Auctioneers of a Mombasa resort have cut by half the initial asking price after it emerged that the property which has been listed for sale for the past three years has continually failed to elicit demand.
The Nyali-based property overlooking the Indian ocean is a reflection of the rocky state of property markets in Kenya where overleveraged investors have fallen on hard times following an increase in repossession by financiers.
Auctioneers have now been forced to cut the property’s initial price of Ksh. 6 billion to Ksh. 3 billion according to the Standard. The auction spree has spilled over from individual homeowners to commercial investors across the country.
But auctioneers are not smiling to the banks either as both buyers and sellers have been shortchanged by a tough economy.
Auctioneers have reported that auction sales have dropped to just 10 percent from 70 percent in the past. Joseph Gikonyo, Managing Director for Garam Auctioneers told the Standard that the current situation can be attributed to the poor state of the economy, the government’s prohibitive fiscal policy which has suffocated SMEs.
Some of the notable commercial properties which have come under the auctioneer’s harmer include the Ksh. 240 million Westend Hotel, NextGen Mall, Boma Hotels, Jacaranda Hotel, and Nairobi Upper Hill Hotel.
With property worth billions of shilling lying idle, especially in the high-end segments, the effect is that a lot of cash that could be in circulation is left packed in concrete. However, experts expect the situation will ease in the near term.
The latest version of the Wealth Report shows that the number of Kenyans who are dollar millionaires fell by 499 in 2019 on the back of a slow economy. Manufacturing, real estate, and technology sectors were the major areas of wealth creation in Kenya according to the Knight Frank report.