The year 2020 will ever be remembered for its horrors around the world. Real estate has not been spared. If anything, it’s one of the industries that has greatly suffered due to the coronavirus pandemic. In Kenya, the real estate sector has experienced a fall in properties demand following the bad economic times. It’s even worse for realtors and lenders pushing to sell distressed properties. This trend is expected to follow throughout the year and even early next year.
One of the reasons behind the low property demand is the government’s low housing Agenda. This has been posted as the new challenge for attracting buyers. Prospective buyers prefer to wait and see the government’s plan before committing to any other property.
At the beginning of the year, it was revealed that the government had already received 297,000 applications for the affordable housing project. Sources have it that the government is set for construction of these affordable homes on 7000acres of land across all the 47 counties in Kenya. However, the project is expected to take longer due to the pause that was initiated with respect to the coronavirus pandemic control measures.
As auctioneers continue to post advertisements to attract buyers on several properties around Nairobi, the real estate observers say that the government affordable houses are priced way cheaper than distressed properties. These houses are said to be as low as 5 times below that of distressed properties. You can imagine how bad the situation will be in a matter of months since no realtor nor lender can sell a distressed property below 75% of its current market price.
To make a shift from properties being auctioned, many lenders have been forced to make arbitrations with their customers, which is a much better way of dealing with defaulters. This also favours both parties.
In a report by knight frank last year, it was noted that the increase in the number of distressed properties had negatively affected prime residential values leaving lenders to intensify their endeavour to recover non-performing loans. “We’ve not reached the bottom of the cycle and we expect further reductions in the near term until macroeconomic and local situations improve,” it was noted from the report.