With the arrival of smartphones, lower costs, and faster bandwidth, the internet has transformed the way real estate business in Kenya is conducted. Drones and block chain technology are other global trends that are further changing the sector placing Kenya among the most competitive Countries in the sub-Saharan. Today, we discuss the global trends that shall affect the Kenya Real Estate in 2018 and how investors will need to position themselves.
Use of big data technologies
IBM reports that 2.5 quintillion bytes of data are created every single day. This data holds great value to real estate agents who can use it to gain insight into customers, understand market trends, and improve efficiency. In 2018, big data is expected to increase transparency in the real estate industry worldwide. With data such as demographics, home evaluation reports, and sales price on the cloud, more objective appraisals can be created hence promoting better decision making and facilitating a streamlined sales process. Further, real estate agents can use big data to turn customer data from social media into targeted marketing that delivers the right information to the right customer at a particular time. As data analytics become more user-friendly, more people are comfortable using it. A smart real estate developer will need to adapt to the changing dynamics to provide fast, and accurate appraisals to stay top of the construction business.
The slowdown in China’s economy
The downturn in China’s economy is slowly leading Chinese investors into exploring opportunities in emerging markets. In Kenya, various Chinese companies have established themselves as business entities while some are pursuing collaborations with credible private investors. Over the past two years, three Chinese have collectively invested Ksh 54 billion into the real estate and construction industry in a bid to gain influence in Kenya’s property market. As the year 2018 progresses, more Chinese investors are expected to join the growing real estate market. China has a track record of investing in diverse asset classes. In Kenya, these activities are mainly focused on real estate and infrastructure projects and the impact on financing in the sector is guaranteed to be felt as commercial banks funding option remains crunched. Investors may need to tap into partnerships with the increasing number of foreign investors in the country to better deliver quality real estate products to buyers.
Putting value on sustainability
The OECD estimates that in developed countries, buildings account for more than 40 percent of energy consumption over their lifetime. This is inclusive of activities in the production of raw materials, construction, operations, maintenance, and decommissioning. This is just one among many research activities that have been carried out on real estate sustainability over the recent past. As the emphasis on sustainability continues, more countries globally, are adopting to buildings that can make a major contribution to a more sustainable future of the planet earth. There is moderate growth in awareness and application of sustainability initiatives spreading across the industrial and commercial sectors worldwide. Initiatives aimed at water, energy, and waste efficiency are also gaining recognition among progressive cities and coastal areas. In Kenya, efforts by International agencies such as the United Nations and the Green Building Society have seen a modest increase in awareness and implementation as well. In March 2018, global investors, experts, and policymakers will join in Nairobi to discuss opportunities in the green buildings sector in sub-Saharan Africa. Organizers of the forum say Kenya is top among the African frontiers for investments in energy efficient buildings thanks to friendly policies and fiscal incentives such as tax rebates.
Cheap environmentally friendly building materials are increasingly becoming accessible in Kenya, and enactment by progressive regulatory and policy frameworks will drive sustainability in the Kenyan construction sector. According to reports, construction in the past year has about 25 projects in the pipeline for green accreditation. Investors should be on the lookout for the proposed funding options for green buildings by the Kenya Green Building Society to position themselves, and further gain from incentives put in place by the Kenyan government to promote the uptake of green buildings.
The Geopolitical Uncertainty in the Middle East
For some time now, the Middle East has had plenty of development activities despite difficulties in doing business and the existent geopolitical tensions. However, an increasing number of investors are skeptical as uncertainties associated with geopolitical issues increase. These include the continuing clash in Yemen, insecurity in Iraq and Syria, and internal rows within the Gulf Cooperation Council where Qatar continues to be relegated by Saudi Arabia, Egypt, the UAE, and Bahrain. Additionally, there exist some proxy wars between Iran and Saudi Arabia.
Coupled with the current economic instability impelled by lower oil prices and the ripe real estate & infrastructure development, investors are resorting to other investment avenues in Africa’s emerging markets. Recently, the Dubai based conglomerate Majid Al Futtan invested in Kenya’s retail sector through the French retail franchise, Carrefour. To facilitate more collaboration between Kenya and the UAE, the Dubai Chamber of Commerce and Trade has opened an office in Nairobi. This provides investors fewer channels for partnerships. Among the leading local investors that have joined hands with the UAE include Centum Investments which is in partnership with Investbridge Capital to build a chain of International schools in the country.
Africa is experiencing some economic advances that continue to place the continent at an advantage as a land of promises. Such advances include demographics, a shift in the global power, social changes, rapid urbanization, and technological breakthroughs. It is because of the continued economic interconnectedness in Africa that continues to draw international investors whose economies are mature, and providing plummeted returns. Kenya’s ease of doing business is, however, a key factor for growing attraction to the country, and as activity in the real estate sector increases this year, more international collaborations are bound to happen. Investors will therefore need to align themselves in good partnerships to deliver in the property market.
This article is written by Buildafrique Consulting Group; a Kenya Real Estate Consultant and Development Solutions provider that offers End-to-End Financial, Development Management, and Investments Solutions in Real Estate, to allow Developer, Investors, and prospective Home Owners manage risks and realize value for their investments in a fast evolving Real Estate market.
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