Real Estate KenyaReal estate Kenya has been booming over the last 5 years and the sector even appears to be weathering the global recession sparked off by the financial crisis in the US. Why the Real Estate Kenya boom?The Kenya real estate boom has arisen because many investors have switched their savings from the low-yield treasury bills to the hugely profitable property market.This has been complemented by banks introducing and aggressively marketing various mortgage products. The comparatively low Kenya property prices are indicative of a strong capital growth potential and reasonable rental yields. The latter is attributable to the fact that Kenya's annual housing demand stands at 150,000 yet supply is only 25,000 units, resulting in a shortage of 125,000 units. Buying versus BuildingThe main pros of buying an existing home are certainty and convenience. The cost is clearly known and you can count on living in your home upon completion of the purchase transaction – which, in the context of the real estate Kenya sector, is typically 90 days from the date of signing the sale agreement.The main drawback of buying rather than building a house is that the floor plan and the finishings choice or quality may not suit your needs and the costs involved in altering these may be prohibitive. Building your home on the other hand, imbues it with a priceless sentimental value and enables you to come up with a floor plan that suits your family's present needs and aspirations. Furthermore, the architectural plan, construction materials and standards will likely be state of the art. This, for instance, makes it easier to use high-speed internet and satellite TV (DStv or GTV) without having wiring cluttering the entire house. The main disadvantages of building your own house relate to cost and time overruns. Higher costs may mean you never complete your dream home or that you take on more unsustainable debt. Delays in projects completions many also have adverse financial implications as you are hit twice with mortgage and rent obligations. The time you invest in the project many also leave you physically and emotionally drained and lead you to fall behind on your home and office commitments. Freehold versus LeaseholdA key point about the real estate Kenya sector is that properties in Kenya come with either freehold or leasehold title. Freehold title gives the owner absolute proprietorship over the land in perpetuity and relates to most properties in Lavington, Runda and Kileleshwa.Leasehold property, on the other hand, is held on a government-issued lease for a specified period, usually 99 years although some 999 year leases also exist in parts of the country such as Laikipia. Part of your due diligence before concluding a transaction on property held on leasehold should include finding out the outstanding lease period. It may not be wise to take anything less than 20 years. Leaseholders pay an upfront amount and annual land rent. Leases are often renewable on application to the Ministry of Lands, provided all the prior payments and other conditions have been met. Properties held on lease will be found in properties in Westlands and the city center. Both freehold and leasehold land is subject to annual City Council/ municipal rates, which are calculated based on value of the unimproved site. Posh SuburbsProperty prices are on the up in Nairobi's posh suburbs of Runda, Lower Kabete, Karen and Lavington as well as the middle-class areas of Kilimani and Kileleshwa. This partly because these areas are connected to the sewer and they experience less frequent water shortages than other parts of the city. Many landowners of plots at Upper Hill and the First to Fifth Ngong Avenues in the Community area have converted their users from residential to commercial. Greater Nairobi: The Future of Real Estate Kenya InvestmentsIn addition, land developers have been buying plots of land in the outskirts of the city such as Athi River and Mlolongo. There are 3 main reasons for this:
MombasaThe affluent residential addresses in Mombasa are Diani and Nyali. Diani, on Mombasa's south coast, is a much sought-after residential address because the sand of its famously white beaches is powder-soft and the ocean waters are crystal turquoise clear.Up market Nyali on the other hand is close to the city center, Nyali Golf and Country Club and Mamba Village which doubles as a crocodile farm and discotheque. LamuLamu, Kenya's tranquil (almost lazy) town has a strong Swahili culture. Lamu's enviable contribution to the real estate Kenya sector is the Lamu door - a beautiful heavy wooden intricately carved door used in posh residences and businesses all over the country.MalindiMalindi is home to some of Kenya's finest beaches. Swahili cultural artifacts also have a much heavier presence here than they do in Mombasa. Because of burgeoning German and Italian resident populations, investing in the real estate Kenya sector here is particularly profitable with the prices being comparable to those pertaining in Europe.KisumuKisumu, Kenya's third largest city, is part of US President-elect Barack Obama's Luo homeland. On account of this fact alone, real estate investment in the city is likely to be on the up in the coming years. The most affluent part is Milimani, where the Imperial Hotel and the members-only Nyanza Club are located.Other Towns in KenyaOther places worth checking out for real estate investment opportunities are Naivasha (a favorite with Europeans), Nakuru and Eldoret although these tend to be less cosmopolitan than the ones enumerated above.Real Estate Kenya ListingsEvery Thursday, the Standard newspaper carries comprehensive listings of Kenya properties for sale and renting in its Home and Away pullout. In addition, you should plan to attend the well-advertised real estate exhibitions held in Nairobi throughout the year. Real Estate AgentsThe leading real estate agents in Kenya are Knight Frank, Villa Care and Hass Consult. Be sure to check out the Kenya Properties page for an analysis of these and other real estate agents in the country.Payment TermsProperty transactions take an average 90 days to be concluded. Upon reserving a property that is ready for occupation, you will often be required to pay 10 percent of the purchase price upon signing the agreement of sale and the balance within 90 days. Non-residents can appoint agents, such as lawyers, to act on their behalf. Acceptable modes of payment are personal and banker's checks and electronic transfers.Mortgage ProvidersSeveral banks, building societies and mortgage companies provide mortgages. These include Housing Finance, Savings and Loans (which is part of the Kenya Commercial Bank Group), Barclays, Commercial Bank of Africa and Stanbic.Most of these financial institutions will require an outstanding lease period of at least 50 years before considering your mortgage application. Mortgages typically run for 15 or 20 years and attract variable rather than fixed interest rates. In fact, fixed interest rates are only offered by KCB's Savings and Loans. While Stanbic offers 100 percent financing, most of the mortgage financing arrangements in the country will require you to put in substantial equity, ranging from 15 to 30 percent of the purchase price. The equity portion is used to cover appraisal, professional valuation, legal, statutory and registration fees. Related PagesKenya PropertiesReturn from Real Estate Kenya to Home
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