The real estate market in Kenya holds opportunities for both Investors and Buyers. Some of the factors influencing Real Estate include;
Urbanization has such a great influence on Real Estate growth and investments. As the population grows and moves to Urban areas, there’s a need for more housing to cater to them. This in turn creates more demand for both residential and commercial properties.
To fully accommodate a growing population, there’s a need for development. This means commercial spaces such as offices, business centers, apartments, and retail spaces are required. This therefore opens up opportunities for pools of investors.
Real estate investing has the potential to increase disposable income for the investor. By buying or setting up apartments for rentals in Kenya, investors stand to gain passive income from collecting rent. Also, Real Estate value often increases or appreciates and if you sell it, you generate profits. Real estate doesn’t directly create disposable income. However, profits generated from real estate can be a source of passive income or can be reinvested to create and build wealth.
Kenya faces a housing shortage, especially in urban areas. This creates difficulties for people in urban areas looking for affordable housing. While this might be a problem for Kenyans, it is a good opportunity for investors to invest in the sector. Because of this shortage, investors can expect high occupation in their properties. Also, their property value increases as demand exceeds supply.
While looking for a place to set up your property or get land, consider areas with improved infrastructure and high demand for housing. This will guarantee good investment returns. Also, consider areas with potential for urban growth, as those gain value over time too. Investing in areas with high population growth means that there’s demand for housing which in turn translates to high occupation rates. This also means that investing in areas with high housing demand and not enough supply will have your property value appreciating.
It is also important to consider areas near or with potential growth for infrastructure such as roads, stable power, etc. These improve the quality of life and are likely to attract tenants. Areas near hospitals, schools, etc. are also good investment opportunities. They attract tenants who are ready to pay for premium services.
It is also very crucial to consider your target demographic. Is it young, elderly, families, or students? This will help you to align your property investments with the needs of those particular groups.
Long-stay rental properties provide leases for a period longer than 6 months. They include traditional rentals, furnished apartments, and Airbnb. While Airbnb is known to offer short-term stays, they also have options to rent monthly to their customers. This is the most popular way real estate investors make money investing in Kenya.
Short-term rental property investors make a lot more than other rental property investors. Airbnb hosts can adjust their prices depending on the season. Prices usually skyrocket during peak tourist seasons in specific tourist attraction areas. Short-term rental properties have brought convenience and flexibility to the tourism industry, which never existed before. Some short-rental property hosts include companies such as Airbnb and Vrbo.
Both commercial and residential properties are in demand, especially in urban areas. People need retail centers and office spaces. etc, while others seek luxurious places to stay. Residential properties concern housing, such as apartments and gated community homes to single-family homes. All these in return offer an investor property appreciation, part-time rental income that is passive, and less risk because they are low-maintenance properties. On the other hand, commercial properties are far more about buildings like office spaces, warehouses, and retail centers. For instance, in most cases, commercial properties proved to offer higher return rates than residential ones. They generally have longer lease terms than residential properties, providing more financial security. They are riskier due to the need for higher maintenance.
As a property owner, you need to keep a clear record of your Rental income and other expenses. You can identify where a lot of your money is spent and make decisions such as cutting costs or increasing rent. It is also important to note that even under Rental tax, you still have to file Tax Returns. Having a clear record of all your income will make it easy for you to do so. Being able to track your financial records will help you see where you are financially as an investor, that is, is your property making you profits or do you lose money to it? It is also important to consider property management. It ensures smooth running for an investor. Consider the available resources, and how much you’re willing to risk. These will help you know if to use property management companies, and real estate agents or operate solely.
Investors seeking to invest in Kenya have plenty of options to seek finances from. These include commercial banks and Saccos. Commercial banks in Kenya provide mortgage loans. They can also finance your property through loans, whether you are building or buying property. Some Saccos also offer land and home improvement loans to their members. Investors could also collaborate with finance companies to create projects.
The increase in the need for housing in Kenya has led to the expansion of the mortgage market, ranging between 12% and 14% as of 2024. This varies depending on the lender, and the amount of your loan, among many others. For one to qualify for a mortgage loan in Kenya, lenders consider some factors. They include income, employment status, and collateral. But these also vary among different lenders.
.jpg)
This is where investors buy underdeveloped properties such as homes and then renovate them to resell them. They may furnish them according to their taste or that of the potential buyer by considering what they like or what’s popular. They generate profits due to their improved nature.
This is where investors buy properties such as apartments, commercial spaces, and homes and rent them to tenants to generate rental income.
This is where an investor purchases a property and then sells it to the tenant over time. This usually involves an agreement, where the owner grants the tenant to live there for a certain time (usually 2-5 years) after which they get to buy the property. The landlord sells the property with a potential buyer in place and profits from the deal. It is a good strategy for the tenant that can not buy in the traditional circumstances, but it provides very little benefit at all to an investor. The lease period allows them to build their credit scores and can eventually get a mortgage to buy the home. It also allows them to test the property before buying it.
It is important to understand how the real estate market in Kenya. Consider factors such as demand, and market patterns as well as other indicators such as urbanization patterns and so on.
If you’re serious about investing in Kenya, consult with a real estate agent or a lawyer. First, they are experts and can help you navigate faster, while also mentoring you.
Planning for your property maintenance is key in making sure you retain tenants and your property doesn’t lose its value.
Screening tenants allows you to check their income and rental history and avoid non-paying clients for an overall smooth running of the property.
Conduct your research, and understand the real estate market. Consult with experts as you join this lucrative world and unlock the real estate success that you deserve. Learn more about the Real Estate market in Kenya, through Real Estate associations.
They include; The Kenya Professional Realtors Association (KPRA), Association of Real Estate Stakeholders, etc.
A: The investment option to choose will depend on your budget and investment goals. Notably, long-term rental properties have been shown to guarantee high returns..
A: The amount of money you would need will depend on the type of investment you’d like to make. Explore the various investment options available to find one that fits your budget.
A: Yes. The real estate market in Kenya is profitable and it has shown improvement over the past two decades.
Book a demo with us to learn how Bomahut can help you improve rent collection and save time on property management tasks.
%401x.svg){kind=icon}
.jpg)
