Amidst the ongoing global as well as regional market snag, Kenya’s economy remains stable with a positive outlook. This year, the GDP is expected to grow by around 5.7-5.9% compared to 5.6% for 2015. The construction and real estate sectors have continued to support the country’s GDP growth with cement consumption during the first eight months exceeding the quantities for the past year.  Nairobi remains a regional hub with increasingly notable investments in residential property, office space, retail and the burgeoning logistics. In 2016 alone, the value of approved building plans in the first 8 months has grown by 46% to Ksh. 212 billion versus Ksh. 145 billion at the same period last year.

According to Knight Frank, prime residential sales prices fell by o.4% in Nairobi in the year to September, and further declined by 2.3% in the 3rd quarter. This has been attributed to low transaction volumes and buyers looking at long term capital gains. Prime residential rents also fell by 9.2% in the year to June followed by a slight drop of 1.5% in the third quarter. The rentals’ correction was due to the current oversupply in the market.

In the offices category, approximately 3 million square feet of office space are expected to be added in 2016 although supply of office space currently exceeds demand. Typical leases of office space are currently in the range of 1000-3500 sqft and asking rents range from $12-14 per sqm/month. The recent downscaling by multinationals in the oil industry and consolidation by others have added to the amount of office space that will be available. Sales for office space have stagnated in 2016 with prices in the range of Ksh. 130000-150000/sqm. Some of the major developments with office space include The Watermark Business Park in Karen, FCB Mihrabin Kilimani and Fortis Office Park in Westlands.

In the retail segment, the asking rents remained unchanged since 2014 with 4.7 million sqft additional office space expected to come online.  The Hub (300,000sqft), Rosslyn Riviera (110,000 sqft) and Two Rivers (620,000 sqft), are some of the mega projects that have recently marked the retail space. These have attracted international retailers/brands coming like Foschini (Sterns) and Carrefour. With longer letting periods for new shopping centre developments, developers are now seeking the first-mover advantage in secondary cities like Naivasha, Nakuru and Eldoret.

Logistics and warehousing is a new frontier in Nairobi due to the inadequate supply of prime logistics space. Existing facilities, mainly located in industrial area, are old and logistically undesirable because of traffic congestion and cost US$4/sqm/month in rent. The scarcity has created opportunities for developers of industrial parks and some speculators. The current market trends are projected to continue until after the elections in 2017. Prospects will improve after 2017 helped by a faster GDP growth and improved global oil prices. For now investors can ease up because fundamentals do not support the notion of a property bubble.