I have just seen this report whose link was kindly posted by SCUBIDU (Thanks Scubidu) on the Convexity of bonds thread. I have had a quick read and although I am no property expert, I can see some glaring inconsistencies with what I know to be the facts on the ground.

It is however a nice read, especially considering that is precious little data on the Real Estate market in Kenya.

You will all recall seeing the oft quoted statistic of the annual supply of housing in Kenya standing at 35,000 units against demand of 150,000. I think I have been seeing this same statistic for the last 5 years. With population and economic growth during the period, I think this is seriously OUTDATED.

I would therefore commend Hass Consult for their initiative, even if I think their study is skewed towards high end properties.

Have a read and see what you think.

Here's the link.

http://www.hassconsult.c...ries/quarter%203.10.pdf

SCUBIDU - I hope you do not mind my taking this liberty with what you initiated.

Over to y'all!

The report reads; “Hass Consult is today issuing for the first time a nationwide index of property prices in Kenya.”

It further states that; “The Annual average is representative of all properties offered for sale in Kenya.”

In the Index, “The average value of a property has gone from Kshs 6.83 million in December 2000 to Kshs 19.34 million in September 2010.”

As for rentals, it says, “The Hass Property Composite Index is representative of all property for rental in Kenya.”

It then summarizes, “The average rental of a property has gone from Kshs 36,766 in December 2001 to Kshs 93,959 in September 2010.”

In my view this is certainly not representative of a Kenya wide situation. It seems to be based on the sort of properties that Hass Consult and others such as Knight Frank and Dunhill deal with. Knowing what the average income is for most middle to upper income Kenyans, I would doubt that many pay an average monthly rent of 94 K a month. While they are those who do indeed pay rents of more than 200K, I believe that these are in the minority and hence the mean would be pushed well below what they give as an average.

Looking at specific average rentals for various suburbs I also doubt whether the average rent for an area such as Kitengela is Kshs 49,300, Thika 40,100 or that of Buru Buru is 17,300.

What do others think?

Looks like I am doing badly. My rent is less than $1,000 and the average is around $1,200. I need to find myself a new job.

I've gone through the report and I have to agree with mwanahisa and muganda. It is not representative of the countrywide figures as alluded.

But I think HassConsult are onto something big here. They will definately need to collaborate with other developers and agents to collate this info into something worth investing in. Considering the dearth of info on real estate, I believe there are many people, me included who would be willing to part with some Kshs to access this info!

I see the average rent for Kitengela is higher than for South C! Really?

No no no... this is why it's important to take the step of actually reading the report. This is fabulous, fantastic read! For the first time in my life, I can actually answer the question:

What's the average rate of return for properties in the last 10yrs? Fabulous.
And what will the effect of this report be? More information = better planning and better buying.
Hass Consult Quarter 3 Year 2010 Report.


BUYING SNAPSHOTS:
* Average Kes 19m
* 4-6 bed Kes 28m
* 1-3 bed Kes 10m

RENTAL SNAPSHOTS:
* Average Kes 93,959
* 4-6 bed Kes 137,000
* 1-3 bed Kes 54,000

The average price and rentals per suburb on page 8 is more comforting and realistic - though some questions remain?

@mwanahisa. good analysis. why don't you do some sort of survey. Maybe ask the guys on wazua to give you rents and prices for the areas where they live. It would give you a wealth of information. But I love the initiative Hass has taken. I wish many more developers would collaborate with them.

As muganda said if you can calculate returns or rental yields you can see things really changing, more transparency, identify the bubbles. Would a fund manager or insurance firms be interested in such info, I think they would. Everyday Kenyan's savings are heading away from financial assets into these kind of assets, real estate, but you're right the info has to be more comprehensive.

The summary title is the clincher - "Property market rides despite developers' oversupply of large apartments."

Oversupply of large apartments in the leafy suburbs while a scarcity in the low class areas. I wish there was a way of knowing which banks have backed the loans for these oversupplied large apartments. Doesn't this present a compelling case for a default scenario on these property without occupancy or buyers?

It is a good effort by Hass Consult. And who is to begrudge them for milking it for all its worth. The publicity they get is worth tons of marketing exposure.

The folks at the Kenya Bureau of Statistics should take this up. I believe they have the mandate if not the resources.

@All, is there an index that measures actual rent paid as opposed to what is advertised?

@Sasha and also Mwanahisa - you both think the figures for Buru Buru and South C are unjustifiably lower than Kitengela (or Thika). If these are average figures, from an SQ/bedsitter to a maisonnet (or even a grand mansion like we sometimes see in Thika or Kitengela), then I would agree. Areas like Thika town and Kitengela are mainly (not exclusively) for the driving working class who mostly commute to Nairobi - these areas are not littered with bedsitters/SQs for rent and typically sit on more than an eighth an acre vis a vis the smaller plots in Buru and South B which, owing to landlords building extensions and letting out, house small dwellings whose rent brings down the average. I agree Kitengela and Thika also have small houses but not as many bedsitters/SQs being leased.

If you take a typical 4 bedroom in South C - attracting rent of 40-45k (or Buru at 35-40k) - then add it to an SQ/Bedsitter attracting 5-8k, then we see the math getting distorted. Then look at the density (the number to derive the average) and it gets even worse.

So, in Kitengela/Thika, there are fewer dwellings per square kilometre. And lets remember Kitengela and Thika are whole towns whereas South C and Buru Buru are estates.