The real estate sector is likely to slow down for the first time in the last decade following high inflation that has seen a slowdown in construction and flattening of property rent. According to a report by Hass consult the high inflation has led to an increase in construction cost with the sector registering an overall growth of 1.8% in the last quarter. Although the sales index for standalone houses and apartments registered marginal growth closing prices for upper end properties falling by 2%. According to the report developers suffered from reduced profit margins, with some reviewing their building plans to reduce cost whereas others are delaying completion.
‘Where completion rests on these extra payments, they are achieving some increases. But buyers are unwilling to commit from fresh to higher prices’ Farhana Hassanali, property development director Hass consult.
Landlords have also seen reduced profits with asking prices for rentals especially for townhouses dropping by 2.4%.Overall the rental market was almost static growing by a mere 0.1%. The report further states that although this might be good news for new home owners not in for investment purposes the situation might lead to a diversification of funds by investors to sectors with higher returns. Although statistics are still scarce on the rental prices for houses situated in the informal sector a senior officer working at the Kenya slum upgrading programme speaking on condition of anonymity told the Kenya broadcasting corporation that the default rate may have increased as the cost of living rises with no parallel income growth. In Q2 of 2010 building and construction sector registered the highest growth developing at 18% ahead of the financial sector at 16% and manufacturing at 6.8%.
No comments:
Post a Comment