What you need to know:
- “Kenya’s middle class and business people have turned to the UK to buy houses for renting out, mostly due to the high inflation in the country that has made acquiring of Real Estate very expensive and mortgage rates very high,” reads a statement by the UK property company.
With inflationary pressures diminishing return on investments, segment of Kenya’s middle class is now looking at Europe, specifically UK’s real estate industry for safe investment, according to a periodic analysis by UK surveyors and data analysts.
In the expert analysis, Baron and Cabot, a UK based Company that facilitates the process to acquire property in the U.K noted that Kenyans middle class are increasingly searching for safe and high return investments beyond its borders, with UK apparently being the destination of choice.
“Kenya’s middle class and business people have turned to the UK to buy houses for renting out, mostly due to the high inflation in the country that has made acquiring of Real Estate very expensive and mortgage rates very high,” reads a statement by the UK property company.
In June, 2022, Kenya’s inflation rose to 7.9 per cent from 7.1 per cent in May, hitting a 58-month high on soaring prices of food items, according to the Kenya National Bureau of Statistics. This is the first time the upper limit target of the Government, which is 7.5 per cent, has been breached since August, 2017. The disruptions caused by the war in Ukraine has largely contributed to this.
“Inflation distorts citizen’s incentive to save, invest and work,” says Ivan Wafula, real estate sector analyst.
He continued: “Buying of property locally has therefore been largely affected. This is due to the rise in prices for building materials, which consequently make construction expensive.”
In 2021, economists at the East Africa Property Summit agreed that Real Estate in the region would be unlikely to see a rise in demand.
Moses Lutalo, the Managing Director of Broll Uganda, which is a property service company, lamented that the demand for commercial office space had been down for 12 months, while the demand for rentals remained very low, especially in Kenya.
By May, 2022, data by realtor HassConsult showed that the price for an average house within the city had risen by 6.8 per cent.
Additionally, land prices in Nairobi rose by a marginal 1.07 percent and recorded a jump of 7.35 percent in the satellite towns such as Kitengela and Juja.
And for that, the statement issued earlier in the week (Monday) by Baron and Cabot, notes that since it is challenging and costly to buy property in a high inflation market, “Kenyans are now finding alternatives to buying property in Kenya.”
“Kenyan buyers are spending an average of 210,000 pounds (Sh30.7 million) on a house in Birmingham, Manchester, London, Liverpool, and Leeds in the UK” says Mark Pearson, Founder and Managing Partner for Baron and Cabot.
“Our company is getting a lot of interest from East Africa, and predominantly Kenya. The average purchase from a Kenyan client is 210, 000 pounds. Most are business people, and middle-class Kenyans, which is exciting.
“We are seeing a spike in a lot of younger middle class or upper-middle-class and not just the ultra-elite as they are aware the world seems to have shrunk a little bit.”
Investing in property in the UK is greatly considered to be one of the lowest risk investments in the world, with consistent long-term returns factored in by continuous growth within the country.