Diminishing returns on Rental Property hits Kenya

As statistics show doubling of apartments and houses prices over the past three years, rental yields are to landlords is dwindling. The growth in rent charges has stagnated over the same period, a recent property pricing survey indicates. With the significant supply of rental property experienced during the economic slow down between 2008 and 2009 and reduced incomes available to tenants for rental purposes have led to this reduced price movement. The new landlords should be altering their expected cash flows projections as buying a house for rental purposes is no longer lucrative. A marketing manager at Hassconsult, an estate agency firm, reports that, however, "the main beneficiaries are the tenants who are spending the same proportion of income as was the case three years ago to occupy a house."  In the converse, demand for house ownership remains strong as people prefer to own houses than to rent. The availability of mortgage products from financial institutions with other factors has led people to be more inclined to own rather than rent, she said. The construction industry is bound to appreciate, although quite conservatively with the survey warning speculators that buying houses for quick returns is not fashionably feasible. The survey indicates further that the future of apartment and house sales shall be be driven more by first time buyers seeking homes than investors moving into property business for quick high gains or high rental yields. AK Team

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