As the best property management software providers in Kenya, we continually monitor the real estate market to help landlords and property managers maximize their revenue. As the election draws nearer, the question you might be asking yourself is how the 9th August 2022 election will affect the investment environment in Kenya. In previous years, the election period comes with the risk of destabilizing the economy due to ethnic clashes. This often led to lower business activity and investor confidence. In some cases, risk-averse investors even hold off or sell the investment holdings. So, how will the upcoming elections affect the real estate market this year? Here is all you need to know.
To better understand the effects of the election on the real estate market, it would be best to discuss the market sentiments that drive demand and supply. As per a recent survey by the Kenya National Bureau of Statistics, the real estate industry in Kenya has been enjoying tremendous growth due to growing infrastructure, increased tourism activities, and the government’s efforts on affordable housing. However, the real estate sector has its fair share of challenges, including oversupply in some areas, financial difficulties, rising interest rates, corruption, and inaccurate land prices.
Additionally, the sector might face various challenges since this is an election year.For instance, the real estate sector recorded a 4.1% growth rate in 2013, a 1.1% decrease from 5.1 in 2012. Similarly, the growth rate decreased by 2.9% in 2017. During this electioneering period, the following factors will be affected:
Like other industries, real estate is also subject to the law of supply and demand. As a result, the force of supply and demand largely influences land prices and rental units. More demand in the housing market leads to higher prices, while more supply leads to lower prices. So, how does the law of demand affect the real estate marketing Kenya during this election period? Well, some areas are likely to experience decreased demand while others might experience more demand.
The main reason some areas will experience reduced demand is ethnic clashes. Property seekers may avoid such hot spot areas or postpone their plans as they await the outcome of the elections. Property managers and landlords will likely deal with reduced occupancy rates and lower returns during this period. A recent National Cohesion and Integration Commission study revealed that six counties, including Nakuru, Kisumu, Nairobi, Uasin Gishu, and Mombasa, might experience election-related violence.
Beyond the violence, the economy might also take a hit during the electioneering period, which also means that tenants and property seekers might not be in a position to buy or rent a new property. With that in mind, we expect property managers and landlords to lower their prices or offer discounts to cushion tenants and property buyers from the adverse effects of the election period.
Property owners and managers should embrace themselves for lack of adequate credit access during the election period. First, developers are likely to slow down their plans as they await the outcomes of the upcoming elections. Similarly, lenders will likely tighten their lending policies to cushion themselves against economic uncertainties. Within adequate funding, real estate investors are likely to halt their plans.
Government policies have a significant impact on the real estate market. To help you understand, the government can increase or reduce the demand and supply for real estate through subsidies, deductions, and tax credits. Being an election period, the Kenyan government has introduced various subsidies to caution the average citizen against the adverse effects of the economy. Consequently, tenants might have extra money for rent.
Additionally, the government is launching social projects to boost its acceptance rate.Property owners and managers can benefit from these social projects in the long run. For instance, launching roads, sewer, and water projects near your property will likely boost your occupancy rates.
It is best to note that the economy often returns to normal quickly after the election. Property owners and managers should remain unfazed during the upcoming election period. Even though you might be tempted to take a wait-and-see approach, don’t change your entire investment strategy. Prepare for volatility and focus on the present rather than the future. You can also use the election period as an opportunity to find cheap property across the country.
Property owners and managers across the country can take the stress away from property management during this electioneering period by using the best property management software in Kenya. Such a rental property management system allows landlords and property managers to manage their properties on autopilot and maximize their profits. Why don’t you try it today and watch your profits soar.
Book a demo with us to learn how Bomahut can help you improve rent collection and save time on property management tasks.
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