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uncertain future for real estate? bubble bust?
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Moorings
#1 Posted : Tuesday, November 01, 2011 8:16:33 AM
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Joined: 1/3/2011
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Location: nairobi
due to high inflation, weak shiling, war in Somalia, high interest rates...et al. does the future of real estate investing look misty going forward? i know of high profile estate developers approaching a known internation funding organization for financing but not in real estate, rather in agribusiness. they argue, with the current interest rates and purchasing power of target clientele, they can't meet their targets. your thoughts?
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mlennyma
#2 Posted : Tuesday, November 01, 2011 8:36:50 AM
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Joined: 7/21/2010
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Over 85% of kenyans cant afford mortgages and cant dream of getting cash to buy hses at the current market prices..the market is almost turning to be dictated by the few buyers and a crush must come.
"Don't let the fear of losing be greater than the excitement of winning."
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CaptainGG
#3 Posted : Tuesday, November 01, 2011 10:27:34 AM
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The current prices of land has made it out of reach for many Kenyans especially in Nairobi and its environs. If speculating, better go for cheap and bigger land otherwise getting a buyer for any land above 1 million is not that easy unless it is very prime. Commercial land is better
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guru267
#4 Posted : Tuesday, November 01, 2011 11:19:53 AM
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property prices will continue going up for the forseeable future whether we want them to or not..

As long demand > supply the status quo must remain..

No one can say that anytime soon supply will be > demand..



Mark 12:29
Deuteronomy 4:16
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Cde Monomotapa
#5 Posted : Tuesday, November 01, 2011 11:48:19 AM
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Joined: 1/13/2011
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guru267 wrote:
property prices will continue going up for the forseeable future whether we want them to or not..

As long demand > supply the status quo must remain..

No one can say that anytime soon supply will be > demand..




and also Kenyans believe that paying more for an asset makes it worthwhile smile Laughing out loudly
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Mainat
#6 Posted : Tuesday, November 01, 2011 1:09:45 PM
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Loan rates now average 19%, pretty steep if you are developer. Lets see how things look in March 2012...
Sehemu ndio nyumba
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Kaigangio
#7 Posted : Tuesday, November 01, 2011 1:53:04 PM
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Mainat wrote:
Loan rates now average 19%, pretty steep if you are developer. Lets see how things look in March 2012...


not rosy at all...property market will definitely be subdued significantly and the signs have started showing up well in earnest.
i expect that in the 1st quarter of 2012 developers might stay back as they watch the unfolding events with no meaningful output into the real estate and the purchasers will be very afraid of borrowing and buying due to the high cost of borrowing...
...besides, the presence of a safe alone does not signify that there is money inside...
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bwenyenye
#8 Posted : Tuesday, November 01, 2011 2:12:26 PM
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Remember that the world population hit 7B yesterday. We are now 41.6M Kenyans 50% of who are young. I know of only three basic human need food< SHELTER and clothing. Keep dreaming about your burst for the next 10 years.
I Think Therefore I Am
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VituVingiSana
#9 Posted : Tuesday, November 01, 2011 2:16:58 PM
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Interest costs up from 14% to 20% means many families will have problems paying the mortgages unless they cut back on other discretionary spending.

For those who are already straining to pay the mortgage, a loss of one job (if a couple) or an unexpected event can push them over the edge.

I expect defaults to soar 9 months from now. A pity.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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tony stark
#10 Posted : Tuesday, November 01, 2011 2:54:32 PM
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I don't think anyone is suggesting a bust. But I think a decrease in the growth and slight correction in some areas is very likely.
Developers who sold houses off plan are having difficulty completing the properties on time. The prices of inputs have gone up and the few they are trying to sell once complete are being affected by high mortgage rates.
Something will have to break in some of these markets where there is oversupply of houses/ apartments and the prices will definitely come down. I suspect syokimau (area in the short term), Kilimani & kileleshwa, Thika I think are areas where prices of houses will probably come down.
I also envision the rental yields increasing in the short to mid term. The rent will not come down in any of the areas above. The supply of rental units is way below demand (both will & able and well defined) and since the prices will be coming down this makes it ripe for long term investment.
So the question begs .. is real estate a viable market? YES but strategies will have to change.
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tony stark
#11 Posted : Tuesday, November 01, 2011 3:17:44 PM
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VituVingiSana wrote:
Interest costs up from 14% to 20% means many families will have problems paying the mortgages unless they cut back on other discretionary spending.

For those who are already straining to pay the mortgage, a loss of one job (if a couple) or an unexpected event can push them over the edge.

I expect defaults to soar 9 months from now. A pity.


Defaults are blessing in disguise. Distressed sellers will sell at good prices ... sad but opportunities are opportunities.
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Nobby
#12 Posted : Tuesday, November 01, 2011 4:32:15 PM
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Joined: 2/8/2007
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Location: Nairobi
tony stark wrote:
I don't think anyone is suggesting a bust. But I think a decrease in the growth and slight correction in some areas is very likely.
Developers who sold houses off plan are having difficulty completing the properties on time. The prices of inputs have gone up and the few they are trying to sell once complete are being affected by high mortgage rates.
Something will have to break in some of these markets where there is oversupply of houses/ apartments and the prices will definitely come down. I suspect syokimau (area in the short term), Kilimani & kileleshwa, Thika I think are areas where prices of houses will probably come down.
I also envision the rental yields increasing in the short to mid term. The rent will not come down in any of the areas above. The supply of rental units is way below demand (both will & able and well defined) and since the prices will be coming down this makes it ripe for long term investment.
So the question begs .. is real estate a viable market? YES but strategies will have to change.



Very few complete units are bieng sold in Syokimau, what is selling there is mostly land to build.
The future belongs to those who believe in the beauty of their dreams.
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youcan'tstopusnow
#13 Posted : Tuesday, November 01, 2011 5:13:48 PM
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Joined: 3/24/2010
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Location: Black Africa
tony stark wrote:
VituVingiSana wrote:
Interest costs up from 14% to 20% means many families will have problems paying the mortgages unless they cut back on other discretionary spending.

For those who are already straining to pay the mortgage, a loss of one job (if a couple) or an unexpected event can push them over the edge.

I expect defaults to soar 9 months from now. A pity.


Defaults are blessing in disguise. Distressed sellers will sell at good prices ... sad but opportunities are opportunities.


Defaults may rise but how many mortgages are there in Kenya? Are they significant enough to affect the industry?
GOD BLESS YOUR LIFE
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Lolest!
#14 Posted : Tuesday, November 01, 2011 7:11:58 PM
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Joined: 3/18/2011
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CaptainGG wrote:
If speculating, better go for cheap and bigger land otherwise getting a buyer for any land above 1 million is not that easy unless it is very prime.
How I wish this was true!! 1M?
Laughing out loudly smile Applause d'oh! Sad Drool Liar Shame on you Pray
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kizee1
#15 Posted : Tuesday, November 01, 2011 7:26:05 PM
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there will be a general asset burst and real estate will not be spared infact real estate is the most vulnerable asset class due to its illquidity...guys cbr hiked by 550 bpts! overnight rates at +20pct heck even bank fringe benefit tax has been hiked to 10% there is no money in our economy...real estate exploded since our economy was awash with money, u cannot expect asset prices to stay the same at 20pct interest rates as they were when rates were at 1pct...
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Ndaragwa
#16 Posted : Tuesday, November 01, 2011 7:51:08 PM
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Joined: 3/12/2011
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VituVingiSana wrote:
Interest costs up from 14% to 20% means many families will have problems paying the mortgages unless they cut back on other discretionary spending.

For those who are already straining to pay the mortgage, a loss of one job (if a couple) or an unexpected event can push them over the edge.

I expect defaults to soar 9 months from now. A pity.


Not many families rely on mortgages. For single dwelling units, I think the growth will continue since a lot of those constructions rely on SACCO loans which do not charge high interest on their loans. Some sectors of the real estate industry e.g., those costing over 8 millions per unit will slow down significantly. But with a growing population - its going to take a long time to slow growth of dwelling units costing less than 8 million. ha ha don't ask why 8 million - just an eyeball figure
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guru267
#17 Posted : Tuesday, November 01, 2011 11:12:49 PM
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VituVingiSana wrote:
Interest costs up from 14% to 20% means many families will have problems paying the mortgages unless they cut back on other discretionary spending.


The mortgage market is still too insignificant and housing demand still too high for property prices to slow its roll upwards
Mark 12:29
Deuteronomy 4:16
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the deal
#18 Posted : Tuesday, November 01, 2011 11:42:15 PM
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Joined: 9/25/2009
Posts: 4,534
Location: Windhoek/Nairobbery
If people can not afford how will this property prices go up? Between 2001-2010 property prices have more than tripled...has the GDP done the same? this IMF austerity will slow down property prices...i expect a sharp correction on that front especially the high end of the property market...also the Somali factor is worth considering in the property boom of 2001-2010 but a bubble?...NO.
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Obi 1 Kanobi
#19 Posted : Wednesday, November 02, 2011 9:19:57 AM
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Joined: 7/23/2008
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Are you guys serious, who will take a mortgage at 16.5% base rate. Sacco loans can be taken to build houses, but question is where is the land to put houses at areas that are close to towns.

I think a major slowdown in the uptake of real estate is definitely here, atleast for a short period. Infact the more important question is where will the developers get the money to put up their structures.

I don't understand this Prof. Ndung'u, if th eproblem is the shilling, then why not simply reduce Kenyans appetite for imported goods through enhanced tarrifs and increased duty, why kill domestic credit.
"The purpose of bureaucracy is to compensate for incompetence and lack of discipline." James Collins
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Toshi
#20 Posted : Wednesday, November 02, 2011 12:50:01 PM
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Joined: 3/11/2009
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Knife and fork in hand; foreclosures anyone?
Possession of material riches, without inner peace, is like dying of thirst while bathing in a lake.
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