7 REASONS WHY BUYING A PROPERTY IN KENYA IS A GOOD IDEA
June 10, 2020
The real estate industry in Kenya is one of the most preferred means investors use when seeking to obtaining a high return on the funds committed. Getting hold of a residential property and renting out the property guarantees the inflow of funds that can be of great benefit to the landlord. Purchasing a property eliminates the aspect of having to pay rent on a continuous basis on the agreed period, in turn, it is a cheaper option in the long run.
Residential properties in Kenya are plenty as there is an oversupply of properties currently especially in Nairobi. This gives an array of options to prospective buyers that have diverse requirements for the type of properties they are looking for and the locations of interest.
Purchasing a property in Kenya is a good idea and below are seven reasons as to why!
Investing in a property enables obtaining foreseeable cash inflow. According to a research by CommercialKE, a well-planned real estate investment in Kenya should make available a 6% or greater cash flow. This should be after all the mortgage payments and operating expenses have been done. This indicates a higher rate of return on investment. Purchasing a property and obtaining a willing tenant will result in the continuous rental income over the contract duration and thereafter upon renewal or obtainment of another willing tenant.
The current Covid-19 Situation offers more good reason for buying a property in Kenya. This is because the real estate market has slowed down leaving real estate consultants and landlords in an unfavorable situation resulting them in taking every inquiry/client they get seriously. This gives room for more negotiation and a chance for a prospective buyer to come to an agreement with the landlord and/or real estate consultants at a price that could simply be hard not to go ahead with the purchase. Landlords and/or real estate consultants at this current trying moments are more willing to reduce their price further as compared to what they initially prefer to do so due to the market conditions in play.
Purchasing and/or investing in a property is not a complicated process as compared to other means of investments such as purchasing and selling shares through the Nairobi Stock Exchange (NSE). There is a higher level of knowledge, research, monitoring, and caution needed when dealing with the NSE. You don’t need specialist knowledge when purchasing a property. Usually what happens is that prospective buyers purchase a property to stay in and later on is when they realize the benefits that can be derived from letting out the property due to the appreciated in value of the property as time goes by. This is what tends to transform owners that are staying in their property into investors.
The real estate industry is a safe form of investment as compared to other forms of investment such as purchasing shares. A research conducted by Safaricom Investment Co-operative indicates that Kenya has a relatively safe and vibrant property market that offers investors a unique opportunity to invest their hard earned savings safely .When you factor in the return and risk associated with property and shares, property wins hands down. Shares have higher capital growth, but the difference in risk is huge. The risk is measured in variation, returns and capital growth (or loss) on shares can range from +40% in a year to -40% in a week! You don’t get that sort of variation in property, hence it is considered a safer investment.
Buying a residential property eliminates the aspect of having to pay rent on a periodical basis hence in the long run it is a cheaper option as compared to renting a property. When renting a property there is continuous outflow of money and by purchasing a property that aspect is out of the equation. Due to the slow demand in the real estate market, now is the best opportunity to negotiate for a better deal as landlords are more willing to consider the offer on the table.
With the real estate industry, there is constant appreciation of the value of a property if well maintained over the years. You may purchase a property for 20M Kshs for instance and the annual appreciation increment for residential properties usually are between 5%-10% as a result that can give an increment of 1M-2M Kshs based on the 20M valuation every year. This results in earning a higher return as the years go by if you intend to sell the property in the future.
Lastly shelter is a necessity. Who wouldn’t want a property registered under their name? I’m sure everyone would. You are guaranteed having a roof under your head at the end of every month as the headache of paying periodic rentals, rental escalations, landlord giving you a notice to vacate and many other scenarios that come with renting a property are no more!
Buying a property should not require you to think twice in the event you are able to finance the process as there are various benefits of doing so. It’s a great idea, act on it as soon as you can!
Read more about how to buy an affordable residential home in covid-19