The prices of houses in Nairobi Metropolitan dropped in the first quarter of 2019 since 2013.
According to a report by the Kenya Bankers Association (KBA), the decline represented about 2.8 per cent in comparison to 1.5 per cent recorded in the same period last year.
The report attributed the decline in the house prices to supply and demand imbalances.
On the house supply, the KBA report indicates that the building and construction sector recorded slow credit growth which led to housing supply constraints.
The report further indicates that homebuyers’ main challenge was prevailing economic conditions, which have resulted in tight household budgets.
“Lending institutions were reluctant to offer loans to the private sector, leading to decline in demand,” said the KBA report.
In terms of uptake, the report said that apartments accounted for 63 per cent of all residential market uptake in the period under review.
This was followed by maisonettes and bungalows at 23.4 per cent and 12 per cent respectively.
Apartments, however, recorded 13.7 points decline from 76.3 per cent in the same period last year which is a sign of subdued market activity.
“The dominance of apartments is an indication that the housing market is predominantly in the middle income segment of the population,” said part of the report.
The report revealed that the buyers’ housing preference were largely influenced by the number of bedrooms and bathrooms, with the location being a key determinant in pricing.
A leading investment company, Cytonn is optimistic that the residential market will continue to record modest performance due to factors such as financing, which continues to be elusive for home buyers as well as insufficient credit advancement to developers.
“We expect the lower and mid-end markets to continue experiencing increased demand and uptake as homebuyers seek affordability,” says Cytonn in its May survey report.
Meanwhile W Hospitality Group also released the Hotel Chain Development Pipeline in Africa 2019 report, which tracks key planned hotel development activities across Africa.
According to the report Kenya is ranked fifth among African countries with the highest hotel room pipeline with a deal pipeline of 27 hotels and 4,232 keys as at the first quarter of this year.
Top on the ranking was Egypt, Nigeria, Morocco and Ethiopia in the order.
“Kenya’s deal pipeline increased by 23 per cent from 3,444 rooms pipeline recorded in 2018,” said part of the report.
Nairobi accounts for the lion’s share of the pipeline with 3,167 rooms.
The report applauds the recent hospitality performance in Kenya, which has been on an upward growth.
This growth has been boosted by vibrant tourism sector with the number of international visitors reported in 2018 increasing by 14 per cent to two million visitors from 1.8 million visitors in 2017.
Enhanced security, increased meetings, conferences and exhibitions also contributed to improved hospitality sector.