Real estate investors in Nairobi may have to recall their patience skills following the recent developments in many sectors of the market. The retail sector to begin with, has experienced a reduction in retail stock uptake due to oversupply.
Oversupply in commercial property has been no more impressive with reports of several empty units months after completion.
An analysis by DataFintech covering over 17,500 property listings in categories of residential, commercial and land during the period from November 2016 to November 2017 highlights the situation.
Rental yield on commercial properties saw a slight increase year-on-year; this is explained by an increase in average sale price which out-performed the growth of rent. However, rental yields are expected to fall in the next few months as more units become available.
The average listing sale price of property increased by 53.24% between November 2016 and November 2017 from Ksh. 57.83 million to 88.03 million but this growth did not match the increase in units for sale in the marketplace. Likewise, the average rent price per square ft. increased by 42.61% from Ksh. 71,220 to Ksh. 101,570 within the same period. However the units in the market place increased by nearly 87%.
This implies that majority of the units coming into the market in the last 12-months were of lower rates than the preceding year. For in investors, the effect is that the hunt for returns may take longer than planned.