The real estate sector is experiencing a slowdown in new investments as developers adopt a wait-and-see approach ahead of next year's general elections, the Kenya Property Developers Association said yesterday.
Planned new projects are expected to take a sluggish implementation until August, the association said, with developers moving to sell existing property before the elections.
“During elections there is dampening of economic activities. People say let's start when there is clarity from the government,” KPDA chairman Mucai Kunyiha said.“People in the market selling now are however not affected, but new projects will slow down.”
The residential, commercial and industrial property lobby group says many investors are cautious. It avers their fears are based on experiences of the bungled 2007-8 general election that sparked violence after the disputed presidential results, leading to loss of property worth millions.
The business community is crossing its fingers in anticipation of peaceful elections similar to the March 2013 exercise.
“It is a responsibility for us as Kenyans to behave and do the right thing,” Kunyiha said.
The sector is, however, positive that capping of interest rates will increase mortgage uptake.
A recent report by real estate investment firm, Cytonn, shows uptake of mortgages remains low. It notes there are only 22,000 mortgages worth Sh164 billion in a country that has an estimated population of about 43 million people.
“We hope to see an increase. High interest rates have been keeping people away from mortgages. We hope the new rates will open up the market,” he said.
The building and construction sector registered a 13.6 per cent growth in 2015, the economic survey 2016 shows, with formal employment in the sector growing by 11.4 per cent to stand at 148,000 up from 132,900 in 2014.
Meanwhile, the association has raised concerns over skill gaps in the sector, which could hurt construction standards. It has also called for ethical standards in the sector, warning against unprofessional approval of buildings.
Nairobi has recently witnessed a number of collapsed buildings especially in the Eastlands areas. This has put the sector under sharp criticism for failing to curb illegal constructions that do not meet the required standards.
“People are looking for cheaper alternatives; they don’t want to seek professionals. It is good to pay extra and get a well job done,” said Gikonyo Gitonga, director at KPDA.