DEMAND FOR AFFORDABLE AND MID SEGMENT HOUSES EXPECTED TO RISE AFTER COVID 19 PANDEMIC
July 8, 2020
Going by the first definition and Kenya National Bureau of Statistics (KNBS) data on income distribution in the formal sector, affordable housing would be units that can be afforded by individuals who earn Kshs 50,000 and below per month, which is a total of 74.4% of persons employed in the formal sector in Kenya.
The COVID 19 Pandemic has resulted in a reduction in the rate of demand for residential properties in Kenya. This has affected home owners and real estate consultants in obtaining potential tenants or buyers for the properties as most potential tenants and/or buyers prefer to hold back their funds for now due to the ongoing COVID 19 Pandemic and the uncertainties it brings along. Most potential clients aiming at securing a mid-segment property intend to do so after the COVID 19 Pandemic and instead prefer to use this time during the pandemic to explore the options available in the real estate market through various means such as with the use of real estate consultants, referrals and the like. With most of the middle class and lower society saving their funds and exploring their options to find the best property suitable for themselves after the COVID 19 Pandemic, there is an anticipation of growing demand after the passing of the pandemic.
Kenya enjoys an increase in high end residential properties developments yet there is was in increase in demand from potential home buyers in the middle-income market segment in February according to an article by The Star. The demand levels are expected to peak again once the COVID 19 situation drastically improves, with that in mind, residential property developers should take this into consideration and offset the high demand levels for mid segment properties by focusing on developments for properties based on that segment of interest to avoid a deficit in supply levels of mid segment properties.
With certain restrictions imposed by the government of Kenya in regard to multiple people gathering in a certain location and a limitation of the number of passengers in a vehicle, this has reduced the willingness of potential tenants to view properties. With not all decision makers able to gather in a place due to the consequences involved in doing so, this inhibits the decision making process and as a result slows down the process overall. After the COVID 19 situation drastically improves and the measures put in place by the government relax, enquiries and viewings for properties will increase in turn leading to an increase in demand.
With real estate consultants increasingly developing software’s for virtual viewings, this is pleasing for many clients and also the opposite is true. There are certain clients that are not in favor of virtual viewings and in turn prefer to physically meet the real estate consultants and/or property owners in the property of interest and have a physical perspective of the property itself. However, the hindrance to this possibility is a reluctance by clients and other parties involved in meeting physically due to the fear of exposing oneself to the virus. As a result, this puts a halt in the viewing and negotiation process due to the preference of taking this approach after the COVID 19 Pandemic diminishes.
Patience is key during these difficult times especially for clients that under no circumstances are willing to view and commit to a property however the anticipation is that the demand for affordable and mid-segment houses will rise after the COVID 19 Pandemic situation drastically improves.