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
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
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
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
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
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
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
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.
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
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
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.