• This is with the aim of cushioning themselves against forex losses caused by the weakening of the Kenyan shilling.
• These landlords and entrepreneurs have been contributing to the rising inflation.
Some landlords of prime office spaces in Nairobi have moved to set their rent prices in dollars.
These landlords seem to be joining an increasing number of businesses that are reliant on the changes in the dollar value to set their daily sales prices.
They said they aim to cushion themselves against forex losses caused by the weakening Kenyan shilling against the dollar by nine per cent over the past year.
“There has been increased preference from investors to have rent in dollar payments due to the ongoing depreciation of the Kenyan shilling,” Knight Frank, a property consultant, said in its Kenya Market Update published on February 2.
Knight Frank said though only a few landlords demand actual dollar payments, others have a mechanism embedded in the lease that creates room for payment in shillings but based on the current dollar rate.
“The main trend is we could end up having a two-tier market where there is a segment that is purely dollar-based and then a tier below based on the shilling,” Anthony Havelock, the Head of Capital Markets at Knight Frank Kenya, told the Business Daily.
However, the Knight Frank report failed to mention the specific landlords, nor did it give their contact details.
The move also seems strategic as some investors sare keen on increasing clientele from abroad.
“Some landlords are asking for rent in dollars as a gimmick to remain competitive in the marketplace. If I quoted to you a selling price of Sh250 million, this would be more intimidating than say quoting to you a price of $20,000,” Collins Chacha told Business Daily.
However, experts say there is a downside to the new preference for dollars as it may seem landlords gain from protecting themselves from forex losses but they may still lose in case the dollar is seen as an obstacle by potential clients.
Currently, statistics from the CBK show the shilling is trading at Sh124.80 as the official exchange rate.
Over the months, CBK has insisted that the shilling remains well-priced and maintained calm over its direction, banishing claims of dollar shortages severally.