The electioneering period in Kenya has had a negative impact on the property market resulting in 1.9% and 0.3% decline quarter over quarter in asking prices and rents, with apartments accounting for the biggest drop.
Kenya's political uncertainty is having a negative impact on the property market
The electioneering period in Kenya has had a negative impact on the property market.
According to Hass Consult House Price Index Q3 2017 report, the aftermath of the Supreme Court ruling which overturned the Aug 8 presidential vote there is a slowdown in buying activity as there is a lack of clarity on when there will be a conclusion to the electioneering period.
In the report, Hass Consult Limited,a real estate firm,notes that there was a spike in activity up 400 per cent in the three weeks following the announcement of election results in mid-August as the assumption then that the electioneering period was over.
However, the Supreme Court's directive for a new election saw buyers adopt a wait-and-see approach that had been taken towards the run up to the August 8 polls.
“We saw activity pick up from mid-August as buyers who had held off on purchasing decisions came back to the market but the current uncertainty moved sales momentum back to the pre-election period. Buyers are sensitive to risks associated with the political process and are therefore unlikely to make decisions until there is an end to this period,” said Ms. Sakina Hassanali, Head of Development Consulting and Research at HassConsult.
Overall, property prices recorded a 1.8 per cent drop over the quarter and 5.1 per cent drop on an annual basis.
Pockets of growth were however observed in suburbs in or close to the diplomatic zone despite a despondent market. Properties in this area as well as suburbs along Limuru Road were of interest to investors where sustained demand offers a return in a market that is slow due to the aforementioned uncertainty due to the political environment.
Gigiri,a residential estate in Nairobi, is the best performing suburb up 4.8% over the quarter while Muthaiga is the top performer on an annual basis up 12.5% manly driven by investors who see value in buying houses in the areas that serve the diplomatic corps and expatriate community.
On the rental front, asking rents dropped by 0.3 per cent. As the country's political uncertainty creates a knock on effect on economic growth, rental hikes across the country have been minimal while falls were witnessed in many of Nairobi's main suburbs.
“A slowdown in economic activity has a direct impact on wages as firms become more aggressive on cost management. We expect the sluggish growth in incomes has resulted in a stagnation of market rents” added Ms. Sakina Hassanali.
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