7 Reasons to Invest in Real Estate in Kenya

There are several reasons to invest in property- either through land, buildings (completed units) and real estate finance. We consider the biggest reasons why property in Kenya is a worthwhile investment

1. A long history of sound returns

While other asset classes have returned an average 10% during the past 5 years, real estate in Kenya has recorded average returns of 25% in some areas (capital appreciation and rental yield). Investors in real estate have been handsomely rewarded. Additionally, while other assets classes like stock market returns show volatility, real estate returns have been more stable in recent years.

2. The ability to invest on a schedule that suits you

Most real estate developers will allow you to purchase a property with a range of plans that suits your needs. There are cash payment plans, installment plans, zero deposit plans and mortgage plans that allow buyers to purchase the property of their choice

3. The ability to borrow to invest

Unlike loans to purchase shares/ bonds (margin loans); financial institutions are more willing to lend for the purchase of real estate. This is because real estate loans are collateralized- secured against the property that is to be bought. Borrowing to invest in real estate in Kenya also lets you make smaller, more manageable payments. Financial institutions like banks in Kenya will also extend up to 90% of the value of the property for a mortgage.

4. The ability to earn income on your investments

You can also earn rental income from property investments in Kenya. Rents increase your household income and can also offset the cost of a mortgage, thereby reducing the carrying cost of your property.

5. Tax advantages

The government provides many tax incentives for property buyers. Interest payments for a mortgage in Kenya is tax deductible; qualified home ownership savings accounts in Kenya also earn tax free interest. These benefits are provided in order to encourage home ownership. Owners of rental units can also deduct maintenance and repair costs from the rental income earned.

6. Improvements can add value to a property

Owners of investment properties can renovate the property to add bathrooms, bedrooms, kitchens and other features such as solar water heating that add value and increase their rental income.

7. Several investment opportunities

Real estate offers opportunities for every kind of investor. Investors who do not have the capital to purchase real estate units in Kenya can still invest by financing real estate developments at a fraction of the price of a completed unit. Additionally, investors have the option of investing in the public markets through a Real Estate Investment Trust (REIT).

Cytonn Diaspora offers you the flexibility to invest in property by purchasing land, completed units and financing real estate projects.

Contact our financial advisors at diaspora@cytonn.com to become a property investor.