The Covid-19 Impact
Rethinking of investing in real estate?
The Covid-19 pandemic has impacted almost all industries in Kenya, The real estate industry not being an exception.
Tenants as well as land owners and developers have all been forced to reconsider the value they want to get out of property be it profitability, livability and most importantly safety.
Below are some trends in real estate that have emerged as a result:
Transfer of Land
From the information from the Ministry of Lands and Physical Planning, Land transfers have decreased by almost half in 2020 in comparison to 2019. In 2020 there were 3988 transfers whereas in 2019 there were 6162 land transfers.
Land transfer was at its lowest in March when the first case of Covid-19 was announced and lock down was put in place. However, land transfer increased significantly in the month of August 2020.
Analysts suggest that the transfer that was observed in the last quarter of the year was from accumulation that was caused by the pandemic.
A revision on land rates
Owning a piece of land in Nairobi is about to become an awfully expensive affair as land owners are expected to pay higher rates. The new rates will be based on between 0.1 and 0.115 percent of the current value of undeveloped land. The City Hall proposal seeks to revise the land valuation from the current one which is the Valuation Roll of 1982.
The buying habits of the wealthy
During the pandemic period, the wealthy Kenyans have shifted their buying habits. According to a recent report on wealth released in February 2021, wealthy Kenyans are often moving further away from the traditional posh estates and are seeking more privacy in outdoor spaces that they can acquire at lower prices. They are now relocating to less congested areas to escape the threats of contracting Covid-19 as the virus spreads among people living close together.
Smaller houses by landlords
In a report in the year 2020 by the Kenya National Bureau of Statistics (KNBS), it was observed that developers were targeting low-income earners in a hurried attempt to attract tenants. It was reported that in 2019 alone, there were 3,940 one room units constructed.
With the pandemic that left a large number of Kenyans jobless and unable to pay rent, tenants preferred more affordable living spaces.
This further drove the landlords into a craze of moving into construction of more single rooms and one bedroom units that were more appealing to the general population.
With the recovering economy and the adoption of trends such as working remotely, housing areas that can be transformed to working areas will be highly preferable to potential customers.
Low income earners may still prefer the smaller units whereas spacious apartments that accommodate a work, live-play lifestyle will be highly preferred by the middle class.
The retail Industry
During this pandemic period, the behaviors of consumers have tremendously changed, with many taking to Online shopping. This has led more retailers into rethinking and re-strategizing and some have adopted a hybrid system where they have developed their online presence as well as making progress on growing the delivery capacity.
Retailers have gone to rent spaces which are considered central such the Nairobi CBD to fulfill orders conveniently while having their bases in areas with cheaper rent. They have made an expansion into the market entry by combining online platforms and delivery channels.
The office setting
With such encounters such as the lock down that was imposed as part of containment of the Covid-19 virus, many companies have realized how effective remote working can be for both the employers and employees. It has changed how the office is utilized.
Commercial office properties may go the extra mile of leasing out their property as serviced offices to attract the rising SME’s and International companies in an attempt to curb the reduced occupancies in traditional offices.
With the restriction in movement that was caused by the Global pandemic, physical house hunting became an impossible task.
This saw property developers become creative and took on virtual reality to showcase their property to potential clients. Potential clients are now able to take virtual tours from anywhere, even Kenyans living in the Diaspora can be part of this amazing experience.
This in the long run saved many Kenyans from spending endless hours on the road commuting to different properties. The virtual tours are not restricted to boarders either.
Technology continues to make the real estate industry easy to navigate.
The way forward
The real estate industry will continue to be defined by what its leaders do to manage crisis, respond, recover and thrive. This is in respect to partnerships with the national government and county governments to develop more affordable housing units.
Safety and well-being of tenants should be top priority.
Considerations on remote working, including location and access to information and information technology resources are all part and parcel of short term liquidity needs.
Denver Group Limited is among the Land Companies in Kenya that offers affordable plots with ready Title Deeds. Invest with us today!