Investment opportunity: build homes for middle class in Kenya

In Kenya, the next real estate investment challenge is not in large, expensive homes, offices or shopping malls. The new and exciting job at hand is building homes for the country’s growing middle/working class, says Samuel Kariuki, Managing Director of Centum Real Estate in Kenya.

“Demand is abundant”, Kariuki insists.

Kariuki is convinced that investors, developers and construction companies should focus on middle class homes from now on. He has the statistics on his side, when he makes his point on “When we look at the needs of the country’s working classes, market researchers have reported demand for two million units. Of this, over two thirds are for earners who can afford rent of Sh18,000 to Sh50,000 a month.”

According to Kariuki, a huge opportunity exists for a better quality of real estate in this segment. Moreover, while the perception that rental yields in high- end areas are higher has driven investors and developers to areas such as Kilimani and Lavington, research has shown that yields are actually higher in the mid-market areas.

As the expert points out, the average rental yields in 2016 in the mid-market were 6.5 per cent, compared with 6.3 per cent for high-end apartments. That premium in the mid-market has continued. In 2018, mid-market rental yields ran at 5.4 per cent, compared to high-end yields at 5.3 per cent.

Further reading on

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