2021 is set to be an interesting year for real estate in Kenya. The central theme is expected to be recovery, given the fact that the industry was one of the hardest hit by the covid-19 pandemic. However, as the economy starts to improve, so too will the real estate market. What other trends will characterize the year? Let’s explore below:
1. Lower demand for commercial spaces
2020 was signified by strict measures to curb the spread of Covid-19, including limiting access to commercial spaces such as offices, industrial premises, hotels and restaurants to slow the spread of the virus. While the economy slowly recovers, the demand for these spaces is still low, and it will take a little longer before it catches up. With a significant number of formal employees currently working from home, most firms have scaled down or even completely closed their physical offices to reduce their monthly overhead. On the other hand, malls, restaurants, hotels and other commercial establishments used for leisure activities will keep rallying as the economy normalizes.
2. Repurposed buildings and building materials
A new trend in 2021 is the repurposing of buildings to make them more economically viable. This, of course, was catalysed by the coronavirus pandemic, which adversely impacted most businesses. To stop further losses and create a new stream of income, property owners are now converting buildings to serve other purposes. This trend is expected to continue throughout the year as more landlords convert their properties.
Developers have also jumped on this trend, using alternative materials in their construction. Used containers, palettes and recycled plastic are just some of the building materials you should expect to see incorporated into new constructions.
3. Land sub-sector growth
2021 is expected to have positive growth in the land sub-sector, as demand for development land, especially in satellite towns, continues to increase. This demand is driven by improving infrastructure brought about by projects such as the Nairobi expressway construction, Waiyaki Way expansion and the Outer Ring Road improvement project. The land next to such areas will see a boost in value as these constructions near completion. Additionally, the electrification of counties has further opened them up for development, with plots in these areas experiencing growth in value and a corresponding rise in demand.
Kenya’s positive demographics, with a growing middle class that is able to invest in property, are also a good indication of growth in demand for developed land.
4. Increased demand for affordable housing units
Housing has always been a priority for Kenyans, but the pandemic may have highlighted the need for a safe, permanent home. This means that the demand for affordable, quality housing, will continue to grow in 2021. Along with it will be the appetite for accessible and affordable means of funding for these homes. This presents an opportunity for both developers and financial institutions that are in a position to capitalize.
Generally, 2021 appears to be a year of recovery for the areas in real estate that were most hit by the pandemic. To begin with, there will be increased demand for developed land and affordable housing units. The repurposing of buildings too will persist as landowners move towards more profitable property segments. Lastly, the reduced demand for office space will endure for the foreseeable future.