After what seems like the death of traditional banking, Real estate seems to be taking the Kenyan market by a storm. The market is demand and supply driven. All over the Social media the campaigns to buy/Purchase properties are booming especially now as we head to Christmas holiday. The social media has greatly had an impact on the increased audience towards this drift. As campaigns towards the next general election heighten in the country and as well as the felt impact on central Bank’s reduction in Kenya Banks Reference Rate (KBRR) you would think that investment in property has slowed down.
Market research by Knight Frank indicates that “Sale prices of luxury homes in Nairobi increased by a modest 1.3% in the first six months of the year compared to a 2% appreciation over a similar period in 2015. While supply in the prime residential market has been growing gradually, local high net worth individuals looking to buy are only settling for best-in-class properties, with currently more options to choose from. The stability in luxury residential prices also reflects the relatively steady macroeconomic conditions, without major impacts from external shocks. Transactions are still happening in low volumes, as is the nature of this niche market.”
Good thing is Realtors have now ceased the opportunity and some of them are offering extended repayment terms. Some repayment stretch all the way to 5 years! Housing problems will soon be a thing of the past as these market is evolving day and night.
The just concluded KICC Homes Expo show cased hundreds of Realtors who had tailor made solution to their target groups. Did you know that you can now own a home without necessary going through the tedious Bank application procedure? Yes some realtors are doing it e.g Safaricom Investment Company (SIC). In most cases you only need to raise the 10% deposit stipulated on the sale agreement and you can now comfortably move in and enjoy all amenities whilst living in the property and making slow monthly instalment. Other realtors providing longer repayment plans to purchase plots or “shambas” at an extreme low monthly instalments stretching up to 36 months includes Enkavilla properties Ltd located at Trance towers along Tsavo road owned by Mr. Meshack Muhoho who has taken the market by a storm. Other realty companies are PRC, Urithi and the such who are competing alongside to dominate the marke
Why Real estate?
Tangibility. You can touch, smell and feel it! It’s Immovable too hence creating a sense of security.
Increased value in investment: Kes 1,000 today is not the same Kes 1,000 tomorrow, factors of inflation causes a depreciation in the value of money whereas Kes 1,000 invested in real estate is not the same Kes 1,000 tomorrow as real estate has 100% appreciation whether it is at 1% increased rate. Forward is forward no matter the pace!
Control: As a shareholder of a company, you have no control over your investment. And, you never really know what’s happening behind closed doors. In real estate investments when electrical bills are too high you can change the light bulbs to more efficient ones, seal the windows, and take other measures to reduce the costs. If you are losing money, you will know it very quickly! And you will be able to take measures to improve this situation. With most investments like stocks, what can you do if your shares in Safaricom drop 15%? You can sell more or you can buy more… that’s it.
Creative ways to make money. . Since you have control over your property, and there are three different ways to make money from the property, there are plenty of creative techniques to try to make more money from your asset. Some people rent out the garage separate from the house. In the right location, you could sell advertising space or just get price reductions on work done in exchange for some advertising you can add vending machines or laundry facilities, you can change the density of the property (add more units… more units means more rent), or you can change the usage of the property to sell it to someone who can make better use of it (if you are in a commercial area, an office developer might want to pay heavily for a properly zoned property to develop on). There are dozens of ways to turn a simple house into a money making machine with creativity. The same can’t be said for other investments.
Access to the Equity without selling the asset. With real estate, when you need a chunk of cash, you can refinance a property or take out a secured line of credit against the equity you’ve built up in the property. This means that you get to continue making money from the rental income on that property and someone else continues to pay down your mortgage. If property values are appreciating, you will continue to have an appreciating asset while you get the money you need
Real estate has a lot of tax advantages The Finance Bill 2016 proposed to scrap the Capital Gains Tax (CGT) on transfer of property from parents to their children and those of former spouses. In the past, only spouses and immediate family members in cases of divorce settlements were exempted from CGT. This will correct the anomaly in taxation of land whose gains have not been realised. The move will ease the succession process which traditionally would take much longer to effect property transfers according to Knight Frank’s Market report.