Politics in Kenya has always been in turmoil. It influences everyone and almost everything in the country. So how has it and will it influence the real estate market?
Political instability discourages real estate investing. Most investors are likely to go slow on investment until the political temperatures cool down.
Let’s look at 2007 when the post-elections violence took place, the political tension affected the economy. Therefore, foreign investors withdrew from the country.
Additionally, some local investors found themselves in a tricky spot when extremists took over their properties which were never returned. Not forgetting all the property that was damaged. Both local and foreign investors suffered greatly.
Furthermore, due to tribal tension, some tribes in Kenya couldn’t live in some parts of the country without the fear of overpriced homes or safety.
Political Tension Leads To Immigration of Investors
Due to this, the real estate market became a complete buyers market. Homes were sold for next to nothing as sellers just wanted to immigrate.
To date, immigration has played a factor in selling when political turmoil arises. Due to this factor, investor confidence has taken a battering as the political situation affects negatively on economic growth.
In recent history, stats have shown that the number of sellers selling due to immigration has doubled. This is mostly due to political instability especially with terrorism a huge contributor.
Factors that are also influenced by politics indirectly include things such as rising inflation. Due to global food and oil prices which decreases the monthly disposable income. This all leads to a rising household debt-to-disposable-income ratio.
Local Investors Are Stepping Up
Although we have seen some ups and downs in the real estate market, during the years since the first democratic elections. The future still looks bright.
Recent stats show Kenyans have made a big entrance into the market and that almost 50% of the investors now come from locals. One of the main influences being they realised the goldmine which is real estate.
This is a very positive sign for the real estate market and we hope that this continues. We have seen major changes in the real estate market over the years. But the entry of new buyers into the market is surely welcomed.
The role which politics in Kenya plays towards foreign investors is immense. Any political instability causes potential international buyers to retract and this causes sellers to drop their prices.
What are some concerns?
One of the major concerns for buyers looking at commercial properties is the land reform situation in regards to Vision2030. These properties have been attracting international attention as many will generate income for the buyer. With land reforms being called for, international, as well as local buyers, stay hesitant when investing in Kenyan properties.
The political situation of neighbouring countries can easily spill over into Kenya. Somalia has for long had political problems and this directly influences any potential investments. With the constant fear of terrorist attacks.
There are quite a number of negatives when it comes to the influence that our politics have on the real estate market. But we continually see great improvements in the market, both local and foreign. This can be contributed to the Chinese interest in Africa and with the interest they bring revenue as well as improvements.