For a long time the scramble for the country’s prime property has been concentrated in and around Nairobi, where investors argue that they stand a better chance of getting good returns courtesy of the relatively higher rents and steeper value appreciation curves.
However, Mombasa is now slowly emerging as a pretty attractive secondary homes market, a trend which observers attribute to the pressure in property values that Nairobi is currently experiencing and the rise in the popularity of holiday homes as an alternative to traditional hotels.
As a result, numerous developments are coming up along the Kenyan coast, all aiming to cash in on the new real estate boom in the region.
One such project is Lido Beach Resort, whose director, Nasir Ali, says hopes to ride on the exclusivity of beach-front multi-million shilling developments to attract moneyed buyers seeking leisure and comfort, even at a premium.
“We are trying to cash in on a niche market that has a high taste,” says Ali. “And, given that the market is yearning for a different kind of real estate that will include leisure, comfort, and luxury, we think there is an opportunity to sink in millions in this project and try to be a bit different from the competition.”
According to Ali, there a few factors that developers who have done their homework well consider before venturing into the holiday apartments business.
“Location is a key factor in this regard,” he says. For Lido Beach, the developers agreed that putting up apartments near the Mombasa Marine National Park, right at the entrance to Jomo Kenyatta Public Beach, would be most ideal, but other developers think beyond the beach and park to factor in proximity to shopping malls, schools, security services, and hospitals.
Holiday homes, however, are not for everyone and tend to attract a particular type of investor. Because of their relatively high rate of returns, coupled with the fact that the owner rarely occupies the house, they are not ideal for first-time home buyers seeking to have a roof over their heads rather than an investment plan in real estate sector.
But Mwenda Thuranira of MySpace Homes, the organisers of the Mombasa Homes Expo, says that, since land in Mombasa, and indeed the entire Kenyan coast, is quite expensive and hard to come by, especially near the beach where everyone wants to be, the best route to take if you want a piece of the fat pie is to go the apartment way.
“There is a gradual shift, especially among local tourists, to stay in apartments rather than hotels,” says Thuranira. “Families regard them as more affordable and convenient, while groups of, say, four or five find it easier to share a two-bedroom apartment and split the costs than take a room each in a hotel.
“And, with the introduction of cheap flights to this region through Jambo Jet, we expect to have more traffic to the coast in the next few days. That would definitely mean more hotel bookings and more apartment uptake.”
For most buyers of these kinds of homes, however, the difference between heartache and boundless joy is determined by whether the house you buy — at a tidy sum, no less — will attract the traveller seeking cheap yet quality accommodation. You risk having auctioneers knock on your door if you do not do your calculations right or if the apartment you bought, in the hope that it would have favourable tenancy throughout the year, stays vacant for months on end.
But if you strike the right deal and attract the attention of the market, you are home and dry. “Even if you are on mortgage,” says Thuranira, “you will still be able to offset it from the earnings of letting the property.”
Another development that is riding on the holiday concept is Ocean View apartments, which is currently under construction on the grounds where the once-famous Sun ‘N’ Sand Beach Hotel stood just a few years ago. This Sh15 billion project at Kikambala in Kilifi County will have 325 units, and the first tower of 58 units is already taking shape.
The director, Mahmud Visram, says construction of the apartments, under the name Ocean Seven, is projected be completed in 2018, and that the concept is popular in Dubai.
“Research has shown that there is a rising appetite for luxurious apartments,” says Visram, “and what better way to offer that than by putting up this world-class development. The seven towers will include two commercial blocks and five residential ones, which will be sold upon completion. When you sense a gap in the market, you rush to fill it. For us, the void we are trying to fill is that of world-class luxury through innovation and quality products.”
The architectural design papers of the project show that the seven towers will be 17, 19, and 25 storeys each, and that every unit will have a direct view of the blue waters of the Indian Ocean. The towers will take a V-formation in three levels, with two parallel 17-floor towers, two 19-floor towers, and and a centrepiece tower that will reach a height of 25 floors. The penthouse on the 25th floor will be the ultimate deal in the development. Mtwapa, Vipingo (where the classy Vipingo Ridge rests), and across the Likoni channel to Diani and Ukunda are the new hot spots for these types of investments.
Daniel Kyalo, who manages a holiday apartment development at Serena, off the road to Malindi just before Mtwapa, says most beach-front property owners, including those who only have one or two units, are now cashing in on this concept by renting their homes, especially during peak tourism seasons when monthly earnings average around Sh200,000.
It is these investors that Frank Ireri, the managing director of Housing Finance, had in mind when he opened a branch of the mortgage lender at the coast recently. “We have noted that the coastal property market has become very vibrant,” said Ireri, “and we believe that this new branch will attract mortgage borrowers and property developers, thereby growing our loan book.”