Visiting Us

Global Headquarters

55 Baker Street
London
W1U 8AN
United Kingdom
T: +44 20 7629 8171
F: +44 20 7493 4114

Other offices nearby:


 

Kenya’s super-rich buy new homes as market softens

06 March 2019

Nairobi, Kenya – Kenya’s super-rich are buying more luxury homes in the country, signalling bargain-hunting as prices for trophy houses soften, according to data compiled for The Wealth Report 2019.

Some 18% of Kenya’s high-net-worth individuals’ (HNWIs) – those with a net worth of US$1 million excluding their primary residences – bought new homes in the country in 2018, with only 8% purchasing houses abroad. According to The Wealth Report’s Attitudes Survey, 22% of Kenya’s wealthy plan to buy new homes in the country in 2019/2020.

First and second homes make up 45% of total wealth for Kenya’s super-rich, with the HNWIs owning an average of 2.7 homes, according to The Wealth Report. Their South African counterparts own an average of four homes each.

The super-rich took the opportunity to snap up new homes during the year as luxury residential prices softened amid an oversupply in the high-end market segment, tighter liquidity and a general market correction, making it a buyers’ market.

Nairobi’s ranking slipped to 92nd in the Knight Frank Prime International Residential Index (PIRI), from 75th in the previous year, as prime residential prices softened by 4.5% in 2018. South Africa’s Cape Town is ranked 28th following a 3.8% price growth in 2018. Manila, Philippines, posted a 11.1% growth, topping the PIRI which tracks luxury home price movements in 100 locations.

Despite the price drop last year, luxury property values in Nairobi have appreciated by 38% since 2010, according to Knight Frank Kenya research.

Ben Woodhams, Knight Frank Kenya Managing Director, said: “As a result of the oversupply, developers have had to deliver higher specification property at lower prices. A relatively unfavourable economic environment has also affected demand.”

“The price correction, however, presents a good opportunity for high-net-worth individuals to buy high-end properties at discounted prices,” Woodhams said.

Data provided by GlobalData WealthInsight exclusively for The Wealth Report showed the number of HNWIs in Kenya increased to 9,482 in 2018 from 9,176 in the previous year, and is projected to increase by 22% to 11,584 by 2023.

Respondents to the Attitudes Survey said their Kenyan clients have allocated 25% of their investment portfolios to equities, 22% to investment properties*, 22% to cash or cash equivalents, 20% to bonds, 3% to private equity, 3% to luxury investments (art, wine, classic cars etc.), 1% to gold, with the remaining 4% going into other asset classes.

Respondents said 19% of Kenya’s HNWIs have second homes outside the country, with only 7% looking to buy outside the country in 2019/2020. Those looking to buy outside the country are most likely to buy in the UK (65%), Canada (35%), US (30%), UAE (15%), Australia, Germany and India (10%), South Africa and the Caribbean (5%).

Wealth managers and advisors said 39% of their clients have property investments in the country, while 22% have invested in foreign property. Up to 18% made additional property investments in the country in 2018, with 15% buying outside Kenya.

Respondents said 29% of their clients are looking to invest in the country’s property markets in 2019/2020, while 17% are exploring abroad, with the likely destinations being the UK (55%), UAE (25%), US (15%), Australia and Canada (15%), Germany and (10%), South Africa, Spain, India, Ukraine and Ireland (5%).

  

Kenyan HNWIs’ Asset Allocation

Asset

Percentage

Equities

25%

Property investments*

22%

Cash or cash equivalents

22%

Bonds

20%

Private equity

3%

Luxury investments

3%

Gold

1%

Other assets

4%

Total

100%

*Property investments exclude primary residences, i.e. first and second homes, which are not for income-generating purposes

 

To download the Knight Frank Wealth Report, please click: http://www.knightfrank.com/wealthreport

For additional information, please contact:

James Waithaka, PR & Communications Officer, on email: james.waithaka@ke.knightfrank.com Mobile: 0725 423 991

Notes to Editors

Knight Frank LLP is the leading independent global property consultancy. Headquartered in London, Knight Frank has more than 18,000 people operating from 523 offices across 60 territories. The Group advises clients ranging from individual owners and buyers to major developers, investors and corporate tenants. For further information about the Company, please visit www.knightfrank.com or www.knightfrank.co.ke