Real Estate Sector Profile of Kenya
The real estate sector is quite diversified in terms of income, geography and types. The sector caters for all people including high, middle and low income earners. The real estate property types include retail, office, residential, Industrial and special properties mainly found urban areas. The real estate sector grew by 5.6%, 6.2% and over 6% in FY 2014, 2015 and 2016 respectively. Kenya currently constructs about 50,000 houses annually against the shortfall in housing exceeding 250,000 units. The country has an urban growth of 4.2 % and urbanisation is in the excess of 27% of the total population of Kenya estimated at 46 million in 2016. The urbanisation rate will be over 50% by 2030. Kenya needs to construct over 250,000 houses annually if it has to provide the increasing urban population. The urban population is growing in excess 500,000 people per year.
Ministry of Land, Housing and Urban Development
The ministry is mandated to handle all matters related to land to effectively address historical injustices, reduce cases of fraud, confusion in the management of land, Housing and Urban Development.
National Land Policy and National Land Use Policy
Kenya passed its first National land policy since independence in 2009. The policy aims at addressing land issues resulting from lawlessness of Kenyan land. The Kenya National Land Policy recognizes the need for security of tenure for all Kenyans (all socio-economic groups, women, pastoral communities, informal settlement residents and other marginalized groups). More specifically the policy provides;
- All citizens with the opportunity to access and beneficially occupy and use land;
- An economically, socially equitable and environmentally sustainable allocation and use of land;
- The efficient, effective and economical operation of the land market;
- An efficient and effective utilization of land and land-based resources and
- Efficient and transparent land dispute resolution mechanism.
National Land Use Policy
The draft policy addressing issues of optimal utilization of land and land related resources by providing principles and guidelines for:-
- Proper management of land resources to promote public good and general welfare;
- Land use planning to enhance sustainable development;
- Anchoring land development initiatives;
- Mitigating problems associated with poor land use;
- Promoting environmental conservation and preservation;
- Preparation and review of a national spatial plan and integration of various levels of land use planning;
- Land and land related conflicts and
- Categorization of land uses in the country.
National Land Commission
Kenya National Land Commission was established to manage public land on behalf of the national and county governments, recommend a national land policy to the national government, advice the national government on a comprehensive programme for the registration of titles throughout Kenya and to conduct research on land and the use of natural resources. It will also investigate present or historical land injustices and recommend redress, encourage the application of traditional dispute resolution mechanisms in land conflicts, assess tax on land and premiums on immovable property and have over-sight over land use.
The National Land Commission Act, 2012
This is an act of Parliament that makes further provision to the functions and powers of the National Land Commission, qualifications and procedures for appointments to the Commission; to give effect to the objects and principles of devolved government in land management and administration.
The Land Registration Act, Revised Edition 2012
The land registration act was passed to revise, consolidate and rationalize the registration of titles to land, to give effect to the principles and objects of devolved government in land registration.
The Land Act, Revised Edition 2012
This is an act of Parliament that gives effect to Article 68 of the Constitution, to revise, consolidate and rationalize land laws; to provide for the sustainable administration and management of land and land based resources. Other land laws include;
- The Land Control Act;
- The Landlord and Tenant (Hotels, Shops and Catering Establishments) Act;
- The Sectional Properties Act; and
- The Distress for Rent Act.
Characteristics of the estate sector
- Kenya demand for housing is higher than supply and this is expected to continue until 2020;
- Kenya has a shortfall has at least 250,000 shortfall in housing units
- Property are quite attractive, with significant capital gains potential and rental yield;
- Shares of real estate developments are now traded at the Nairobi Securities Exchange, enabling even small investors to own property by buying shares of such properties;
- Increased total value of private and public buildings and
- The sector has a steady growth rate.
Challenges in real estate
- Low income earners cannot afford the cost of buying property and may not qualify for a bank loan;
- Process of buying property is time consuming and complicated;
- Under-funding of the ministry in charge;
- High cost of mortgage finance ;
- Land is becoming scarce as population increases and
Drivers for the Growth in the Real Estate Sector
- The population growth rate is about 2.7% per annuam and over 27% of the population of Kenya live in urban areas;
- Growing demand for housing especially in the urban areas;
- Easy business registration
- Availability mortgage credit and
- There is a clear segmentation of people in high, middle and low income brackets in order to meet their needs.
- Increasing income levels
- Favourable government policy
- Price of property
Real estate sector has been summarized to include the following