Why coronavirus may send off-plan housing to its mortality
Off-plan property buying is purchasing of a property before its completion. In Kenya, there has been a lot of off-plan launching for the past two decades. This type of property ownership has gained attraction into the kenyan market as buyers are allowed to purchase the property below its market value, a great investment opportunity. However, this property investment method has suffered the most from the impact of the corona virus on the economy of Kenya and also on the activities of the real estate industry in the Country.
Now more than ever, the desire for Kenyans to do away with this type of property investment arrangement as has been on the rise. Buyers are now preferring already completed units, escaping the knock of landlords on their doors every month even in these hard times.
One of the professors from the university of Nairobi told the standard news paper that as soon as the pandemic is over, people will be scrambling for single houses and flats. “There will be a scramble for single houses and flats. However, we are likely to experience a cash crunch; there will be restricted demand owing to a lack of money in the economy”.
Small developers are likely to be hit hard by the change in the real estate sector as buyers prefer ready units to off plan properties. As the pandemic exposes most of the home buyers to completed units, investor’s courage to go for off plan properties will also fade. This is because investors always consider the interests of their potential buyers before buying an investment property.
Off- plan developers are not likely to survive the covid-19 impact directed to their side as they largely depend on the customer deposits to keep the projects moving. The good news is this effect may last only for a short while. “There is a deficit of two million houses in the country, and it grows at the rate of 200,000 annually. The off-plan investment programme will only weaken for some time, but it will of course recover,” Cytonn Chief Executive Edwin Dande told the standard. For this to work, however, buyers will be opted to pay small portions of the purchase price for a long time.
Some of the investors who had already invested in off plan properties will have to anticipate for new completion dates of their properties. This is after the reduction of labour force in the constriction sites and disruption of supply chains, leading to delay of property completion. This trend is expected to continue as long as the virus is active, depicting a bad image to prospect investors.
However, off plan developers have hope that the pandemic will end soon, giving the real estate sector the chance to recover. Only then will the off plan home ownership arrangement awake from the nightmare caused by the coronavirus.