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The year in review: What made news in Kenya’s real estate market in 2013

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Impact of the new land laws

The Land Act, Land Registration Act and the National Land Commission Act were all assented to in 2012 to implement the 2009 National Land Policy.

he immediate impact of these new land laws has been felt this year, as they have proved to be a game-changer in the way real estate business is conducted.

Key winners are mortgage buyers, lease-holders, spouses and parties with interest with on a property. Central Bank reports showed lenders are wary that the laws warrant lengthy and more complex credit appraisal procedures.

 

Reits regulations gazetted

The Real Estate Investment Trusts regulations were gazetted on June 18, ending the long wait of over four years. Reits are meant to spur investments in the capital markets by enabling more people to own shares of properties easily by trading on the Nairobi Securities Exchange.

Reits schemes have been classified into D-Reits (developers) and I-Reits (income generating).  Though the Capital Markets Authority is yet to register any Reit scheme or Reit managers, it said in a Statistical Bulletin that Home Afrika Ltd, the first and only listed property developer, has notified it of intention to set up two Reits; for development and income generating.

Reits holders will earn dividends from their unit trusts.

 

KRA nets more property cash

The taxman intensified surveillance on compliance levels in the real estate sector and had targeted to collect about Sh3 billion.

RA said many landlords and property developers had been under-declaring or even evading taxes completely, denying it its dues despite the sector’s lucrative returns.

 

Office demand equals supply

Nairobi’s office space market moved from a position of oversupply to one of stability over the 12 months to February, according to the Africa Report 2013 by Knight Frank.

Demand has been upped by large corporations setting up offices in the city which is restating its position as the regional commercial hub of sub-Saharan Africa. The country is also positioning for a potential resource boom after the discovery of oil deposits in Turkana county.

Nairobi is among fast-growing cities  attracting huge investments.

 

Mid-income homes market

In a housing market fraught with lack of hard data – on supply, actual sales, price movements and, importantly, investment performance – tell-tale signs are emerging that all may not be well in the middle-income segment.

Tens of middle-income homes developments that started selling off-plan over the past two years are now ready for occupation; but still chasing after buyers amid slowing sales.

On the demand side, buyers seem to be sitting on the fence, somewhat waiting for imminent price corrections, which has put builders in a spot of bother.

 

No piracy cash in real estate

A World Bank, UNODC and Interpol study seeking to ascertain the destination of ransom money paid to Somali pirates ruled out influence on Kenya’s real estate boom.

The ‘Pirate Trails: Tracking the illicit financial flows from pirate activities off the Horn of Africa’ report said there was more to the boom “than what is claimed in the streets and office corridors”. It sought to clear speculation by assessing assumptions and perceptions on the flow of ransom cash. An estimated $413 million was paid in ransoms between April 2005 and December 2012.

 

Half-year home plans value up

The value of residential building plans approved in the first half of this year more than doubled over the same time in 2012, signalling a rally in construction of new homes in Nairobi.

Kenya National Bureau of Statistics data showed building plans approved by the Nairobi county government by end of June were worth Sh51 billion compared to Sh23.7 billion in the first half of 2012, a 115 per cent increase.

Construction of offices, retail space and industrial properties however remained flat as the value of non-residential plans approved over the period dropped by 0.6 per cent. Non-residential plans approved were worth Sh46 billion.

 

Building materials prices cut

A wave of price cuts on key building materials starting October 1 has signalled good times ahead for homebuyers and self-builders as construction costs are expected to fall.

Manufacturers of cement, galvanised iron sheets and metal rods slashed their ex-factory prices by as much as eight per cent on some commodities, raising hopes for lower construction costs.

Such would translate into lower house prices for new units. Devki Group cut prices of a 50kg cement bag to Sh600 from Sh625 on October 1, and a kilo of steel to Sh78 from Sh85.

 

New developments unveiled

Several new real estate projects commenced construction in the course of the year and are set to supply residential, commercial and retail space in millions of square feet.

uch include private equity fund Actis’ Garden City on Thika superhighway which commenced in July, a shopping mall in Karen dubbed The Hub, and a shopping centre complex in Naivasha christened Buffalo Mall Development.

ortgage lender Housing Finance also unveiled a second joint venture through its building arm Kenya Building Society.

– The Star

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