Ten years is a short time in real estate markets. A single skyscraper project could take half a decade to complete while certain projects take more than a decade to complete. The bulk of market activity however happens in the small to medium projects and transactions by individuals and firms within shorter time periods.
In many ways the past decade (2010-2019), has been a defining one for property markets in Kenya and Africa. In this piece, we highlight the key events, key people and key developments that kept the markets talking.
2010– The glut; when the economy began expanding post-2007, investors came calling. The CBD became too small so big-ticket investors looked to Westlands, Upper Hill and Mombasa road. Small and medium-sized enterprises also expanded their reach beyond the CBD and some of them moved premises from the urban core. The result was a commercial office glut as old office buildings in the CBD lost tenants to newer commercial establishments in more upscale locations.
2010– At the beginning of the decade property firm HassConsult launched Hass Index launched in Q3 of 2010 to track property price changes.
2012– The Nairobi Stock Exchange (NSE) acquired Tossica Centre in Westlands for Ksh. 360m, making forays into real estate.
2012– Capital Markets Authority (CMA) set the capital base for licensing of REIT managers at KES 50 million. Investors in REITs required to pay a minimum of Ksh. 1 million for shares.
2013– Home Africa listed on the GEMS segment of the Nairobi Stock Exchange (NSE) becoming the first property developer to do so. Shares of the builder have been trading significantly below par value in recent years.
2013– Value of building approvals in Nairobi peaked between 2013 and 2014, reaching up to Ksh. 30 billion according to KNBS data.
2014– The Finance Act introduced the 5 percent capital gains tax effective 1st of January 2015, after 30-years since it was scrapped in 1985. The Finance Act of 2019 raised the rate to 12.5% effective October 1st, 2019 subject to relevant exemptions.
2014– KBA launched a Housing Price Index while in 2015 HassConsult introduced the Nairobi-18 Suburbs and Nairobi Satellite-14 Town indices launched in 2015 to supplement the Hass Sales Index.
2015– Stanlib Fahari I-Reit listed on the NSE raising Ksh 3.6 billion. The business is due to be acquired by ICEA Lion as part of its acquisition of Stanlib.
2015– Cytonn unveiled a Ksh. 50 billion real estate fund and its real estate affiliate following a fallout with real estate developer, Acorn.
2018– Kenya announced plans to adopt European Building Codes effective January 2021, discarding the 49-year old British building codes.
2018– President Kenyatta announced the affordable housing plan to build 500,000 affordable homes by 2022 as part of the Big Four agenda.
2018– Kenya has eased its way up the doing business rankings form a low of 129 in 2014 to its highest ranking of 61 announced in the 2018 doing business report by World Bank. The improvement was partly attributed to process and technological improvements in the Ministry of Lands.
2018– Property developers outpaced manufacturers as the biggest loan defaulters. Mortgage defaults in 2018 increased to Ksh. 38bn from Ksh. 27.2bn in 2017, following widespread distress which saw several massive auctions in the industry including HF’s Ksh. 2bn auction of mortgage holders and Suraya properties.
2018– Kenya Mortgage Refinance Company was incorporated as a lender of last resort for banks and advance mortgages at lower rates, enabling commercial banks to further drive down mortgage rates in the country. The mortgage crisis hasn’t changed much from 10 years ago when over 90 percent were locked out of mortgages.
2019– Tatu City Development announced plans to begin Phase 2 of Tatu City extension (Mchana Estate) which will take up another 885.22 hectares (2,186.49 acres).
2019– The National Social Security Fund (NSSF) announced plans to fund the construction of 30,000 low-cost houses in Mavoko, Machakos County at an estimated cost of KSh. 500 billion as part of the affordable housing project.
2019– Kenya got its flag on the tallest piece of real estate in the world during the Jamhuri Day celebrations for three minutes.
We found some similarities at the beginning of the decade with the current situation in the residential markets. In 2010 there was a residential glut in the markets especially on the higher end leading to a slowdown following overpricing and excessive supply, the same can be said of present market conditions.
Centum Chief James Mworia is probably the deal maker of the decade. The CEO has had a notable impact on the industry through flagship developments across East Africa including the Two Rivers Development, Vipingo mixed-use development, Pearl Marina in Uganda. In 2018, Centum appointed its CFO, Samuel Kariuki, to head the firm’s global real estate operations.
Other key players include Acorn CEO Edward Kirathe who in October of this year raised Ksh. 4.3 billion through a green bond and Cytonn Investments CEO Edward Dande who has been resilient in expanding the firm’s property portfolio despite legal tussles with Britam.
Daniel Ojijo, CEO of Homes Universal, a property outfit responsible for various real estate services including property management, property development, project management and events. The property veteran is the man behind Villa Care, Mentor Holdings, Sigimo Entreprises, Kenya Homes Expo and Homes Kenya Ltd. He has been instrumental in market development.
Realtor Victor Gikonyo Gitonga, Managing Director and CEO of Axis real estate and a board member of the Kenya Property Developers Association. The experienced realtor has been outstanding in advocating policy and promoting the industry at a national level and on various regional platforms.
Ben Woodhams. The Knight Frank Managing Director has played a key role in making the firm one of the biggest property management firms in the country. Knight Frank arguably has the largest commercial property portfolio under management in the country. In addition, the firm has played a key role in positioning Nairobi’s prime property markets through research.
2010- Completion of the Thika superhighway in 2010 was decisive in marshaling demand for land and property along the road’s stretch. Property developments have continued to push up real estate prices along the highway for the most part of the decade.
2011- Investors launched the luxurious Sergoit Golf and Wildlife Resort in Eldoret town riding on the continuing real estate boom in the country at the time. The Ksh. 40 billion development backed by Sergoit Holdings Ltd. was set for completion in 2016.
2012– One of the largest developments unveiled in the past decade was the Ksh. 85 billion Longonot Gate Development; a 1500 home on 2400-acres of land development including a golf course and commercial space.
2014– Completed in 2014, Garden City was in 2017 named the best green building in Sub-Saharan Africa for its retail and residential spaces during the Africa Property Investment Summit.
2015– Centum acquired 10,500 acres from Rea Vipingo Holdings at the Coast where the listed investment firm is developing the Vipingo industrial park which is a master-planned project. In 2018, Centum announced plans to start work on the Ksh. 100 billion industrial park.
2017– Tilisi developments unveiled 400-acre Tilisi City targeting 3200 housing units and a logistics park.
2017– Estimates showed that Murang’a County had lost over 710-acres to the real estate industry especially along the Thika road belt.
2017– Award-winning mixed-use development Two Rivers mall is launched, adding nearly 700,000 square feet of retail space into the market. The Centum backed mall is the second largest on the continent after the Mall of Africa.
2018– Chinese multinational AVIC unveiled the Global Trade Centre (GTC), a commercial complex set on 7.5 acres of land in the heart of Nairobi’s Westlands business district. The building is expected to be completed in 2020.
2018– Garden City Developer, Actis broke ground on Ksh 54 billion Business Park to offer 25,000 sqft of office space.
This has been a defining decade for Nairobi’s skyline. In 2018, Britam Towers was launched becoming the tallest building in the region. Other landmarks completed during the decade include UAP Towers in Upper Hill, Prism Towers and One Africa Place in Westlands.
In Kenya, this is the decade that saw the construction of the single most expensive piece of public real estate in the country’s history, the Ksh. 577 billion standard gauge railway from Mombasa to Naivasha which was completed in 2019.
On an African scale, this is the decade and year (2019) that Africa actually got two of its tallest buildings so far breaching the 200m height mark which separates tall buildings and supertalls globally. A majority of the continent’s supertalls are still on paper, between legal battles or on the sidelines of regulatory approval.
Again, this is the decade that saw the construction of the Ksh. 640 billion Grand Ethiopian Renaissance Dam, the continent’s largest hydro-electric dam which has also caused a diplomatic debate between Egypt and Ethiopia overutilization of the Nile waters.
Our preliminary assessment shows that the second half of the decade was more remarkable than the first, and it has set the stage for the next.
The next decade has arrived, and the general market sentiment is that it is going to be an interesting time for the country’s skylines, affordable housing and property markets in general. Market players have long been warming up and development pipelines are nearly clogged. Policy is subject to change and the economy could swing either way. Market development will be key.