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<p>The total number of restructured real estate loans in Kenya reached 5,786 between Match and June 2020 according to the Central Bank of Kenya&rsquo;s Financial Stability <a href="https://www.centralbank.go.ke/reports/financial-sector-stability-reports/" rel="noopener noreferrer" style="color: #ff6600;" target="_blank"><span style="color:#000000">Report</span></a><span style="color:#000000">.</span></p>

<p>The total value of restructured loans for the real estate sector during the period reached KSh. 123.8 billion. Outstanding loans for the sector stood at KSh. 429.6 billion.</p>

<p>Another 1,615 loans were restructured for the building and construction industry during the period with a total value of KSh. 35.9 billion.</p>

<p>CBK had instituted accommodative monetary policy and financial measures following the pandemic.</p>

<p>This included asking banks to renegotiate terms and restructure loans for borrowers, whose loans were performing as at March 2, 2020 but now faced difficulties in servicing their loans as a result of the pandemic.</p>

<p>SASRA also allowed SACCOs to restructure and renegotiate loans to ease pressure on their members facing difficulties in repaying loans due to the pandemic.</p>

<p>Saccos restructured loans totalling KSh 4.7 billion in 3 months to June 2020, reflecting the difficulties members were facing in loan repayment.</p>

<p>The report says the Covid-19 pandemic eroded the banks&rsquo; asset quality gains made in 2019 as shown by the increased Non-Performing Loans (NPLs).</p>

<p>Asset&nbsp;quality was affected by among other things, delayed government payments to suppliers, low real estate occupancy rates and prices, weak credit underwriting standards, and drought.&nbsp;</p>

Housing construction and rental activities contributed a combined output of 11.0 per cent of Uganda’s GDP in 2018 at US$8.46 billion, says an analysis by Centre for Affordable Housing Finance (CAHF).

In its Housing Economic Value Chain analysis, CAHF estimates that in 2018, Uganda invested almost US$ 2.1 billion in the construction of housing, while the total economic value added from residential rental services was US$ 1.1 billion.

“This relatively under-developed rental sector is due to the relatively small proportion of urban households that rent (29 per cent), as well as to the under-developed nature of the rental sector, where most rentals are provided by small-scale and household landlords,” it says.

According to CAHF’s Housing Cost Benchmarking, Kampala has the third-highest construction cost (US$58,596) after Pretoria, South Africa (US$40,199) and Lagos, Nigeria (US$52,103) on the continent.

Construction costs alone are 51 per cent higher than in Pretoria, South Africa, mainly driven by high input costs. Other causes for high cost in the country include process and holding costs incurred due to delays in the development process.

In comparison, based on <span style="color: #ff6600;"><a style="color: #ff6600;" href="https://estatecloud.co.ke/why-affordable-housing-is-more-expensive-in-kenya-than-south-africa/">available statistics</a>,</span> the value of housing construction in Kenya in 2016 was KES 272 billion (US$2.6 billion).

The estimated value chain for housing rental in Kenya in 2016 reflects total domestic production of housing rental and associated services of KES 85.1 billion (US$838 million), making the sector ten times bigger than in Uganda.

<strong>Read</strong>; <span style="color: #ff6600;"><strong><a style="color: #ff6600;" href="https://estatecloud.co.ke/national-treasury-says-real-estate-sector-to-grow-by-0-7-per-cent-in-2020/">National Treasury Says Real Estate Sector To Grow By 0.7 Per Cent In 2020</a></strong></span>

<strong>Also Read</strong>; <span style="color: #ff6600;"><strong><a style="color: #ff6600;" href="https://estatecloud.co.ke/centum-to-shift-more-weight-from-real-estate-to-private-equity/">Centum To Shift More Weight From Real Estate to Private Equity</a></strong></span>

According to a DataFintech analysis of online real estate listings, apartments have seen a slight increase in the total asking price, while houses and townhouses have seen a huge decline in the total ask prices for 3-bedroom listings across the market for the 2 months since December 2017. Quantitatively, the asking price for apartments increased by 3% while houses suffered the largest decline of -27%. Townhouses saw a decline of -18%

On a rental level, apartments and town houses have also seen an increase in the average rental revenue for 3-bedroom listings across the market for the same period.

Apartments featured the highest increase with 19% more while townhouses saw a 14% increase in rental revenue. Houses however, suffered a rental revenue decline of -4%. In general, apartment units remained higher than townhouses and houses over the past 2 months even though property types showed an increase in the first month of 2018.

The sales data for 2018 shows that the total value by asking price of all property types decreased, for the month of January 2018 compared to the month of January the previous year; except for townhouses which had a marginal increase. This was shown by the drop in listings over the past 2 months. Houses suffered the highest drop of -48% while town houses saw a slight increase of 4%.

For investors rents have had a good show so far this year. The average rental price for apartments in the year 2018 had a 31% increase compared to 2017. On the contrary, average rental price for both townhouses and houses each featured a decline in the year 2018 as compared to 2017. Houses suffered the largest decline of -49% with townhouses suffering a -11% decline.

The calculations featured a simple listing index for all the months within this period and then a 3-month moving average for each category (townhouses, houses and apartments) in the market.

Related;<a href="https://estatecloud.co.ke/westlands-apartment-prices-could-drop-by-july-2018/">Westlands apartment prices could drop by July 2018</a>

Apartments set to bring in higher Returns in 2018

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Chinese conglomerate China Wu Yi is set to buy a 20-acre land in Kilifi County at a cost of Sh530 million, signalling the company’s intention to expand its manufacture of construction materials locally.

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The multinational, in a statement, said it had authorised its local subsidiary China Wu Yi Kenya Park Investment &amp; Development Co to purchase the land.

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The planned investment in the property was not immediately clear but sources indicate the company could be planning to produce iron and steel at the site.

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Acquisition of the land comes soon after China Wu Yi started the construction of a Sh10 billion housing materials plant in Athi River, with the local investments coming after the multinational bagged major private and public sector construction tenders.

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The Athi River plant is expected to be completed this year, producing pre-cast construction materials that will also be sold to other construction firms. The multinational is putting up the plant through its locally incorporated subsidiary China Wu Yi Precast (Kenya) Company Limited.

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The project, on 30 acres land off Mombasa Road, will include a pre-cast elements plant, a display area, warehouse and a construction material supermarket which will introduce construction materials from China effectively making it a one-stop shop for construction materials in the country.

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The supermarket will stock stones, ceramic tiles, bathroom appliances, construction electrical, lamps, and kitchen furniture among others.

<strong>Source;</strong> <a href="http://www.businessdailyafrica.com/" target="_blank" rel="noopener">Business Daily </a>

</div>

China Wu Yi acquires 20 Acres of land for Sh530 Million in Kilifi

Housing Sector Makes Up 11 Percent of Uganda's GDP

According to the African Construction report by Deloitte, the number of construction projects in East Africa has risen by 65.1% between 2016 and 2017 while the increase in the total value of projects has been much lower, but still considerable at 20.7%.

Kenya has the largest number of projects in East Africa with 23 versus Ethiopia’s 20, however, the total value of projects in Ethiopia is almost twice that of the value of projects in Kenya.

Two of the three largest sectors in the construction industry recorded an increment last year. The  percentage of real estate projects in East Africa in 2017 increased to 14% from 11% in 2016 while transport projects also increased by from 47% to 52%. The portion of projects in energy and power decreased from 26% to 23%.

The report also states that the transport sector continues to be the largest sector, accounting for more than half of projects in 2017, with 27 Road &amp; Bridge projects currently underway. These include the various cross border projects currently underway including the construction of the 1,672km standard gauge railway linking Rwanda, Burundi and Tanzania.

Once completed, the project which is valued at US$7.6bn, will provide both freight and passenger services between Dar-es-Salaam and Kigali, forming part of the Central Corridor. Such large-scale cross-border projects will drive both international trade and interregional trade which is at it’s lowest in Africa compared to other continents. LAPSSET, for instance, includes port projects, highways, railways, an oil pipeline and airport projects.

Energy &amp; Power projects are also significant, accounting for nearly a quarter of all projects in East Africa.

A majority of the projects (90.1%) are owned by government while roughly, only one in 10 projects are not government-owned. Governments in East Africa are most proactive in driving projects through both national and regional infrastructure development plans. The ownership statistics also show that private domestic firms only own 4.2% of projects while private firms from China, Singapore, the UAE and the US own the remaining 5.6% of projects.

Related; <a href="https://estatecloud.co.ke/east-africa-construction-report-2016/">East Africa Construction Report, 2016</a>

Regarding funding, governments only provide 15.5% of the project's funding. Most of the funding comes from the Chinese who have taken the lead in funding large-scale construction projects in East Africa, financing one in four projects in the region. International DFIs follow with 19.7%, and have overtaken African DFIs, which fund 16.9% of projects.

The Chinese however, don’t stop at funding. China is also the most visible developer, now constructing over half of all projects. Private domestic firms are responsible for building 11.3% of projects while firms from the Middle East and other European countries each take care of 8.5% of projects.

The Grand Ethiopian Renaissance Dam (GERD), worth US$4.1bn, remains the most valuable project in the region. The second largest project in 2016, the Mombasa-Nairobi Railway, was opened in May 2017 and the Tatu City Project, 2016’s fourth largest project, is currently between phases and so not undergoing construction. The Lake Turkana Wind Power Project, the single largest private sector investment in Kenya’s history, is set to go live in early 2018.

Even so, half of the projects in the top ten are new projects. A number of the largest projects from 2016 have either been completed or replaced by new larger projects.

Also Read; <a href="https://estatecloud.co.ke/value-of-construction-projects-in-africa-drops-report-shows/">Value of Construction Projects in Africa Drops</a>

<strong>Nairobi, Kenya</strong> – High-net-worth individuals (HNWIs) in Kenya have allocated the largest portion of their wealth (28%) to real estate investments, which excludes primary residences and second homes, according to the Knight Frank Wealth Report 2017.

Personal businesses make up 20% of their wealth, while investments in equities, bond, cash, precious metals and similar items makes up 18%, according to the survey of nearly 900 of the world’s leading private bankers and wealth advisors. Primary residences and second homes, which are excluded in calculating individual net worth in the Wealth Report, make up 14%, while collectables (art, wine, cars etc.) make up 8% of total wealth for Kenyan HNWIs.

Globally, HNWIs allocate 25% of wealth to investments, 24% to real estate investments, 23% to personal business, 16% to primary residences and second homes, 6% to collectables and 6% to other categories of investments.

Ben Woodhams, Managing Director at Knight Frank Kenya, said: “Kenyan HNWIs clearly realise the long-term stability that property investments offer in an otherwise volatile market together with the good returns that the sector has demonstrated in the past.”

The 11th edition of the Wealth Report shows that up to 900 Kenyans became dollar millionaires in 2016, raising the tally of local HNWIs – those worth US$1 million (Sh102 million) or more in assets excluding primary residences – to 9,400 people from 8,500 in 2015. Majority of them – 6,800 – live in Nairobi.

In deciding where to buy properties to live in, Kenyan HNWIs are prioritising education for children, followed by personal security, safe havens for capital, opportunity for capital appreciation and lifestyle.

Kenya’s super-rich typically own up to three homes (primary and second homes) on average, much as their global and Africa counterparts. Majority of them own homes locally (74%), in Europe (74%) and North America (16%), while 5% have bought houses in the Middle East.

Kenya’s super-rich typically own up to three homes (primary and second homes) on average, much as their global and Africa counterparts. Majority of them own homes locally (74%), in Europe (74%) and North America (16%), while 5% have bought houses in the Middle East.
Over the next two years, 46% of resident Kenyan HNWIs are likely to buy additional homes within the country, while 43% are looking at outside the country.

In addition, 59% of HNWIs in Kenya are looking to invest in commercial properties locally, while 44% are looking to buy abroad. Globally, 44% of HNIWs are looking to invest in commercial property in countries of residence, while 32% are looking at outside their countries. Of the Kenyan HNWIs looking to invest in commercial property abroad, 53% prefer Europe, 12% North America and 6% the Middle East.

Kenyan HNWIs are raising their interest in property sectors, with 63% eyeing residential, 56% offices, 31% retail, 25% leisure and 13% industrial, according to local data from the Attitudes Survey.

The survey’s respondents said 68% of Kenya’s wealthy are likely to own a home locally, while 4% of the global HNW population look to own homes in Kenya – led by the UK HNW population where 63% fancy owning a home in Kenya, followed by 16% of South African HNWIs, and 11% of Spanish, Mauritians and US HNWIs. About 5% of the super-rich in Uganda, Tanzania, Nigeria, Ghana, Switzerland, France, Canada and Lebanon are also likely to acquire homes in Kenya.

Interestingly, Kenya is currently among the top-five most popular second-home locations for Africa’s ultra-high-net-worth individuals (UHNWIs). These insights come even as prime residential prices in Nairobi decreased by 2.1% in 2016, making it more attractive for trophy house hunters. Prime residential houses are currently priced from US$800,000 (Sh81.6 million) in Nairobi.

“With the upcoming election, we have noted a slow-down in development. This will allow the market to re-absorb the oversupply which will reverse the marginal price decline,” Woodhams said.

The survey also established that 69% of Kenyan HNWIs are likely to invest in commercial property locally, while up to 4% of the global HNW population would consider investing in Kenya’s commercial property sector. The latter are led by 38% of UK’s and 25% of South Africa’s HNW populations, with 6% of the super-rich in Ghana, Nigeria, Mauritius, Greece, UAE, Germany and Canada also expressing interest.

“The current foreign interest stems from the East, with investors from India and China making inroads, whilst much of the interest from South African funds seems to have been distracted by opportunities in Eastern Europe,” Woodhams said.

High-net-worth Kenyans allocate largest portion of wealth to real estate investments

Global editing firm PwC recently released the Hotel Industry Outlook for African countries from the year 2017 to 2021. The report gives insights into the state of the industry in various African countries including Kenya. According to the report, Kenya’s attraction for investors in the hotel industry was boosted by relatively stable economic growth projections and imp-roving security.

In addition, Kenya was named the 9<sup>th</sup> best destination in the world and the top in Africa by <em>Rogue Guides</em> of the United Kingdom in 2016. This saw the number of visitors increase to 1.31 million in 2016 from 1.18 million in 2015.

Further, government incentives like elimination of certain fees and charges for foreign visitors together with the improvements in infrastructure have also improved the country’s appeal as a leisure as well as a business destination.

Such developments, along with a stable economy, have continued to attract international hotel brands to Kenya. Some of the international hotel brands scheduled to open branches in Kenya in the next five years include Sheraton, Ramada, Hilton, Best Western, Radisson, Marriott, and Mövenpick.

In total, 13 new hotels are expected to open by 2021, adding 2400 rooms and expanding the hotel capacity by 13% with a 2.5% compound annual increase in available rooms over the next five years. With an increase in flights to Kenya, lower park fees, a stable economy, and ongoing growth in domestic tourism, PwC projects that guest nights will build on their recent momentum and rise at a 4.1% compound annual rate over the next five years.

From the report, average room rate growth, a measure of the average booking price per night for hotels, slowed in 2016. This contributed to the rebound in stay unit nights which is the accommodation capacity of a hotel. However, room rates are expected to grow at moderate rates (projected to average 3.3 per cent annually through to 2021) as hotels look to sustain their recent expansion in the face of growing competition.

Further projections indicate that occupancy rates will decline over the next two years before edging up in 2019. Hotel occupancy rate is expected to 57.4% in 2021, up from 52.9% in 2016, but still well below the 66.1% rate achieved in 2011.

Estate Cloud

Estate Cloud

Restructured Real Estate Loans Hit KSh. 123.8 Billion in Four Months

By Estate Cloud - over 2 years ago - Kenya

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