At Week #15 of 2021, the following are Kenya Real Estate and Development Trends that are influencing Investment Decisions in Kenya Real Estate Market.
A.) KENYA REAL ESTATE TRENDS
i.) Developers preference for holiday homes over hotels increases amid Covid-19
Hotels are losing preference as centers for vacations and holiday stays amid the Covid-19 pandemic, as holiday homes create more traction for vacationers. That has led to more development of holiday homes as compared to hotels amid the Covid-19 pandemic.
According to developers, hotels do not quite give the same home-away-from-home feeling, and as bookings in some of Kenya’s busiest hotels drop, holiday homes have recorded increasing popularity. Also, home buyers purchase houses and leave them empty so they can use them whenever they are tired of the urban rush. Others opt to rent the houses out to visitors for nights or longer stays. Furthermore, with the lucrative market for holiday homes, many property owners have converted their houses into Airbnbs.
Naivasha is one of the areas that have become attractive to developers of holiday homes. The town’s proximity to Nairobi, its scenic landscapes, wildlife parks, and the lake have put the town in the sights of property developers.
ii.) Specialization in target real estate niches increase amid Covid-19
To improve their margins and levels of differentiation, developers are specializing in target real estate niches and segments (such as holiday homes, affordable housing, high-end or low-end apartments, hospitals, or industrial warehouses) in which they can build competitive advantages.
Developers are also specializing in using different construction materials, sub-segments, or methods of construction. That has made real estate investors to develop and retain knowledge and capabilities to maintain their competitive advantages. Also, Real estate investors continue to weigh the effectiveness, efficiency, and brand positioning that greater specialization enables against the potential risk or cyclicality benefits of a more diversified real estate portfolio.
D.) GLOBAL REAL ESTATE TRENDS
At Week #15 of 2021, the following are the Global Real Estate and Development Trends that are influencing Investment Decisions in Kenya Real Estate Market.
i.) Demand for smaller, high-quality industrial space increases globally
With the Surging demand for e-commerce, the number of large warehouse sites is shrinking; a trend accelerated shift towards online retail during government-ordered lockdowns to combat the Covid-19 pandemic. According to Legal and General Investment Management (LGIM), the rise of e-commerce and a scarcity of high-quality and well-located industrial assets has created a significant supply-demand imbalance.
A study by property specialists Savills shows that 2020 was a record year for demand in small and high-quality logistics properties. In Europe, take-up reached 26 million square metres – an increase of 12% on 2019. The report highlights the fact that although the situation remains tough in parts of the export economy and manufacturing sectors, e-commerce has benefited disproportionately.
According to the study, the growing demand for smaller logistics properties is attributed to an increase in e-commerce, leading to an increase in urban logistics space requirements. Also, the impact of new technologies and artificial intelligence in the industry has enhanced demand for smaller, high-quality industrial space that is flexible by design and located in dense urban areas. With the increase in e-commerce in Kenya, smaller, high-quality industrial spaces which are well located are expected to be the new trend.
ii.) Airbnb supply gets a boost as vacationers prefer remote stays
According to new data from the analytics firm AirDNA, home rental company Airbnb Inc’s has supplied more than doubled vacation homes over the past four years while surpassing some of the traditional hotel chains combined. According to AirDNA, the relative appeal for short-term rentals with larger living space and their location in remote destinations continues to prove vital for Airbnb amid the Covid-19 pandemic, allowing it to perform better than traditional forms of lodging.
Airbnb’s global active listings increased by 2.5 per cent as of February 2021, compared with a year earlier. Globally, there are over 5.4 million active listings on Airbnb, with more units available for rent than the combined total of 3.3 million units at hotel chains Marriott, Hilton, and IHG. Going forward, Airbnb is expected to be the new trend in the hospitality industry, and therefore, Kenyan real estate investors could take advantage of this trend.
Writer of the Article:
This Article is written by Buildafrique Consulting Group, Kenya multi-disciplinary consultancy, that offers END-TO-END DEVELOPMENT CONSULTANCY, REAL ESTATE, and PROJECT FINANCE solutions through specialized subsidiaries. Among our solutions includes:
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