In September 2014, Kenya effectively joined the ranks of middle income countries. This was mainly due to the ‘rebasing’ of the economy, which resulted to a 25.3% upward revision of Kenya’s GDP in 2013 from a previous estimate of US$42.6 billion to about US$55.2 billion, according to Kenya National Bureau of Statistics (KNBS). The statistical reassessment makes it the 9th largest economy in Africa, surpassing Ghana, Tunisia and Ethiopia. In addition, Kenya’s GDP per capita was also increased to US$1,246 in 2014, from just US$994 in 2013 reflecting a growing middle class and rising incomes of all Kenyans across the board.
This positive economic development is expected to lower Kenya’s debt ratios, and improve its ability to borrow to finance a much needed construction of new transport links and a repair of existing infrastructure in the country, which is a key pre-requisite for real estate development.
The real estate sector in Kenya has seen a boom that begun somewhere in the mid to late 2000’s because the property market was responding to increased demand in the growing urban centers in the country.
In Nairobi, the capital and largest city in the country, there is one of the largest expatriate communities in the continent due to the significant number of multinationals who have chosen Nairobi as either their African hub or East and Central African hub. The rebirth of property development in Nairobi has attracted global attention. In its 2012 Wealth Report, real estate management company, Knight Frank, ranked Nairobi as the fastest-growing real estate market in the world, outpacing cities like Miami and Monaco. Real estate prices in Nairobi rose 25 percent between January and December 2011. Nairobi was also voted as one of the top 10 cities to watch by global real estate firm, Jones Lang LaSalle, out of 150 cities globally.
Kenya’s lucrative real estate sector has rapidly expanded to become the fourth biggest contributor to the country’s wealth. The contribution of the real estate sector to Kenya’s gross domestic product (GDP) increased to 10.6 per cent in 2014 down from 4.9 per cent in 2013, a more than double increment in one year.
Growth over the past 10 years has seen the real estate industry dislodge the retail sector as the fourth largest contributor to the economy even as traditional sectors such as agriculture, wholesale and financial services continued to diminish.
In terms of distribution, Kenya continues to experience some of the most decentralized growth of the real estate market as property development is not only taking place in Nairobi, but in other urban centers as well such as Mombasa, Kisumu, Eldoret and Nakuru etc.