By Daisy Mumbi
The July visit by the U.S. President Barrack Obama to Kenya for the Global Entrepreneurship Summit (GES) has added credence to the expressed confidence of the Kenyan government that Kenya is safe and remains a major tourist destination in Africa. Preceded by a three-day visit by the US Secretary of State John Kerry in May this year, where he announced a U.S. Government grant of Sh13 billion to combat terrorism, the Kenyan coast, the most affected by insecurity, is gradually regaining its popularity as a tourism attraction.
This confidence is also shared by two world leaders – US Senator Craig Tiezen and UNWTO (United Nations World Tourism Organisation) Secretary General Dr. TalebRifai– who visited Kenya and expressed confidence in the security situation in the country, urging countries that had issued travel advisories to review their stand. Kenya is definitely open for business to the world, and Kenyans are not being left behind!
The Kenyan real estate market is experiencing steady growth, and has emerged as the fourth biggest contributor to the country’s wealth, recording a 10.6% contribution to the GDP after agriculture, industry and services. Contrary to some sentiments, the real estate bubble is far from bursting. Rather, investors and developers are reinventing new ways to profit from the construction boom by targeting markets that ensure a high return on investment, as with developments along the Kenyan coastline.
So who is fueling this growth? The recent rebasing of the country’s GDP by the National Bureau of Statistics profiles Kenya as a lower middle-income nation with the GDP per capita surpassing USD 1200. The expanding upper middle class with higher disposable incomes and a high affinity for the finer things in life have largely contributed to this growth and are actively investing in the real estate market.
Consequently, the property sector is experiencing demand for gated communities and modern commercial developments targeted at raising the standard of living for Kenyans within the middle income and high-end bracket. This trend ensures increased security and lower cost of maintaining modern day amenities such as swimming pools, gyms, clubhouses and private parks within residential developments.
There is also a growing demand for the modern retail culture, therefore necessitating observance of international standards in commercial developments. Most notable is the just opened Garden City Mall and the upcoming Two Rivers Development set to be the largest lifestyle center in sub Saharan Africa outside South Africa. With the inland market slowly reaching a plateau, focus is fast shifting along the Kenyan coastline with aspirational buyers forming the bulk of the investors.==
Interestingly though is the age bracket doing the actual buying, “we are surprised by recent trends that have seen an influx of buyers in their thirties and forties, who are going for properties that you would ordinarily expect the older bracket to invest in. For instance, Sultan Palace, a beach retreat in Kikambala is receiving great interest from young professionals who are going for the Villas and beach houses as opposed to the condominiums which we initially expected to attract the younger buyers.” Says Mr. Nathan Luesby MD, Jenga Web.
The investment potential of developments along the Kenyan coast is therefore not lost to Kenyans. “We are receiving a lot of interest from second home buyers who are also interested in renting out their properties to local and international tourists when not in use, knowing well that the exclusivity of the retreat will appeal to vacationers given the added advantage of the development also featuring a five star hotel and club house under the world renowned Taj brand, who will also be the estate managers.” Says Mr. Luesby.
Coupled with the government’s commitment to invest Sh900 million towards tourism recovery through global PR and branding and the apportioned Sh600 million going towards various marketing activities by the Kenya Tourism Board, the future is bright for investors in the holiday homes and destination properties.
There is a heightened popularity among Kenyans and foreigners vacationing along the Kenyan coast to opt for villas, beach houses and condos as opposed to the traditional hotel accommodation. The realization is that this arrangement ensures greater flexibility, higher exclusivity and increased security, as these are excusive properties in gated communities, which also offer five star facilities.
Coastal holiday developments are also very popular with Kenyans living in the diaspora as they offer an opportunity to own beachfront property without going through the hassle of overseeing the construction themselves. This and the added advantage of top notch shared amenities is very convenient and cost effective for many diaspora Kenyans who are perpetually afraid of loosing their investments to unscrupulous agents and family members.
Local and international Tourism is therefore taking on a new face, which is a welcome relief for local investors, offering an opportunity for more individuals to reap from emerging trends, under a low investment and high return model.
Writer is Key Account Manager, Jenga Web