2022-08-30-莱坊-Kenya_Market_Update_1st_Half_2022_8页_365kb

Kenya Market Update - H1 2022 Summary

Economy

• GDP Growth: Expanded from -0.3% in 2020 to 7.5% in 2021, now projected at 5.5% for 2022.
• Inflation: CPI reached 7.91% in June 2022, the first time exceeding the 7.5% CBK target in five years.
• Currency: Kenyan Shilling depreciated further against the US dollar.
• Structure: Agriculture remains dominant (23% of GDP). Recovery from COVID-19 affected different sectors variably: Education and Hospitality rebounded strongly, while Agriculture faces drought-related challenges.

Infrastructure

• Major developments: Nairobi Expressway, Mombasa Gate Bridge, Makupa Bridge, Dongo Kundu bypass, Kenol-Marua Road expansion nearing completion. Railway City Project initiated in collaboration with China.
• Mombasa Port expansion (Phase 2) adds significant container capacity.
• Affordable housing support via Kenya Mortgage Refinance Company (KMRC).

Policy & Regulation

• Scrapping of interest rate controls.
• Reinstatement of Construction Levy and EIA License fees.
• National Construction Authority enforcing standards.

Real Estate

• Market cooled due to oversupply, particularly in prime segments.
• Office vacancy slightly above 5%, prime rents stable.
• Residential sales slightly up, prime rents declined.
• Significant oversupply impacting yields. Shift towards Less Traditional Assets: Purpose Built Student Accommodation (PBSA), logistics warehouses, industrial parks.
• Acorn D-REIT & I-REIT reported net profits, but yields are low; some REITs experienced price drops.
• New developments popping up (e.g., Rosslyn Ridge Residences, Piano Westlands, Clay City).

Retail

• Supermarkets (Naivas, Chandarana) continue expansion, focusing increasingly on residential areas.
• Tourism rebounds, international arrivals increasing; domestic tourism growing faster.
• Hotel occupancy rising significantly (57% by May 2022), suggesting continued recovery.

Capital Markets

• Equity market for REITs (D, I) is small but growing.
• Interest rates revised by CBK (11.3%). Banks are preparing for continued rate increases.
• Mortgage lending value increased (approx. KES 245 billion), non-performing loan ratio slightly down.

Industry Trends

• Industrial rates increase in the review period.
• Digital infrastructure (ICANN, Data Centres like PAIX).
• SEZ developments (Dongo Kundu, Athi River) aiming to bolster manufacturing and trade.
• Opportunities in agro-processing and local pharmaceuticals production (KBI).
• Rising costs in education and healthcare.

Conclusion: Kenya's economy is recovering but faces inflation and currency depreciation. Infrastructure development is ongoing, but the real estate market is experiencing a slowdown due to oversupply, however, investments towards capacity building, logistics, and sustainable developments continue.