• Even though some large scale projects approved before 2016 are still being developed, the number of new schemes being approved has dropped off.
The property market is transitioning into to a state where there is few new construction underway, real estate investment firm in East Africa says.
According to Fusion Capital, the real estate is moving from its previous oversupply to situation where the rental rate decline remain flat meaning owners, occupiers and investors can now start to buy.
“Rental rates have come down significantly, and office space has become very cheap despite the wider economy continuing to perform,” it states.
Even though some large scale projects approved before 2016 are still being developed, the number of new schemes being approved has dropped off.
Fusion Capital says due to this, the prices will not go down further.
Kenya National Bureau of Statistics data that shows that value of last year’s approvals in Nairobi City County were Sh210.3 billion from S240.7 billion in 2017.
The value of building works completed in the 2018 were Sh90.12 billion a marginal increase from Sh86.12 billion in previous year.
The market has been characterized by supply and high vacancy rates, pushing rents to go down as landlords compete on price.
“It is at this point that investors are suffering and stop investing in new projects leading to the suppressed supply that inevitably causes the cycle to start all over again,” it added.