INSECURITY in Kenya and pending elections in Tanzania are a set back to an all inclusive economic growth which threaten to spill over to the thriving real estate sector.
Speaking at the opening session of the East Africa Property Investment Summit in Nairobi yesterday, managing director of Africa Economics David Ndii said that while the property market has registered impressive growth, uptake of its products was being hampered by constrained growth in other sectors.
In an opening presentation at summit attended by over 250 delegates from more than 100 companies globally, Ndii said the real estate sector has doubled its contribution to Kenya's gross domestic product in the last decade to 10 per cent to be at par with the manufacturing sector which has stagnated in several years.
Kenya's tourism sector has been hit hard by insecurity incidents, leading to massive layoffs and shutdown of several hotels.
This, he said, has affected disposable income whose effects spill over to the real estate sector.
"In Kenya house prices have grown four-fold while incomes are not catching up," Ndii said.
Tanzania which is East Africa's second biggest economy is set to hold elections this year. Due to looming elections, the heightened political climate in Tanzania is likely to deflect attention away from a regulatory framework for development of its gas sector which would have aided economic growth.
Donors are also adopting a wait and see attitude over governance concerns with some of the international donors announcing in October that they will only pay outstanding pledges of budget support worth nearly $500 million.
Stanbic head of debt products in East Africa Ralph Gunn said there has been a higher demand for large scale property deals which has changed the financial needs of developers.
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