Real estate operators are poised to take a hit amid the coronavirus pandemic. All indicators show that the industry, which was already on its knees is about to face further difficulties.
The situation is expected to cascade across all major towns as buyers and sellers hold back their wallets for more urgent needs. Towns like Nairobi and Nakuru are already experiencing the constraints brought about by fears in the markets.
In Nakuru, real estate brokers have reported facing loss of business following a rapid decline in the number of transactions.
Most agents and developers have been forced to freeze activity as uncertainty continues to grip markets. The shake-up in the markets is expected to lead to massive financial losses for the retail and commercial sectors.
At least seven agents in the Nakuru market have reported a reduction in property deals. According to the Nation, land transactions worth millions of shillings on the shores of Lake Naivasha in Nakuru County have been suspended for lack of buyers while commercial leases worth millions of shillings have also been put on hold.
On the financing side, bankers have also frozen lending to developers fearing the implications of the crisis on cash demands. The Central Bank of Kenya has taken pre-emptive measures, lowering the cash reserve ratio from 5.25 percent to 4.25 percent in a bid to increase banks liquidity.
The slowdown in activity is has left the economic fate of many workers and professionals attached to the real estate industry hanging in the balance. Construction workers, realtors, lawyers, accountants, and other service providers are staring at hard times.
“This is a difficult situation we are in at the moment. No one is spared including lawyers, property managers, rent collectors, maintenance crews among others as the sector has ground to a halt,” said Wilson Gitu, a Nakuru based real estate agent.
Mr. Wilson Gitu, told the Nation that the Ksh. 1 billion property market in Nakuru has been shaken. He said that land transactions and other real estate activities are a major contributor to the local economy and that the recent move by the ministry of lands to close all registries has significantly affected the financial value chain.
The call to stay at home has also affected tenant activity as many people fear moving houses in such a fragile environment.
There have been random suggestions by a section of Kenyans calling for the government to suspend payment of rent by tenants following the COVID-19 pandemic but the government has remained silent on the matter.
Many tenants have had their sources of income disrupted since the pandemic has lead to job losses and disruption of supply chains especially from China which accounts for approximately 21.0% of Kenya’s total imports.
In effect, many landlords expect to experience disruptions in rental income as long as the crisis lasts.