Realtors and lenders seeking to sell distressed properties are expected to continue facing difficulties making sales this year due to falling demand and bad economic times.
While auctioneers have been placing notices seeking buyers for various properties, the government’s low-cost housing roll-out is expected to pose a new challenge in attracting buyers. The government has received 279,000 applications for low-cost houses with 18,000 Kenyans injecting Sh100 million into home savings schemes. The government-fronted housing units are set for construction on 7,000 acres of land identified in all 47 counties in the coming years.
This has seen many prospective house buyers adopt a wait-and-see strategy before committing funds towards the purchase of the costlier housing units being built by local and foreign realtors.
Real estate sector observers say while the government houses are priced nearly five times less than the cost of distressed properties, the situation is worse since no lenders or realtor can sell a distressed property below 75 per cent of the prevailing market price.
This has forced many lenders to embrace arbitration with their customers, a shift from the ruthless auction approach in dealing with defaulters.
In its quarter three 2019 sector report, realtor Knight Frank said rising distressed properties in Nairobi has affected prime residential values with lenders intensifying efforts to recover non-performing loans. “We’ve not reached the bottom of the cycle and we expect further reductions in the near term until macroeconomic and local situations improve,” said the firm’s head of agency Anthony Havelock in the report.