Kenya's prime housing market saw the biggest price increase globally last year, a report has found
The country's market offers top returns to investors, estate agents say
But international buyers have been slow to dive into the market, partly due to security reasons
Analysts say uncertainty about elections and high interest rates may also hamper growth
Inside a gated community in a tranquil Kenyan suburb, a group of builders are putting the final touches to the exterior of a lavish, red-tiled villa nestled in the middle of a landscape garden.
Within the spacious property, no luxury is spared: Hardwood floors, Venetian finishes, designer furniture and five en-suite bathrooms ensure that all the modern conveniences are in place for the future tenants.
Welcome to Miotoni Ridge, a 14-mansion development in one of the Kenyan capital’s most prestigious locations.
Houses here are designed for the highest-end of the luxury market. Asking prices are running at more than $1 million but that has not deterred any potential buyers: 60% of these properties are already sold out.
In fact, a study earlier this year by estate agents Knight Frank and Citi Private Wealth found that Nairobi was the best performing prime residential market in the world.
Values in the city grew up by 25% in 2011, leaving luxury hotspots such as London, Miami and Hong Kong behind.
Ben Woodhams, managing director of Knight Frank Kenya, says the findings of the survey surprised even the agency’s research department.
“We were higher than Miami and it was like ‘how dare you,’” he says. “So we had to justify our figures and say ‘yes, this really is what is happening here.’ But it is about growth, it is not about value.”
Although this growth comes from a base of relatively low prices, Woodhams says there’s a number of factors that has made investing in Kenya’s luxury housing market attractive.
“Regionally Kenya is a safe haven,” he says. “People are seeing relatively good returns in Kenya specifically, but [also] in Africa as a whole – particularly with the problems we are seeing in the rest of the world.”
Woodhams says it’s mostly Kenyan or Kenyan-linked investors that drove the country’s prime housing market to the top spot.
“A lot of Kenyans in the diaspora in the [United] States and Europe send a lot of money back to Kenya and a lot of that gets invested in the property market,” he says. “So that is another big driver for us.”
Yet, Nairobi is not the only location in Kenya experiencing great growth in luxury real estate.
Coastal hotspots such as Mombasa, Malindi and Lamu occupied the second spot in The Wealth Report 2012, recording a 20% price growth in luxury residential properties.
Lamu, a tiny island located off Kenya’s north coast, is the second home for many tycoons, attracting local and international investors who flock in to get a unique combination of sun and culture.
Andrew McGhie, a Lamu-based estate agent, says that Kenya’s coast tugs at people’s heart strings, not just their wallets.
“Lamu attracts a fairly adventurous romantic type person who wants to come to somewhere that is completely different to their everyday lives,” he says.