Prices of posh homes drop as supply rises in Nairobi.

Luxurious homes in kenya

 

Prices of luxurious homes in Nairobi fell slightly during the first three months of the year, according to a Knight Frank report. The Knight Frank Prime Global Cities Index quarterly report released last week ranks prime residential markets in 35 cities worldwide. It states Nairobi recorded a one per cent decline in prices of posh homes between December 2014 and March 2015.

Supply of high-end homes slightly exceeded demand, mainly due to developers responding to the rising foreign investor interest in Nairobi over the past few years. This is in addition to an expanding pool of local high-net-worth individuals seeking to buy trophy homes. The moderate growth in supply created room for price negotiation between buyers and developers, Knight Frank added.

Unlike before, homeowners and developers servicing loans were willing to settle for flat price growths in some neighbourhoods. “Our data going back five years shows Nairobi has been a star performer globally, with values growing by 20-25 per cent a year,” said Anthony Havelock, head of agency at Knight Frank Kenya.

“What we’ve seen over the last year is price stabilisation. If you drive around the city, there has been a huge amount of construction and buyers for the first time have got choice,” he added.The volume of transactions during the quarter also slowed down due to the security situation.

“There is a slowdown in some pockets of the high-end market. This is a market whose mainstay is the expatriate community, who are now having to change the way they live and properties they occupy due to security concerns,” said Knight Frank Kenya managing director Ben Woodhams.

“The spate of insecurity witnessed last year affected the entire real estate sector leading to a depressed market and some investors opted for alternative forms of investments such as government securities,” he added.

Reintroduction of the capital gains tax from January 1, 2015 is said to have played a role in the price stabilisation as the market awaited clarity from the Kenya Revenue Authority on the new law. Despite the gloomy first quarter, Knight Frank projected market vibrancy to pick up in due course, fueled by inbound investments as multinationals eye opportunities in the extractive industry and the growing aspirational consumer market.

“This is the best entry time for buyers in the high-end residential market before momentum picks up. Transactions normally happen when sellers are willing to negotiate and make concessions, however small, and this is what will contribute to an increase in transaction volumes,” said Woodhams.

The weaker shilling is also seen to be boosting foreign investment inflows into the real estate market, particularly from Kenyans in the diaspora, according to the report. In addition, property developers are adopting higher standards as clients become more discerning, a trend that will keep guaranteeing steady capital appreciation.

theSTAR

 

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