Have you listened to a politician discouraging you from investing in real estate? Have you believed him?
What does he know about the regulations governing banks’ property holdings and the investment rules that apply to pension schemes and insurance companies? Did you know that Kenyan retirement benefit schemes can invest up to 30% of their assets in immovable property in Kenya, subject to the applicable regulations? This is a maximum permitted allocation, not a requirement to invest that percentage.
Do you think that all these people building flats and buying houses do not know that they could earn returns from the stock market or government bonds?
Think critically, not fearfully.
Where will the people moving into Nairobi live if we all decide to put our money into financial assets and ignore property? Have you heard the saying that money doesn’t like noise?
Do you think every landlord will openly announce how much they earn from their properties, particularly when they have a waiting list of potential tenants? Do you think a landlord would willingly borrow money at 18% interest to earn a 12% return on the investment? Would a bank even agree to lend him the money if the numbers did not make sense?
These are questions worth asking. But just as you should question politicians, you should also question property sellers, developers and landlords. Not every property is a good investment, and the numbers must make sense.
Would you be open-minded enough to hear from a real estate adviser who is a Registered Valuer and Registered Estate Agent with more than 15 years of experience?
If I can show you the other side of real estate investment in Kenya, would you consider diversifying your investments?
Real estate is more than bricks and mortar
Just imagine living in your own compound in a gated estate with good security and amenities for yourself and your children. A safe place where your children can ride their bikes freely, and you can take evening walks holding your partner’s hand as you discuss how your day was.
Imagine owning an apartment in an aparthotel managed by an established hospitality brand, earning rental income while your property potentially appreciates in value. Of course, the actual return will depend on the purchase price, management fees, occupancy, operating costs and the performance of the property.
Imagine coming home for your summer break and staying in your own furnished apartment, which has the potential to generate rental income during the rest of the year.
Imagine owning a plot or apartment for each of your children. When the time comes for them to attend their dream university, you could sell the property and use the proceeds towards their fees. Alternatively, you could retain it as an inheritance for them.
These are some of the reasons people invest in real estate. It can provide a place to live, a source of rental income and a long-term asset that can be passed on to the next generation.
What will you show for the years you have worked and sacrificed?
Will it just be shares whose prices can be affected by company performance, global events and market sentiment? Will it be bonds whose real returns can be eroded by inflation?
Or will you have diversified your investments to include real assets such as land and buildings?
Real estate is not just an investment. It can be your legacy. It can be a home. It can provide security and peace of mind.
But let us be clear: property is not risk-free. It can be difficult to sell quickly, maintenance costs money, tenants may default, and some properties lose value. The key is to understand what you are buying, why you are buying it and whether the numbers make sense.
What percentage of your investments is in a REAL asset?
Most people have read my article on Land vs Bonds. If you haven’t, click the link and read it.
Is Nairobi still an opportunity for property investors?
Nairobi is often described as the Dubai of East Africa. Whatever you think of that comparison, Nairobi and its surrounding areas continue to attract attention from property developers, businesses and investors.
Have you considered the opportunities in established and emerging developments such as Tatu City and Northlands? These developments offer different property opportunities, but you still need to assess each investment on its own merits.
Do not buy simply because a development is popular or because someone tells you that prices will rise. Look at the location, infrastructure, title documentation, price, likely demand, service charges and the time you may need to hold the property before selling.
As a Registered Valuer in Kenya, this is where I believe independent professional advice can make a difference. The right property is not necessarily the cheapest one or the one with the most impressive marketing. It is the one that makes sense for your circumstances and investment objectives.
Could a KMRC-backed mortgage help you get started?
For prospective homebuyers and property investors, financing can make a significant difference.
Some Kenyan lenders advertise mortgage products supported by the Kenya Mortgage Refinance Company (KMRC). For example, a KMRC mortgage at a fixed interest rate of 9.5% per annum, with financing of up to KSh 10.5 million, subject to eligibility and the applicable terms and conditions.
Could this be an opportunity worth exploring?
Before committing yourself, establish whether you qualify, how much deposit you need, the total cost of borrowing, the monthly repayments and whether the rental income or your personal finances can comfortably support the loan.
A mortgage can help you acquire an asset sooner, but borrowing does not automatically make an investment profitable. Make sure the numbers work before signing on the dotted line.
What is stopping you from starting your real estate journey?
You know what is good for your circumstances better than anyone else. Perhaps you are concerned about the risks, unsure where to invest, worried about buying the wrong property or simply do not know where to begin.
Why not have a conversation?
As Valuer Kariùki of Valuer Kariuki & Company, I would be happy to discuss your property investment questions and help you identify the issues you should consider before making a decision.
Send me a no-obligation WhatsApp message on +254 720 204074 or email info@kariukiwaweru.com to arrange a free 15-minute consultation about your property valuation needs. We can discuss your requirements and the appropriate next step, without any obligation to proceed with a valuation.
Think critically, not fearfully. Make informed property decisions.
Valuer Kariùki MRICS
Valuer Kariuki & Company
RICS Registered Valuers and EARB Registered Estate Agents
2nd Floor, Pamstech House, Woodvale Grove, Westlands, Nairobi.
