Wealthy Kenyan investors beat their global counterparts by recording the highest return on investments in 2022.
A new Wealth Report by property consultancy firm Knight Frank shows that Kenya's rich fared better than anywhere else in the world as they ramped up investments in rented residential and retail properties.
The two categories were the best performing asset classes in 2022 as the economy reopened fully for business after the easing of Covid-19 restrictions.
This coupled with the reduced investment in industrial property and development land cushioned the investors.
The report shows that despite Kenya having the world's most optimistic outlook, last year recorded a small rise in wealth accumulation.
Investors shied away due to election uncertainties, global economic challenges and the devaluation of the Kenyan shilling.
Boniface Abudho, a research analyst at Knight Frank Africa said the wealthy in Europe were by far the hardest hit, due to Russia's invasion of Ukraine, suffering a 7.3 percent fall in their fortunes.
“The world's Ultra-High Net Worth Individuals (UHNWIs) saw their fortunes slashed globally by 10 percent last year on a cocktail of post-pandemic property price falls, soaring energy prices, falling stock markets, and surging inflation and interest rates,” said Abudho.
In a trend likely to shape investments this year, Wealth managers say their clients are looking to continue investing in the Retail and Residential Private Rented Sector (PRS) in 2023.
Following a renewed appetite in commercial property in the local market due to higher returns, property managers are optimistic that the rich will increase their wealth by more than 10 percent this year.
Kenyan wealth managers also reported that private rented property dominated their clients investment plans for 2023, with 60 percent planning to invest in private rentals, followed by 50 percent in retail.
Liam Bailey, Global Head of Research and Editor-in-Chief of the Wealth Report said nearly two-thirds of Kenya's and Africa's wealthy increased their property in 2022, compared with only 40 percent globally.
During the economic turmoil of 2022, some of the rich and the super rich retreated from international citizenships and foreign property in favour of Kenya and Africa as safe havens.
In terms of portfolio balance, property and bonds accounted for 66 percent of Kenyan HNWI's holdings in 2022, while only 18 percent of their assets were held in stock market equities and just 5 percent in venture capital.
This contrasted with a global position, where the rich held an average of 26 percent of their assets in stock markets in 2022, and 9 percent in venture capital and private equity.
In the period under review, Kenyan wealthy have held a greater proportion of their investment portfolios in property and bonds than is the norm globally.
Knight frank CEO Mark Dunford, said Africa delivered the highest proportion of clients who increased their wealth in 2022, at 64 percent, compared with the global average of 40 percent, and just 24 percent in the Americas.
Wealth managers also reported that about 19 percent of the property portfolios owned by Kenyan wealthy were held overseas, compared with an average of 32 percent.
