Investing in Real Estate in Kenya: Is it profitable? (2024)

Real Estate is ranked among the most resilient and profitable investment ventures in Kenya. The sector has showcased exponential growth during the last two decades compared to other traditional assets such as bonds and equities.

Real Estate provides investors with opportunities in both commercial and residential markets. Investments in office space, retail space, industrial space, and rental residence are all viable options for one to make a consideration. Investment in land is also another category that has taken shape due to massive infrastructural projects.

The Kenyan government is keen on improving the road network and other utility connections such as power provision. The Real Estate sector has become one of the biggest beneficiaries of such interventions. The demand trajectory for housing and commercial projects has been on a steady rise. Purchase of apartments and commercial space, buying of land, leasing of commercial space, and investments in Real Estate Investment Trusts (REITs) continue to rise.

Another key performance indicator that can be used to assess the sector is the rate of return on investment (ROI). The Real Estate sector has recorded gains of up to 25% returns since the year 2000. Such lucrative returns may not be sustainable in the long term, but they paint a good picture of how well the sector has been doing.

A debate continues among speculators whether the ‘’Real Estate bubble ’’ has any signs of bursting. While there are glimpses of the markets slowing down, nothing substance indicates a downturn just yet. Investors need to be more strategic and protect themselves from potential risks. A need to align any project with the current forces of demand and supply is vital. For instance, an influx of office space in areas such as Westlands and Upperhill has caused a slowdown in the uptake of commercial units in the areas. A high supply of residential apartments in Kileleshwa, Kilimani and parts of Westlands has surpassed the demand. Therefore, it is prudent for every investor to exude caution as part of their decision process.

Kenya's growing middle class and infrastructure growth have been a major boost for the Real Estate sector. A slight shift in the pendulum is however expected with the current debt crisis facing the country. Inflation is considerably high and the effect has hit both the construction and Real Estate sectors. However, with a more strategic approach and portfolio diversification, Real Estate remains one of the most promising ventures in the country.