Several hotels at the Coast have been converted into apartments amid a downturn in the tourism industry which has hit investors hard.
More than 10 major beach hotels in Kwale, Mombasa and Kilifi have been transformed into rental apartments, targeting both short and long term tenants.
Property owners have attributed the shift to a slump in tourist numbers in the region which has continued to hurt tourism sector earnings thus jeopardising the hotel business.
Some of the hotels which have already been turned into apartments include Four seasons hotel in Mombasa Island which is now called Royal Apartments, Sun and Sand in Kikambala has partly been converted to Ocean Seven Apartments, Golden Beach Hotel in Diani is now offering furnished apartments for lease.
“Lack of business is pushing hotels to consider other different ways of investments. Hotels are now opting for furnished apartments where they can get long term clients,” said the chairman of Kenya Property Developers Association, Coast region, Mwenda Thuranira.
Property prices in the real estate sector in Mombasa have however stabilised according to most developers.
“Property seekers have shown confidence in the market which has been struggling with insecurity in the last three years. We are looking at a better year than last year,” said Thuranira.
Land, apartments and holiday homes top the list of inquiries on properties in the region with Kenyans living abroad and Nairobi residents leading in inquiries.
The demand has caused land prices in various locations at the Coast to rise steadily over the last two years, fetching up to Sh150 million per acre at beach fronts in upmarket Nyali and Kizingo areas.
An eighth of an acre in Bamburi, Kiembeni, Utange and Shanzu areas is estimated to cost between Sh3 million and Sh4 million compared to last year's price range of between Sh1 million and 2.5 million.
“The market is now stable with both overseas and local inquiries trickling in. We are looking at a good year with all factors constant,” said Thuranira, who is also the CEO of Mombasa-based MySpace Properties.
House prices have also risen, with a two-bedroom apartment in Bamburi and Bombolulu currently selling at an average Sh8 million, from about Sh6 million two years ago.
A four-bedroom apartment in high-end Nyali with a sea view is quoted at about Sh24 million currently and while a three-bedroom apartment is priced at Sh19 million.
In Bamburi, Utange and Shanzu areas, a three-bedroom bungalow is going for between Sh6 million and Sh6.5 million.
“Mombasa's real estate sector is looking promising as days go by. The future is bright for this tourist city,” said Goldwyne Consult CEO Benedict Mutuku.
Demand for low cost houses for the middle income earners has also increased according to Mutuku.
Among local buyers, Nairobi residents have been noted as major drivers of second-home prices in Mombasa, Kilifi, Malindi and Diani.
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