K enya’s property market depicted resilience even as uncertainty grew towards the end of the quarter when Kenya recorded the first case of the COVID-19 pandemic, a report from real estate consultancy firm Hass Consult has shown.
House prices slightly edged up by 0.9 per cent over the quarter driven by a mild performance from detached and semi-detached markets which recorded a 1.3 per cent and a 0.9 per cent growth respectively, sustaining the trend recorded in the previous quarter.
Sakina Hassanali, Head of Research and Marketing at Hass Consult, however said that whereas the Kenya’s property market began showing signs of resilience as confidence trickled in, the COVID-19 pandemic, which was first locally recorded in early March, will have an effect going forward.
“It is important to note that Kenya recorded the first case of COVID-19 towards the end of the quarter and therefore the real effects of the pandemic property market will begin to emerge from the second quarter. Globally the pandemic has caused markets, across all asset classes, to perform poorly but the extent of this effect on our local market will depend on how we manage the COVID-19 pandemic,” said Ms. Hassanali.
Zillow, a leading real estate and rental marketplace in the US, conducted a study on housing during previous pandemics and concluded that while home sales dropped during an outbreak, home prices stayed about the same or only suffered a slight decrease.
This is largely due to the fact that there is little opportunity for prices to change when there fewer transactions. In the US, previous pandemics have resulted in a market pause, but have not caused any devaluation of property assets.
This data is reflected in other global markets and is expected to be similar in Kenya.
“Property has a long history of providing superior returns over most asset classes,” said Ms. Hassanali, “and while we will continue to track data locally, we expect this trend to continue despite the economic environment that the pandemic has created.”
Similar to the sales market there was a mild increase, across all market segments, in rents over the first three months of the year at 1.6 per cent.Apartments recorded the strongest growth over the quarter with asking rents at 2.1 per cent, followed by detached houses at 1.7 per cent and semi-detached houses at 0.9 per cent.
Apartments similarly recorded the strongest growth in rents at 2.9 per cent against the overall property rents slight drop of 0.7 per cent.The rental market may be more severely affected in the short to medium term.
“As more companies scale down operations and send Kenyans home due to the ongoing pandemic there will be pressure on landlords to give waivers or discounts until the economic situation returns to normalcy and this will be reflected in prices,” said Ms. Hassanali.