Voyager Beach Resort banner | Coastweek


THE MOST FROM THE COAST !

..


 Coastweek website


XINHUA NEWS SERVICE REPORTS FROM THE AFRICAN CONTINENT

 

Shocks to Financial Market jolt depressed Kenya real estate sector

by Bedah Mengo NAIROBI (Xinhua) -- Some house projects have stalled, others have failed to take off while those complete have no buyers, pointing to a depressed real estate industry in Kenya.

New house prices are also shrinking, the number of houses being auctioned due to defaulting in loan repayment are on the rise and mortgage uptake has stagnated, with the turmoil in the industry hurting property developers as much as buyers.

After over a decade of growth, the east African nation’s once booming property industry seems to be experiencing a bubble burst.

Analysts have blamed the current shrink to a number of factors, with the major ones being the introduction of caps on loan rates in 2016, stifled economic activities and too high house prices.

Suraya Property Group, a leading real estate firm in the east African nation, is among the worst hit by the turmoil.

As is the case with other firms, several of its projects are over four years behind, leading to protests from home buyers.

Josephine Murugu, one of the home buyers who had invested with the company, noted that she has waited for her home to be completed for over three years despite having paid the value of the house in an off-plan scheme.

She has filed a complaint with authorities.

Pete Muraya, the chief executive of the firm, attributed their woes to tough economic conditions, arising from the capping of interest rates.

Another troubled company, Dinara Properties Ltd, recently went under with investors’ money, a majority of whom had put money in their 3 million shillings (30,000 U.S. dollars) two-bedroom apartments that were to be constructed off-plan.

A number of surveys and data on Kenya’s property market released recently point to stifled activities in the real estate sector.

A Kenya Bankers Association (KBA) property index released on May 23 shows that house prices declined 3 percent, a five-year low, in quarter one of 2019 due to constraints in credit flows to both the supply and demand side of the housing market.

"There is a cautionary stance by buyers in view of the prevailing economic conditions and the squeezed household budgets which continued to exert a drag on the housing market.

"This is partly due to the challenges facing prospective home buyers to access bank credit," the association said on the demand side.

Latest data from the Kenya National Bureau of Statistics indicates a decline in the value of the new building plans approved in the capital Nairobi to 2.1 billion dollars in 2018, a four-year low.

Cement consumption in 2018 also dropped to 5.49 million tonnes from 5.79 million in 2017, highlighting reduced activities in the construction sector.

Property developers have blamed the decline to a stifled economy and interest caps, which have hurt demand for houses and office spaces.

Investors have apparently shied away from starting new projects due to the challenges in the sector, according to Daniel Ojijo, a property developer.

Antony Kuyo of Avent Properties in Nairobi noted that while the interest rate caps may have affected loan disbursements to various sectors including real estate as banks lend more to government, Kenya’s property price were way too high.

"How do you account for a three-bedroom apartment going at 150,000 dollars in a middle income estate? It is completely unrealistic. I believe the market is correcting itself," he said.

The biggest casualties, he noted, are home buyers, especially those who had put their money in off-plan projects.

"Some of these projects may never take off and investors would not get back their money.

"This is going to erode the industry," he said.

The government on May 22 launched a mortgage refinancing company, which aims at lowering the cost of home loans in the east African nation and increasing their availability to the ordinary worker by providing long-term funding to primary mortgage lenders.

The move has been lauded by real estate experts, who noted that it would awaken the industry, which currently has some 24,000 mortgage accounts.
.

UPDATE:

Kenya’s overall inflation falls to 5.49 percent in May

NAIROBI (Xinhua) -- Kenya’s overall inflation fell to 5.49 percent in May, down from 6.58 percent in April, the statistics bureau said on Friday.

Zachary Mwangi, director general of Kenya National Bureau of Statistics (KNBS), said that the lower inflation rate was driven by a decrease in the cost of food.

"The year-on-year food inflation decreased from 8.17 percent in April 2019 to 6.33 percent in May 2019," Mwangi said in a statement issued from Nairobi.

The Food and Non-Alcohol Drink’s Index decreased by 0.37 percent in May due to favorable weather conditions that led to lower prices.

Mwangi said that the Consumer Price Indices (CPI) decreased by 0.07 percent from 205.9 in April 2019 to 205.77 in May 2019.

The Housing, Water, Electricity, Gas and Other Fuels’ Index rose by 0.61 percent as a result of higher cost of some house rents and cooking fuels.

The transport index rose by 0.32 percent, mainly on account of increases in pump prices of petrol and diesel.

Price data came from selected retail outlets in 25 data collection zones in Nairobi and in 13 other urban centers.

             

 

Remember: you read it first at coastweek.com !


Zanzibar Serena Hotels banner | Coastweek

 

TO ADVERTISE ON THIS WEB SITE:  www.coastweek.com
Please contact

MOMBASA - GULSHAN JIVRAJ, Mobile: 0722 775164 Tel: (+254) (41) 2230130 /
Wireless: 020 3549187 e-mail: info@coastweek.com

NAIROBI - ANJUM H. ASODIA, Mobile: 0733 775446 Tel: (+254) (020) 3744459
e-mail: anjum@asodia.co.ke

 
    © Coastweek Newspapers Limited               Tel: (+254) (41) 2230130  |  Wireless: 020 3549187  |  E-mail: info@coastweek.com