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The Housing Bubble in Kenya will Burst very soon....
Rank: Elder Joined: 5/1/2010 Posts: 3,024 Location: Hapa
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a friend told me that property prices are likely to go down as the possibility of somalis investing back home opens up....it will take time for that to start happening but it will definitely have an effect and it is likely that property prices may start to decline Float like a butterfly, sting like a bee. - Muhammad Aliπ
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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subzero wrote:CBK says that there is a sharp drop in the amount of forex inflows from unexplained sources since the military incursion in somalia
Any implications on the said 'property bubble' ? In Nairobi prices will definitely start to fall after some time! Mark 12:29
Deuteronomy 4:16
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Rank: Chief Joined: 3/24/2010 Posts: 6,779 Location: Black Africa
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Prime Minister Raila Odinga Wednesday told Parliament some foreign exchange inflows in the economy arose from piracy on the Somali high seas. The PM was answering questions on the Somalia incursion which was reported by the Business Daily to have led to a sharp drop in unexplained forex from a high of Sh170 billion at the beginning of 2011 to a low of Sh6.5 billion in June, the lowest figure in five years. http://www.businessdaily...8/-/vbx712/-/index.html
GOD BLESS YOUR LIFE
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Rank: Chief Joined: 8/4/2010 Posts: 8,977
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youcan'tstopusnow wrote:Prime Minister Raila Odinga Wednesday told Parliament some foreign exchange inflows in the economy arose from piracy on the Somali high seas. The PM was answering questions on the Somalia incursion which was reported by the Business Daily to have led to a sharp drop in unexplained forex from a high of Sh170 billion at the beginning of 2011 to a low of Sh6.5 billion in June, the lowest figure in five years. http://www.businessdaily...8/-/vbx712/-/index.html
Just a wild thot. Does this mean they'll be a USD shortage? What will fill up this illegal USD vacuum?$15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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Rank: Veteran Joined: 8/25/2012 Posts: 1,826
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forgive my naivety in matters economics, but does it mean that USD shortfall will lead to shortage in supply thus a weaker shilling against the USD - this will lead to an increase in commodity prices. which in turn might force a good number of the individuals who bought land for speculative purposes to sell for cash flow problems - which will increase supply of land thus a reduction of the prices.
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Rank: Veteran Joined: 8/30/2007 Posts: 1,558 Location: Nairobi
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Guru prices aren't going to fall. Kenya's realestate still the cheapest in the world per sqf. Refer to page 29 of the link below from citi/knightfrank. $1m will only buy you 88sqm in Mumbai whereas in Nairobi, it will buy you 588sqm. Granted, Nairobi, isn't in serious contention to compete with cities like Monaco, Miami, London in terms of size, economic complexities etc. but we are getting there. I remember a comedian(the name escapes me) who said Kenya is in Puberty whereas Europe is in Menopause. I've heard that statement"housing bubble will burst very soon for about 10years now" there is no bubble. Nothing drastic happened even with interest rates of 20% as there is demand for units out there. The Somali pirate money isn't the basis of the housing market. It maybe to a lesser extent. Even if it was, they aren't going to sell their assets. They will keep and rent. If you look at this particular thread "mr chicken little" started it in march 2011. And so far, prices have gone up 25%. NOT DOWN. but then again, falling prices make a difference only to speculators, not long term owners. So long as the population is growing, there will always be demand for housing. http://resources.knightf...-1231dd51781a&type=1
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Rank: Elder Joined: 6/20/2007 Posts: 2,037 Location: Lagos, Nigeria
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HORTON wrote Guru prices aren't going to fall. Kenya's realestate still the cheapest in the world per sqf. Refer to page 29 of the link below from citi/knightfrank. $1m will only buy you 88sqm in Mumbai whereas in Nairobi, it will buy you 588sqm. Granted, Nairobi, isn't in serious contention to compete with cities like Monaco, Miami, London in terms of size, economic complexities etc. but we are getting there. I remember a comedian(the name escapes me) who said Kenya is in Puberty whereas Europe is in Menopause.
I've heard that statement"housing bubble will burst very soon for about 10years now" there is no bubble. Nothing drastic happened even with interest rates of 20% as there is demand for units out there.
The Somali pirate money isn't the basis of the housing market. It maybe to a lesser extent. Even if it was, they aren't going to sell their assets. They will keep and rent.
If you look at this particular thread "mr chicken little" started it in march 2011. And so far, prices have gone up 25%. NOT DOWN. but then again, falling prices make a difference only to speculators, not long term owners.
So long as the population is growing, there will always be demand for housing.
http://resources.knightf...0-4501-9379-1231dd51781
Points on @Horton. It can stagnate momentarily if the new county(s) actually takes off but bubble is out of question
because there is a big demand pressure and severe housing deficit.
Somalia impact is minimal I concur (circa 5%).
Again it would pay me to look forward to Kenya housing bubble as I am looking forward to buy an apartment in a few years time, but this will be a wild
dream, as it is good to face the reality. Nairobi is
the hub of East African tourism so foreigners and Kenyans abroad would always seek for a slice of Nairobi accomodation. I would not like to pay high rental income in future, it is better to buy on the long term. Other investors all over the world are likely to reason this way.
The wazua spirit as members is to educate and inform and learn from others within the limit of what we know in any chosen area irrespective of our differences in tribes, nationalities, etc. .
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Rank: Member Joined: 7/17/2011 Posts: 627 Location: Mbui-Nzau, Kikumbulyu
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My take: the biggest beneficiaries of an unstable larger Eastern Africa region have been the UN and relates agencies "expatriates..by view of their perks of being in a "hardship" zone. So what happens when the region stabilizes?..less perks may be? most of them have been the tenants of the insanely prized rates of 100k to 200k apartments Per Month. If this were to change i.e less demand for these insanely prized real estate pieces then the spiral effect downwards to less costly housing would be one of the catalyst for a bubble burst.
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Rank: Member Joined: 3/20/2009 Posts: 348
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Real estate just like any other asset class has cycles where it goes up,down or stagnates.In kenya many people talk about real estate only in the last 10 years and there is normally no reference to what happened 15 years prior.Nothing goes up forever and one day the music will stop.I would be cautious getting into real estate in kenya at today's prices only if you plan to be in it long term just incase ur caught up.I think you can get better prices in a few years.However i must say that with all the weakening of currencies by money printing over the years real estate is always a good hedge but for the long term.All am saying is that the easy money has been made in real estate in kenya,today you have to be surgical and strategic if you are just getting into the game.
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Rank: Elder Joined: 6/8/2013 Posts: 2,517
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There is a new thread on same issue no? Anyway Rink ===>World Bank and Interpol says sio pesa ya piracy its remittances from mayuu lakini si wariah pia manakaa mayuu ?"ππ‘KQ makes money for everyone except the shareholder ππ " overheard in Wazua
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Rank: Elder Joined: 12/17/2009 Posts: 3,583 Location: Kenya
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why is there such a big fascination with the real estate burst, the studies focus on a very limited part of the country and population. Mostly Nairobi and some parts of mombasa zeroing in on the few rich individuals involved.
In kenya most people own land and houses, in fact I would not be surprised if a good number of those who reside in slums own decent chunks of land upcountry.
There is a small number of real estate specialists, but they make lots of noise - the land market in the country is ok, one can still get an acre of agricultural land at 200 - 300k, and I still see plots of land going for about 200 - 300k within 50km radius of the cbd.
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Rank: Member Joined: 10/8/2010 Posts: 446 Location: london
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The bubble has never busted anywhere in Africa, reasons being cash as opposed to borrowing. In most countries where the bubble has busted, all have been due to mortgages. in Kenya few people have mortgages.The only thing that can happen is stagnation
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Rank: Veteran Joined: 1/4/2010 Posts: 1,668 Location: nairobi
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@african coloner..true. Only stagnation can occur and this will only occur in projects that are not highrise eg bungalows and maisonettes or projects whose land cost component is more than 20% of total const of construction. As Iron Sharpens Iron, So one Man Sharpens Another.
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Rank: Veteran Joined: 2/10/2010 Posts: 1,001 Location: River Road
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african coloner wrote:The bubble has never busted anywhere in Africa, reasons being cash as opposed to borrowing. In most countries where the bubble has busted, all have been due to mortgages. in Kenya few people have mortgages.The only thing that can happen is stagnation @african coloner-funny that most people don't remember what happened to the property market 15 years before 2003 which is when the Kibaki govt started the monetary expansion. It looks like real estate is being bought cash but we all know that ultimately money is created from debt so someone is borrowing somewhere for speculation. Life is about boom and burst so enjoy the boom wave while it lasts
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Rank: New-farer Joined: 8/25/2012 Posts: 32
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Bubble busted where it did because the employers of companies there retrenched a good number of people so as to reduce wages.The employees who were retrenched can't afford the mortgage, houses were already built, bank can't give loans, and the developers has no other option but to cut the prices of the depreciating structure.
In Kenya, actually those who are retrenched/likely to be retrenched are not the main target the house developers have. And still, if you see more and more SUVs, picnic sites, hamburgers, champagnes, wines, and missing "Andazi" in the list, this tells me people have money to spend.Developers will only keep observing and changing the targets. If the bubble bust here another start swelling there and before it bust another....
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Rank: Elder Joined: 6/19/2008 Posts: 4,268
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mkonomtupu wrote:african coloner wrote:The bubble has never busted anywhere in Africa, reasons being cash as opposed to borrowing. In most countries where the bubble has busted, all have been due to mortgages. in Kenya few people have mortgages.The only thing that can happen is stagnation @african coloner-funny that most people don't remember what happened to the property market 15 years before 2003 which is when the Kibaki govt started the monetary expansion. It looks like real estate is being bought cash but we all know that ultimately money is created from debt so someone is borrowing somewhere for speculation. Life is about boom and burst so enjoy the boom wave while it lasts If i remember correctly, before 2003, it would be difficult for ordinary kenyans to get land anywhere 6km radius from CBD. Read corruption and sometimes, forced acquisition by the big boys. Again there was some law that restricted people from acquiring flats. When this was amended(repealed) or whatever, that's when many people realised they could acquire properties without necessarily having to own land. This increased the demand for apartments which has gone spiral. there's still a huge shortage of housing in kenya's major cities so the demand for properties will continue. Real estate is still a lucrative market to invest in. We are not near bubble yet and when the bubble comes, it will definitely not be anywhere near the current prices.... it will stagnate way above the prices we have. back in 2009, you would get a 2 bedroomed house at 8k in kitengela. now, the cheapest you can get is 13k. Economy is expanding and hence the peoples purchasing power.... couple that with the generation which still believes that owning land even if idle is still "wealth", and you wont be having a bubble soon. It will also require a generational change. While waiting for the bubble to bust, take the ride, it wont happen overnight.
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Rank: Veteran Joined: 2/10/2010 Posts: 1,001 Location: River Road
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Wendz wrote:[quote=mkonomtupu][quote=african coloner]
If i remember correctly, before 2003, it would be difficult for ordinary kenyans to get land anywhere 6km radius from CBD. Read corruption and sometimes, forced acquisition by the big boys. Again there was some law that restricted people from acquiring flats. When this was amended(repealed) or whatever, that's when many people realised they could acquire properties without necessarily having to own land. This increased the demand for apartments which has gone spiral.
there's still a huge shortage of housing in kenya's major cities so the demand for properties will continue. Real estate is still a lucrative market to invest in. We are not near bubble yet and when the bubble comes, it will definitely not be anywhere near the current prices.... it will stagnate way above the prices we have.
back in 2009, you would get a 2 bedroomed house at 8k in kitengela. now, the cheapest you can get is 13k. Economy is expanding and hence the peoples purchasing power.... couple that with the generation which still believes that owning land even if idle is still "wealth", and you wont be having a bubble soon. It will also require a generational change. While waiting for the bubble to bust, take the ride, it wont happen overnight. @Wendz, it was not difficult to get land during the last bubble in 1970's and 1980's people bought land through land buying companies. The Sectional Properties Act was made in 1987 during the peak of the last bubble when people were using mwananchi banks like Jimba credit and rural urban to buy land in Githurai, Zimmerman, Buru. There were virtually no titles registered under that Act for next 15 years. In the 1990's you had a title deeds but you couldn't afford to pay hospital bills and that's how hospitals accumulated title deeds as security. The population doubled but still property prices didn't rise exponentially like today. By the way bubbles don't affect those who bought and decided to hold on long term. Property bubbles hurt the speculators who get locked in at the wrong price. Property bubbles hurt the economy as capital is taken from productive sectors to acquisition of property for speculation. The japan property bubble was so big they are still in recession to date. Price is what you pay value is what you get so one day investors will look at the price and compare with the value they are getting and the bubble will pop until then enjoy the ride
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Rank: Elder Joined: 6/2/2011 Posts: 4,818 Location: -1.2107, 36.8831
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a4architect.com wrote:@african coloner..true. Only stagnation can occur and this will only occur in projects that are not highrise eg bungalows and maisonettes or projects whose land cost component is more than 20% of total const of construction. RINK!!!!!!: CLICK HERENa ime-stagnate na ikaanza reverse gear HARAKA sana! Receive with simplicity everything that happens to you.β β Rashi
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Rank: Elder Joined: 6/2/2011 Posts: 4,818 Location: -1.2107, 36.8831
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LINK TO THE REPORTQuote:Feature: Rise of apartments in Nairobi suburbs causes housing glut Jan 30,2015 by Bedah Mengo NAIROBI, Jan. 30 (Xinhua) -- The five-storey building in Tena on the east of Nairobi, Kenya's capital, is tiled from top to bottom, giving it a classy look that should appeal to tenants. However, despite being finished close to four months, the flat with 20 two-bedroom houses is yet to be fully occupied, with nearly half of the units remaining empty. "Stylish houses for rent," reads a huge banner hanging on the wall of the flat as it gives a phone number for potential tenants to call. Is this really the case???? Mimi bado witness hii! Receive with simplicity everything that happens to you.β β Rashi
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Rank: Member Joined: 8/27/2010 Posts: 495 Location: Nairobi
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Quote:On our front page last Friday, we had a breakdown of the prices of commercial plots in the prime zones of Nairobi. By commercial plots, we refer here to parcels of land of at least one acre, which may current have single-family residential units on them, but which could easily hold a large multi-storey office block.
The general drift of this story was that private developers and institutional investors had placed such a high demand for such plots, that the prices had risen to unprecedented levels. But as those who live in New York, Tokyo, London, or any other of the great cities of this world, and they will tell you that such incredible surges in property prices, are not always sustainable. While every large investor is rushing to get in on the action, the prices will continue to rise.
But a point comes when all this feverish activity leads to an oversupply of office space β for at the end of the day, that is what all this property development ends up doing; providing more space for office workers to occupy. And when that point comes when supply is found to exceed demand, then all of a sudden prices collapse.
Developers who had long grown accustomed to reaping windfall profits from buildings, which were fully let before the construction was even completed, suddenly find themselves staring at large architectural marvels which are absolutely empty. And which remain empty even after the space is offered at substantial discounts. And where a plot of land sold for stratospheric nine-figure prices just a few months earlier, a property speculator may well find that they have to just fence their plots and sit back, waiting for some years to pass before they can hope to get a decent offer for it.
In other words, Nairobi's commercial property market shows every sign of being very much overheated. Those prices show every sign of revealing a property bubble. And as the experience of those greater cities show, what goes up, must come down. SourceSent from my Black Nokia 3310
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