In early 2017, property consultants Knight Frank listed Kenya among the global destinations for wealthy Africans looking to buy a second home. In the wealth report, the firm noted that foreign African buyers in Kenya prefer homes in the coastal region and Nairobi as the residence is seen to improve the ease of conducting business while a coastal home is generally for vacation. In its most recent report, Inside View Kenya 2018, Frank Knight again reported that 4 percent of global individuals with assets of more than $ 1 million excluding their primary homes are considering purchasing homes in Kenya, with the most interest coming from British buyers and a sizable number of Italians among other nationalities. In this article, we look at the Kenyan vacation property market and the growing investment activity in the residential real estate by foreign buyers as well as the opportunities for investors.
More hoteliers are realizing the opportunities that come with the high demand for vacation homes. Such is the Hemingways, Watamu which recently converted 50 hotel rooms into 21 apartments to be sold on a 99-year lease to mostly foreign buyers at a cost between Ksh 70 million and Ksh 140 million depending on the number of rooms per apartment. Buyers will also have the option to rent their property for returns of up to Ksh 65000 a day for two bedroom apartments and Ksh 125000 for four bedroom apartments. Hemingways is not the only resort building apartments for sale; English Point Marina is currently selling three bedroomed apartments in Nyali with onsite facilities such as a water-spot center, restaurant, spa & gym, a serviced marina, boardwalk with retail outlets, and underground parking space.
The Mount Kenya region is yet another region that has received attention from international buyers. The two most notable developments include the Swiss International Resort Mount Kenya and the Mt. Kenya Wildlife Estate. The $ 70 million 5-star Swiss International resort co-developed with Mt. Kenya Holiday Homes comprises of 128 apartments, 67 villas, and 86 townhouses with the availability of a golf course, a clubhouse, and restaurants. The Mt. Kenya Wildlife estate consists of houses spread around salt licks, waterholes, and views of the Lolldaiga Hills, Mt. Kenya, and Aberdare Mountain ranges. The estate is located at the Ol Pejenta Conservancy and consists of 100 holiday homes on 1000 acres of land which have been sold to both local and foreign buyers.
This move by developers is due to the growing preference in apartments and houses over hotel rooms as more people are looking for convenience that hotels do not provide. In December 2017, the tourism stakeholders in Kenya reported that while hotels were operating at over 75 percent bed occupancy during the high peak season from August to December, apartments were at 100 percent owing to the fewer restrictions and flexibility compared to hotels.
The 4 percent of high net worth individuals interested in buying vacation homes in Kenya include 63 percent from the UK, 16 percent from South Africa, 11 percent from Spain, Mauritius, and the USA, and 5 percent from Uganda, Tanzania, Ghana, Nigeria, Switzerland, France, Canada, and Lebanon. While Nairobi remains a prime residential area for foreign buyers, vacation home buyers are majorly drawn to the coast around Malindi, Watamu, and Lamu and the countryside Nanyuki close to Mt. Kenya and within private game reserves.
Recent research argues that perhaps prime properties in Kenya are bargains for foreign buyers following the currency swings. For instance, a foreign buyer of a house worth Ksh 100 million would have saved up to 8.2 percent through a euro-denominated transaction while a dollar-denominated purchase would be 1.4 percent cheaper. In general, the currency differentiation makes it easier for foreign investors to invest easily in the country, making the demand for vacation homes in Kenya by foreign buyers rise. And as the demand grows, more developers are building more homes in pristine locations to cater for those seeking bargains.
Vacation home purchases by foreigners add to the growing demand by wealthy Kenyans, therefore helping to raise the prices of the local luxury house market to what has seen developers realize large gains. And while prime residential houses in Nairobi are currently priced at Ksh 85 million, more prime units in Diani, Lamu, and Nairobi’s Karen and Muthaiga cost over Ksh 100 million indicating good returns for investments. Predictions show that within the next two years, 46 percent of high net worth residents in Kenya will be looking to own a second home, thus providing developers with a worthwhile investment.
Definitely, there is more to gain for investors looking to safeguard their capital as well as investors looking to create an income generating investment. The right property, in the right location, can easily make enough money to pay for itself.
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.
Contact Us today for Solutions to your Challenge in Real Estate Investments and Project Development:
- Email: [email protected]
- Tel: +254 722 474285 / + 254 20 8058493
- Website: www.buildafrique.com