PRICE DROP

Real estate to dip by 10% on coronavirus effects–MySpace

Inquiries on property have remained low

In Summary

•Demand for commercial space, offices and apartment acquisition remains low.

•Real estate and other services are expected to be suppressed due to slowdown in economic activities and declining disposable incomes, KNBS says in the Economic Survey 2020.

Myspace Properties CEO Mwenda Thuranira gives out blankets to the homeless at Westlands, Nairobi. The company has launched a drive to distribute masks, food and other items in the fight against coronavirus spread/
Myspace Properties CEO Mwenda Thuranira gives out blankets to the homeless at Westlands, Nairobi. The company has launched a drive to distribute masks, food and other items in the fight against coronavirus spread/
Image: COURTESY

House and land prices are likely to drop by 10 per cent in the short-term, real estate firm–MySpace Properties has said, amid low disposable income in majority of households.

This is in the wake of the Coronavirus which has hit the economy hard, after the first case was reported March 13, with both Treasury and the Central Bank last week revising economic growth to 2.5 and 2.3 per cent respectively.

According to MySpace CEO Mwenda Thuranira, real estate players have been forced to reduce prices on both high end and middle level properties in Nairobi and satellite towns to attract buyers and developers.

Two-bedroom apartments in Westlands Nairobi that had an asking price of an average Sh 27 million are now going for 25 million.

Prime land in Kiambu, Ruiru and Kitengela, key satellite towns, are asking Sh60 million, 40 million and Sh12 million per acre respectively, with prices expected to drop by between five and 10 per cent.

Sellers and landlords are more flexible and we might see like a 10 per cent drop,Thuranira said, “Inquiries have also gone low all over the country especially because the land registry is closed and its tough to complete transactions.”

Demand for commercial space is also projected to drop especially offices, as companies and individuals adopt to the 'work from home' plan brought about by the stay home directive.

“Many businesses have realised they don’t need offices,” Thuranira noted.

Appetite for land especially in Naivasha and other affordable areas near the city however remain high.

Demand for rental apartments especially in areas near the Central Business District also remain high.

“People who work in town have realized commuting far distances is not worth it.I have seen many people with big houses in Kitengela , Kiambu and Ngong opting for apartments in Kilimani, Westlands and such areas,” Thuranira said.

“Real estate being a longterm investment the demand is still there , if someone had planned to invest they will still do, the pandemic is short term we hope,” he noted.

Real estate activities remain key in the country's GDP growth. The sector grew by an average 5.3 per cent last year, Economic Survey 2020 released last week shows.

The sector is however among those facing a slowdown this year as a result of restricted movement of population to control the spread of the coronavirus, Kenya National Bureau of Statistics has noted.

“Real estate and other services are expected to be suppressed due to slowdown in economic activities and declining disposable incomes,” KNBS says in the Economic Survey 2020.

Meanwhile, MySpace has welcomed government's measures to control the virus, as it continues to extend its charity to vulnerable groups and communities to ease coronavirus miseries.

The firm together with its partners and other well-wishers has been donating food and non-food essentials to various vulnerable and needy groups in Nairobi and Mombasa.

It targets to help at least 10,000 families by the end of the first phase of its donations, according to Thuranira.

The first phase targets the homeless and slum dwellers. The second phase will target the disabled and those who have lost jobs as a result of the virus.

At least 400 families, five children’s homes and rehabilitation centers in Kibera, Buruburu, Waithaka and Westlands areas have benefited where the company has donated food, toiletries, blankets, sanitizers and face masks.

“Our priority at the moment is to give back to the society in suburbs where we conduct our business,” Thuranira said, “ We are doing this to complement the government’s efforts in mitigating the deadly virus"

Firms such as ProGas, Firmfort limited among other well-wishers have joined the property developer in the programme.