Kenya’s real estate market is witnessing a significant shift as property sellers increasingly adopt US Dollar listings to safeguard profits and navigate economic uncertainty.
A market update from real estate management company Knight Frank for the six months to December 2023 highlights this trend, revealing that sellers are turning to major global currencies such as the USD, Euro, or British Pound to mitigate against the declining Kenyan Shilling.
This shift aims to protect against potential losses caused by Shilling’s diminishing purchasing power against these stronger currencies.
Moreover, sellers accepting payments in major world currencies have been able to secure more favorable deals, as buyers seek to offset risks associated with currency fluctuations.
However, the depreciation of the Kenyan Shilling has also impacted property valuations, leading to delays in finalizing sales as buyers perceive the quoted property prices as beyond market value.
The challenging economic conditions in Kenya have resulted in a slowdown in the residential sales market, further exacerbated by extended turnaround times in the Ministry of Lands, Housing, and Urban Development.
Title conversion process
Frustration among land stakeholders with the title conversion process has been piling misery on the complexities involved in completing sale agreements on time.
Despite these challenges, Kenya’s prime residential rental market continues to thrive, registering an annual appreciation of 5.85 percent to the year ended 2023.
This growth is attributed to the appreciation of the USD against the Kenyan Shilling, resulting in increased disposable income for expatriates and heightened demand for prime residential properties in the market.
However, Knight Frank notes that a severe lack of prime residential stock has allowed landlords to demand higher rents, reflecting the overall positive outlook of the market.
In contrast, Kenya’s prime residential sales market has experienced more modest growth, largely influenced by the depreciation of the Kenyan Shilling and the country’s political environment.
Driven by expatriates and high-net-worth individuals, Kenya’s prime residential market features monthly rents ranging from KES140,000 to KES500,000, depending on location, apartment features, and neighborhood exclusivity, Knight Frank notes.