around areas you are interested in. Researching online is also a good way of getting information on the investments you are interested in. Visiting open houses and auctions can also give you insights on what you need.

You can easily get finance but your books must be good! It is not hard to get asset financing in Kenya since lenders have home loans as a major part of their business. There are several institutions which will give you financing sometimes to 100%.

While these are just a few pointers on why investing in Kenya's real estate could mean good returns, it is prudent to always have the right information before settling on an investment.

The government has been repossessing land said to have been grabbed by corrupt cartels and with the demolitions going on, it is better to avoid the demolition man and con artists and you are good to go.

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