Kenya’s super-rich bet big on homes as prices plummet

By Green On Mar 7, 2019

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

Some 18 per cent 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 per cent purchasing houses abroad.

According to The Wealth Report’s Attitudes Survey, 22 per cent of Kenya’s wealthy plan to buy new homes in the country in 2019/2020.

First and second homes make up 45 per cent of total wealth for Kenya’s super-rich, with the HNWIs owning an average of 2.7 homes, according to The Wealth Report.

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 unfavorable 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.