Affordable housing and mid-market are the next focus for investors seeking good returns. Despite the relative risks, a recent analysis by Centum real estate highlighting the realities of the Kenyan real estate market shows that the affordable and mid-market segment are the future of the market.
This follows a flop in the highly speculative high-end markets, that has seen many investors left with extra inventory in their hands. Further, the analysis says that the future requires sustainable sales strategy for affordable and mid-market housing units through creative and customer friendly financing solutions such as Tenant Purchase Schemes.
Banks and other players have taken note of the shift towards affordable housing, adopting the new realities in the market according to the research. Housing Finance Chief Executive Officer Robert Kibaara, in an interview stated that the mortgage lender is focusing on affordable housing, with the aim of issuing loans of between KSh. 4 million and KSh. 4.5 million.
With the bulk of the total housing demand concentrated in this segment, numbers show that occupancy rates are relatively high across the city with the exception of the high-end market where oversupply in has depressed prices and rental rates since 2018.
Occupancy rates across affordable and mid-end segment nodes in the Nairobi metropolis are usually above 90% for established developments.
Throughout 2018 and 2019, absorption has been slow with a growing stock of available residential units and an average overall drop in sales prices alongside rental rates across Nairobi.
The report concludes that some real estate markets will face supply/demand imbalances through 2019 and 2020.