Kenya is among the top-five favourite property investment locations for Africa’s super-rich, with nearly a quarter (24%) already owning real estate in the country—coming third after the UK (67%) and US (33%), according to the Attitudes Survey data for The Wealth Report 2018.
South Africa is the fourth favourite property investment location for Africa’s super-rich at 9%. In total, 4% of the world’s super-rich already own property investments in Kenya, led by African, North American, European and Asian HNWIs.
Ben Woodhams, Managing Director at Knight Frank Kenya, said: “The fact that Kenya is the top African investment destination of choice for HNWIs on the continent speaks volumes about the strength and growth potential of our property market.”
The Attitudes Survey collated responses of 500 of the world’s leading private bankers and wealth advisors, who between them represent over 50,000 clients with a combined wealth of more than US$3 trillion.
Property makes up 43% of Kenyan high-net-worth-individuals’ (HNWIs) investment portfolios, excluding primary residences and second homes. This averages higher than their African counterparts’ 39%.
The majority of Kenya’s super-rich (59%) have invested in real estate in the country, while 27% hold property interests outside the country, according to the Attitudes Survey insights. Respondents to the survey said 42% of their Kenyan clients increased their exposure to property investments in 2017, further indicating confidence in the asset class.
Respondents said 46% of their Kenyan HNWI clients are considering investing in property locally in 2018. This is higher than Africa’s average of 37% and 43% globally of the super-rich who are looking to invest in properties in their home countries.
Kenyan HWNIs are more interested in investing in offices (39%); residential (i.e. hotels, retail, private rented sector/multifamily) and agricultural property at 28%; student accommodation and logistics/warehouses at 22%; infrastructure at 17%; industrial at 11%; and healthcare and retirement housing at 6%.
According to Knight Frank’s 100-city Prime International Residential Index (PIRI 100) published in The Wealth Report, prices of prime residential property in Nairobi weakened by 0.9% in 2017, which was an improvement compared to 2016 when the market recorded a 2.1% drop.
China’s Guangzhou topped the index with a 27.4% growth in prime residential prices, while South Africa’s Cape Town was second with 19.9%. Nigeria’s Lagos was the worst performer, with prices having fallen by 25% in 2017.
Nairobi’s Karen neighbourhood is among a select urban districts whose “location, infrastructure and vibe mean they are set to outperform the competition”. Karen witnessed rapid growth from the early 2000s, with many of the original five- and 10-acre plots developing into modern housing clusters with shared amenities such as club houses, gyms and swimming pools.
This period saw land prices soar from about Sh2.3 million per acre to the current levels of over Sh50 million per acre, where they have now stabilised. Typically, houses currently sell for around Sh80 million to Sh110 million in Karen, although record prices are being achieved for larger stand-alone houses with more substantial gardens.
The Knight Frank Wealth Report further reveals that affluent Kenyans own an average of 1.9 homes (primary residences and second homes not bought as investments), which is lower than Africa’s and global averages of 2.1 and 2.9 homes for the super-rich respectively. However, 16% of Kenya’s wealthy plan to buy additional homes within the country in 2018, while only 8% are looking to purchase abroad.
Respondents to the Attitudes Survey said 21% of Africa’s super-rich are considering to buy homes in Kenya. A total of 3% of the world’s HNWI population is looking to buy houses in Kenya this year, with the majority being from India, according to The Wealth Report.
Buyers with US$1 million to spend on high-end homes can purchase a luxury residential property with 6,383 sq ft of space in Nairobi, making the city one of the cheapest locations for prime residential buyers. Monaco is the most expensive location globally, with a million dollars affording just 173 sq ft.
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Knight Frank LLP is the leading independent global property consultancy. Headquartered in London, Knight Frank has more than 15,000 people operating from 418 offices across 60 markets. The Group advises clients ranging from individual owners and buyers to major developers, investors and corporate tenants.