To be honest, the writting is on the wall - there will be a correction shortly. The supply of apartments and vacancies has increased.

Wanted to check something with you guys. I have been shown a few units in Nyayo Embakasi, the new phase. This place has thousands on units! Question is: Is this a worthy investment? Prices range about 5M- 5.5M and rents of approx 25-27k. My first concern is the supply - these are thousands of units!! Is capital appreciation a pie in the sky here?

V common misconception re mortgages..According to CBK's june monthly as at end of June, bank loans for real estate, construction and building were Ksh112bn i.e. just over 10% of all loans. If you add in a portion of Ksh118bn to private households, its even higher...

ForSport - Thanks! it's true, i still havent made up my mind on this one...still dithering! What's the price of the current lot? Do you know if it's been sold out already?

stanchart has an offes for Nyayo embakasi. Variable rate @ 11.9 and fixed rate for 1st 5 yrs @ 13.5, Term 20 yrs max. If salaried, i can assist on contacts.

Is the demand more than supply? If demand is measured by purchasing power, not just the need for homes, the supply and demand figures are fairly balanced. Note most of purchases for homes, land and vehicles are financed by loans from the banks, and as such, the rise in interest rates will discourage borrowing, or at least the amount the bank is willing to lend. This is because the higher instalments will reduce what one can qualify for while increasing the risk of default for those who have existing loans. The ability to buy will reduce, and consequently reduce real demand on real estate. In the short term at the current interest rates, i expect the prices to stabalize or slightly stagnate. It is for the same reasons that the demand for personal cars will continue to go down as it has always been fuelled by personal loans. Despite the depreciation of the shilling, and contrary to expectations, it will be a buyers market for these cars as result of erosion of disposable income and drying up of personal loans.

a colleague put up Ksh. 20m of his seed money and borrowed Ksh. 70m from KCB to put up several apartments for sale in Ongata Rongai. The going has been very trying, he is forced to go back for overdrafts and will have to sell the apartments for much more if he expects to make due with the banks and a modest return. Problem is, interest rate have gone up and few people can afford them coupled with the fact that the prices have gone up.

Looks like they're closing applications at the end of Dec.
NSSF's Housing Estate Feted for Best Practice

I think the following would be studied to understand the short - medium term behaviour the economy in general and hence of the property market:

1. War on Al-Shabaab. Will it take 6months, 6years, more than 10yrs?

2. Tourism. Affected directly by the War. We've lost a good profit of the Dec-Mar peak season for 2011/2012. Next year we will lose it to elections. Remember in 2007 the economy was accelerating before the election, this time the economy is bad before elections.

3. East Africa Common Market. Jobs for Kenyans. Market for our product. I think Kenya and Rwanda are most progressive and would benefit most from such an arrangement (also SSudan when we let them in)

4. Oil. If there are indeed large reserves of oil then we are rich if only our leaders don't sell us out to megacorporations. They will, but how badly, how greedy will they be? There may be socio-political costs also: our old ethnic issues may come into play, county borders and local revenues, ancestral lands and compensation etc.


In the short term, 2-5 yrs...

High end property development and prices will slow / decline only marginally;
The low end rental will grow to cope with demand;
Rents will keep going up with interest rates and inflation;
Land prices will keep going up;

In the long term the economy is bullish especially if in the next 2-8yrs...

1. There is an energy cost solution: nuclear, geothermal, wind, hydro, cheaper oil, basically anything...

2. We do not forget to produce food and starve...

3. We become a manufacturing and service industry hub for the region...

4. We do not fight for stolen votes.

5. The constituion is implemented and local governments are WORKING and we can shoulder the cost.

What to do instead of putting up flats for rent/sale in kileleshwa

1. Food production: I would bet on horticulture for direct export.
2. Buy peri-urban land cheaply. Close to strategic towns eg. administrative (county heads), transport (airports, rail, sea ports) economic (Konza, oil towns etc.)
3. NSE post election.

New Blog Post: 3 Kenyan Stocks Whose Dividend Yield Beats Your Average Rental Yield http://www.contrarianinv...verage-rental-yield.html

@tonystark stop being ignorant i said Hass Consult, go to their website u will find property prices and the average rent/month per location in Nairobi, your rental yield according to the parameters you have given me above is 8.75% still lower than the dividend yield of Kenol Kobil...now i want you to calculate yourself your net rental yield and you will see it's much lower.