How does Kenya’s property market compare with other countries in Africa? We take a look at some key property statistics from the online Global property guide that, which maps the place of Kenya in the African property market. Here are a few metrics:
House Price to Income Ratio
Kenya has the third highest house price to income ratio in Sub-Saharan Africa at 117.64x after Gambia and Madagascar. The house price to income ratio is a measure of the affordability of housing taking income into consideration. It is the ratio of the cost of a typical upscale housing unit of 100 square metres, compared to the country’s GDP per capita. Ordinarily, high income countries have a higher house price to income ratio than low income countries.
Gross Rental Yields (%).
This is an annual rental income as a percentage of the property’s value. The ultimate investment is one that gives you the highest rental income at the lowest cost. Kenya’s gross rental yield according to the Global Property guide is 6.7%, third after Tanzania’s 7.4% and Madagascar’s 8.6%.
The price-tent ratio is a good indicator of whether a person should buy or rent a property. This ratio is calculated by dividing the gross rental yield by 100 so the higher the yield, the lower the price/rent ratio. When the higher the price-to-rent ratio, the more economically reasonably it becomes to rent than to buy, which may explain the bubble that precipitated into the 2008 housing crisis when the housing market crushed. In Africa, Kenya’s price-to-rent ratio was third at 15 after South Africa and Gambia
Square Metre Prices
This measures the average per square metre (sqm) prices in USD of 120-sqm apartments located in the centre of the most important city of each country, being either the administrative capital, financial capital or the centre of the rental market. In this regard, the prices for Kenya rank 2nd at $1687 while South Africa’s $4214 was the highest in Africa. Cape Verde is third with $1300.
Property Rights Index
This is a measure of the ability of individuals to accumulate private property within the legal mandate of the state. The index measures the extent to which a country to which a country’s laws protect private property rights, and the degree to which its government enforces those laws. The index also assesses the likelihood that private property will be expropriated and analyses the independence of the judiciary, the existence of corruption within the judiciary, and the ability of individuals and businesses to enforce contracts. Higher scores are more desirable, i.e. property rights are better protected. Scores are from 0 to 100.
Protection of property rights is a significant factor affecting the desirability of a residential real estate investment. Kenya ranks 18th in Africa, with a score of 30 out of 100, a similar score with countries such as Nigeria, Rwanda, Ethiopia, Namibia Togo, Benin and others.