Kenyan real estate agents are increasingly targeting the substantial diaspora population as a key market for land and property investments.
With over three million Kenyans residing abroad, real estate firms perceive a significant opportunity to attract investment from this lucrative demographic. Many expatriate Kenyans maintain strong ties to their homeland and actively seek ways to build wealth in their country of origin. Recent data from the Central Bank of Kenya (CBK) indicates a notable increase in remittance inflows. In June 2024, these inflows totalled $371.6 million (Sh47.8 billion), representing a 7.4 per cent increase from the previous year. The cumulative inflows for the 12 months leading up to June demonstrated steady growth, reaching $4,535 million (Sh584 billion), a 12.9 per cent increase compared to the same period in 2023.
These remittances continue to play a crucial role in supporting Kenya’s current account and foreign exchange market, with the United States remaining the largest source, accounting for 54 per cent of inflows in June 2024. The Kenyan real estate market is poised for substantial growth, according to a report by Statista. Projections indicate that the market will expand to approximately Sh89.7 trillion ($697.80 billion) in 2024. Steady growth is anticipated with an annual growth rate of 3.84 per cent from 2024 to 2028, potentially reaching a market size of Sh104.4 trillion ($811.40 billion) by 2028. George Wamariu, director of Famyard Real Estate agency, emphasizes the importance of the diaspora market in the real estate sector.
He notes that their focus is on Kenyans who have the financial means to invest in land or property but may face challenges in physically inspecting the assets. To address this, real estate firms are leveraging technology to facilitate remote purchases, utilizing virtual tours, online consultations, and digital transactions. This approach not only enhances convenience but also fosters trust among diaspora investors. Real estate agents are also engaging in proactive outreach by attending events for Kenyan communities abroad and networking to promote investment opportunities in their home country. This strategy appears to be yielding positive results, with diaspora investment now accounting for an estimated 20 per cent of real estate transactions in Kenya, doubling from 10 per cent five years ago.
The real estate sector has been a significant contributor to Kenya’s GDP, experiencing a compound annual growth rate (CAGR) of 5.5 per cent over the past five years. In the third quarter of 2023, the sector expanded by 5.4 per cent, reaching Sh785.9 billion compared to Sh743.4 billion in the same period of 2022, according to a report by Cytonn on Real Estate Investment Trusts (REITs). The Kenyan diaspora’s investment interests extend beyond residential properties to include commercial real estate such as office buildings, shopping malls, and industrial parks. These investments not only generate rental income but also contribute to the country’s economic development.
Multiple factors drive the decision of Kenyans in the diaspora to invest in real estate. The potential for lucrative returns on investment is a primary motivator, coupled with a strong desire to own property in their home country and establish a place for future retirement. A survey conducted by the Norwegian-based accelerator company Pangea Trust reveals that approximately 36 per cent of the Kenyan diaspora allocates funds for buying stocks and investing in private equity or venture capital-related securities, with the real estate and construction sectors emerging as frontrunners. High demand for land is particularly evident in Nairobi and its metropolitan regions, including areas such as Malaa, Joska, Kamulu, Ruiru, Ngong, and Kangundo Road. This surge in demand has led to increased property values and economic development in these areas.
Factors contributing to this heightened demand include well-developed road transport networks, reliable electricity supply, and the presence of essential amenities such as hospitals, schools, and security administration posts. In response to this trend, real estate businesses in high-demand areas are offering straightforward and affordable payment plans. Parcels of land, typically ranging from 100 by 50 to 1/4 acres, are among the most sought-after, with prices ranging from Sh 580,000 to Ksh 2 million. These businesses often provide flexible payment structures, allowing buyers to pay 20 per cent upfront and spread the remaining balance over six months.
While the growth in real estate investments presents promising opportunities, it is crucial for potential buyers to exercise caution. To mitigate the risk of fraud and legal disputes, investors must ensure that any property under consideration possesses a valid and verifiable title deed. This due diligence is essential for safeguarding investments and ensuring long-term security in the Kenyan real estate market.