Site icon MONEYINAFRICA

Another turbulent year for real estate comes to a close

Real estate developers would wish to forget the just ended year, 2019, in a hurry. For another year, they came and invested, but few were interested. Several factors conspired to stifle the performance of their cash intensive investments. From uninspiring mortgage portfolio to racking up bad loans, a never ending credit crunch and skyrocketing land prices, it was a free fall for a sector that had so much promise a decade ago. To be fair, most of these factors were beyond the industry’s control and affected the whole economic front. The 2018 Bank Supervision report painted a picture of a sector that was pulling down the financial sector through the accumulation of bad debt.

For More of This and Other Stories, Grab Your Copy of the Standard Newspaper.

While outstanding mortgage loan assets rose to Sh224 billion from Sh164 billion five years ago, so did non-performing mortgage loans that stood at Sh38.1 billion. Bank-appointed auctioneers descended on homeowners unable to service their mortgage loans but the auctioneers also soon found themselves in a hole as they held assets few could afford. And for the fifth consecutive year, land prices both in the city and satellite towns continued to rise, a factor that had a direct bearing on home prices. Interestingly, infrastructure projects such as roads meant to open up hitherto inaccessible areas turned out to be a double-edged sword for real estate developers. In addition, big developers such as Cytonn and Centum invaded satellite towns, a factor that saw land prices spike in formerly rural settlements. “Before the Northern Bypass, an acre of land in Ruaka sold for an average of Sh40 million but currently goes for Sh90 million. This spike is due to an increase in demand for property in the area,” states a Buyrent Kenya.com report. Ruaka, adds the report, overtook other top nodes in Kiambu County where an acre sold for Sh43 million, Mlolongo at Sh27 million and Ruiru at Sh25.6 million. The price appreciation was pegged on the “growing middle class” that preferred to live in satellite towns. In Nairobi, there was no respite for developers as land in some areas, such as Upper Hill, went past the half a billion-shilling mark for an acre. As expected, high land prices went hand in hand with home prices as developers sought to recoup their massive investments. A city home that sold for Sh11 million five years […]

Stay in the Know!

Sign up for the latest news and information on African Companies and Economy.

By signing up, you agree to receive MoneyInAfrica offers, promotions and other commercial messages. You may unsubscribe at any time.
Exit mobile version