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Tuesday, March 07, 2023
More than 60% of Kenyans worth at least $1 million will invest in private rental properties in 2023.
Wealthy investors in Kenya plan to invest a larger proportion of their assets in real estate this year compared to equities, which continue to sit at the bottom of their investment portfolios.
Investments in commercial real estate will account for up to 40% of wealthy Kenyans’ portfolios in 2022, compared to just 18% in equities, according to real estate agent Knight Frank’s 2023 Wealth Report released last week. was not
More than 60% of Kenyans worth at least $1 million (KSh128 million) plan to invest in private rental properties this year.
Bonds, which accounted for 26% of wealthy Kenyans’ investments last year, continue to draw investors away from the stock market compared to equities, which have been hit by a decline in corporate profits triggered by last year’s macroeconomic shock. increase.
Foreigners who dominate trading on the Nairobi Stock Exchange are also fleeing the market, citing the declining Kenyan shilling and a weak dollar.
read: Dollar shortage dampens growth prospects for Kenyan firms
However, the real estate sector continues to thrive, with a clear bias against wealthy Kenyans owning property, coupled with a growing preference for local investment.
Offshore property
The proportion of overseas property owned by wealthy Kenyans has fallen from 19% in January 2022 to 11% this year, according to a wealth report, indicating a growing demand for domestic property.
Mark Dunford, Chief Executive Officer of Knight Frank Kenya, said: east african Foreigners who have invested in the country’s real estate market have not fled to their home countries as much as they have from the local stock exchange.
“In fact, more and more international institutional investors are showing interest in Kenyan real estate. Traditionally, the challenge has been the lack of scale in Kenya and Africa. There’s a huge market,” Dunford said.
Real estate has proven to be a reliable hedge against inflation, currency depreciation and other economic risks for African investors, explaining the growing appetite at the expense of the stock market.
An apartment under construction in Nairobi. File Photo | NMG
According to the report, the wealth of wealthy Kenyans and Africans fell by just 5% last year, while the wealth of the rest of the world fell by 10% as food and energy shocks rocked the world. Decreased.
Liam Bailey, head of global research at Knight Frank, explained that this is largely due to differences in the composition of asset portfolios, with other wealthy individuals around the world investing most of their assets in stocks. bottom.
“HNWIs in Kenya and Africa are less exposed to foreign real estate holdings and stock markets than HNWIs globally, so their assets have proven more resilient to global disruptions. ‘,” said Bailey.
read: More Kenyans Join Billionaire League, Report Shows
Boost by Reits
Kenya’s planned affordable housing rollout could boost indirect investment in real estate through real estate investment trusts (REITs), poised for increased penetration through the recently launched Kenya National Reits I’m here.
In 2022, indirect investments in real estate through Kenyan REITs accounted for only 4% of wealthy individuals’ portfolios. However, this could rise alongside direct investment in commercial real estate this year.
Half of wealthy Kenyans are optimistic their wealth will grow by more than 10% by the end of the year, but multiple risks continue to hit the stock market, which will favor property investment. .
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