WHY YOU NEED TO INVEST IN KENYA REAL ESTATE

As individuals and entrepreneurs prosper in their various income generating ventures, many seek ways to invest their profits. I have found that such people need to add real estate investments to their investment portfolios. High prices are a cause for worry but the gains from investmenting in real estate easily offset the negative implications of pricing.

What many view as a bubble in the Kenyan real estate market is actually a boom. The increase in real estate prices is a as a result of an increasing urban population. Interest rates do not influence individual willingness to secure mortgages. As a result, increase in interest increase is another reason why we have high prices in the real estate sector. Bank loans availability will have an  effect on prices in the sense that as banks avail more funds, prices will ultimately go down as a result of increasing supply¹.

Why You Need to Invest

Rental incomes in Kenya are good given the high demand for housing especially in the urban areas. There are minimal fluctuations in prices of houses. Tax rates for rental income stand at thirty percent for non residents. Resident owners are taxed progressively from between ten percent to thirty percent.

Capital gains resulting from real estate sale are not taxed in Kenya. Transaction costs in real estate are quite low. The total transaction cost ranges between five to seven percent including agency commissions.

Middle Income Level Country

According to the Kenya National Bureau of Statics², the re adjusted GDP figures shifted Kenya’s GDP to fifty five billion Dollars up from forty three billion U.S. Dollars. This placed Kenyan economy in the ninth position in Africa. The per capital figures (one thousand two hundred and forty six U.S. Dollars) suggest that households are continuing to earn more incomes. This will translate into higher demands for housing in the near future.

Reference
1. Mbae, C.G. (2011), is There a Real Estate Market Boom or Bubble in Urban Kenya? A Case Study of Residential Real Estate in Nairobi Metropolitan Region, Nairobi: Kenya Institute of Public Policy Research and Analysis 
 2. Kenya National Bureau of Statistics

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