In Kenya, the real estate sector recorded slow growth during the first quarter of the year. This slow growth later extended following the measures that were put in place to contain the spread of Covid-19. In a recent report by Cytonn investments real estate, the slow growth has been attributed to the uncertainties approval of laws, banks failing to lead to the private sectors and lack of spending power by buyers.
“The spread of the Coronavirus took its toll on key sectors including the tourism sector, which saw hotels suspending operations and this effect is expected to trickle down to the overall real estate, particularly commercial real estate amidst the current global economic crisis,” stated the report.
The disease has already killed hundreds of Kenyans and is still counting the increasing cases per day.
During this period of the pandemic, the retail sector of real estate recorded a drop in its rental yield by 0.1% from 7.8 % record last year. Generally, the residential and commercial office yields improved marginally at 5.2percent and 7.8 per cent, compared to 5.0 per cent and 7.5 per cent recorded last year.
As per the report, apartments are said to have recorded the highest rental yield at 8% against that of the residential market.
Research Analyst at Cytonn Wacu Mbugua noted that the good performance by apartments was due to the high demand for apartments that saw investors benefit from high profits.
“Apartments continued to be popular in the market largely driven by the growing middle-class bracket on the demand side and need for profit maximization for developers on the supply side especially in light of rising land prices,” said Wacu Mbugua.
She also added that “As per the report, Langata, Athi River, Kilimani and Ruaka registered the highest returns to investors respectively, boosted by constant demand from Nairobi’s young and working population.”