At Week #16 of 2021, the following are factors that will shape the Kenya Real Estate and Development Market in the next one week, for your Investments Risks Management:
i.) Reducing Covid-19 positivity rate
In the past two weeks, the Covid-19 positivity rate has been declining sharply. On 3rd April 2021, Kenya recorded 1,091 new Covid-19 cases from a sample size of 5,958 tested, marking a high positivity rate of 18.3%. On 16 April 2021, 486 people tested positive for the disease, from a sample size of 4,134 tested in 24 hours, bringing the positivity rate to 11.8%. According to the Ministry of Health, this trend is expected to continue, providing the Covid-19 protocols are observed.
Flattening of the Covid-19 infection curve is expected to allow more workers to resume working from the offices, and hence the occupancy in commercial offices will be boosted. Furthermore, Investment confidence is expected to be restored, and more investment shifted from government securities to real estate and equities. More money from foreign investors, who had previously avoided property investment, is expected to be injected into the real estate as investor confidence is boosted. Economic recovery efforts are also expected to accelerate in the coming weeks as more people resume work and more businesses reopen.
ii.) Suspension of Cargo Transportation along the county Borders
According to notice by the Kenya Transporters Association dated 16th April 2021, cargo transportation will soon stop if the Covid-19 testing reagents are not made available at the county borders. So far, drivers are not tested at Nairobi, Mai Mahiu, and Malaba as the Centres are closed due to a lack of the reagent to process the samples, with more centers likely to be closed.
In the next week, we expect transportation of construction materials such as steel, blocks, fittings, and cement to be delayed as the government works to sort the border issue. Therefore, construction activities are expected to stall as other construction sites may close due to lack of materials, lengthening construction timelines. This is also expected to increase the construction budget as some site supervisors or contractors opt to secure construction materials from other secondary sources, which are usually more expensive.
As a risk management measure, Real Estate Investors are advised to use this window to refurbish real estate products, offices and retail stores. Investment Opportunities are also expected to emerge to resellers of construction materials, who could package to sell their products at reasonable prices.
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:
- Feasibility Studies and Market Research.
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- Project Management.
- Investment Design Appraisal.
- Quantity Surveying
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