The middle class in the country significantly contributed to the real estate boom in the country for the last 10 years.
Analysis by the Parliamentary Budget Office (PBO) revealed that the value of approved residential building plans hit Ksh100.7 billion. Under that period, it recorded a 25 per cent increase from Ksh75.2 billion in 2012.
According to the analysis, the growth was attributed to the demand of middle-class households.
The Parliamentary Budget Office indicated that the demand which pushed the government to approve Ksh100.7 billion building plans was due to financial and insurance services.
“This is attributable to continued expansion in financial and insurance activities enabled by mobile banking,” the report indicated.
“During this period, the value of mobile money transactions increased from Ksh3.4 trillion in 2016 to Ksh6.9 trillion in 2022,” it further explained.
Besides demand from middle come earners who pocket between Ksh30,000 and Ksh100,000, government policy on affordable housing through various schemes drove the surge in the real estate sector.
However, the analysis revealed that investors had ditched non-residential houses, including warehouses, industrial premises, office spaces, business premises, and garages.
“The actual value of non-residential buildings declined from Ksh115.2 billion to Ksh29.8 billion during the same period (between 2012 and 2022),” the report further detailed.
According to the analysis, the decline in non-residential offices contributed to a significant drop in rental charges for office spaces and warehouses.
HassConsult, a real estate company, indicated that rental prices in Nairobi suburbs, such as Westlands remained static in the fourth quarter of 2022.
However, other areas, such as Loresho, peaked in demand, especially for land, due to the demand for homes.
“Investors with insufficient funds to afford Spring Valley at Ksh220 million per acre are absorbed by Loresho’s lower priced price of Ksh95.5 million per acre,” HassConsult report read in part.
Well-tarmacked roads, a serene environment, social amenities and recreational facilities drove the demand for affordable houses in Loresho.
Source: kENYANS.CO.KE
