2015-12-31-莱坊-Kenya_Market_Update_1st_Half_2016_6页_2mb

RESEARCH
KENYA
MARKET UPDATE - 1ST HALF 2016

ECONOMIC OUTLOOK
• Kenya's GDP growth in Q1/2016 was 5.9%, slightly below the 2016 target of 5.0%.
• GDP rates hovered around 5%, with inflation targeting achieved by the Central Bank.
• Key growth sectors include agriculture, construction, real estate, and finance.
• Factors hindering Africa-wide GDP growth: low commodity prices, droughts, natural disasters, and security/political issues.
• Construction sector faced slight reduction (+9.9% QoQ growth), but cement consumption increased.

MAJOR GOVERNMENT ACTIONS
• Real Estate Incentives: Corporate tax reductions (from 30% to 20% for developers building >1K affordable units) and scrapping Capital Gains Tax on intra-family/ divorce property transfers.
• Infrastructure Investment: Increased foreign investment (Actis, Helios, CADFund) in railways, roads (KeNHA, CRBC), and real estate development (REITs approved).
• SEZ Legislation: Finance Bill 2016 proposed tax incentives for private sector contributions to SEZs.

REAL ESTATE MARKET PERFORMANCE

• Residential:

  • Prime Sales: Marginal price increases (+1.3%) amidst stable macroeconomy, supported by high net-worth demand and government incentives, but volumes low.
  • Prime Rentals: Slight dip (-~8% YoY) due to increased supply. Top segment driven by expatriates.
  • Mortgage Market: Steady growth in number and average mortgage size (+11%) due to incentives.

• Retail:

  • Prime rents (US$48/sqm/month) stable, waiting conditions ideal for new tenants. High-end chains entering market (e.g., Carrefour at The Hub).
  • New supply pipeline (e.g., Carrefour's 30,000sqm Westlands project, Mlolongo Mall) expected to sustain absorption but add short-term rental pressure.

• Office:

  • Absorption rate increased 28% YoH (+1,000 properties). Asking prime rents stable (+15% YoY) due to new supply and landlords' flexibility to attract tenants.
  • Rigid vacancy rates expected in prime secondary stock due to development bank relaxations and EAC trade diversification.

HOSPITALITY & TOURISM
• Hotel Sector: Rankings released,MT Kenya region showed strong performance (+4-star hotels). Maintenance is key due to tourist arrivals dip.
• Tourism Diversification: Planning trips beyond beaches/wildlife, focusing on gastronomy, festivals, and conferences.
• New Facilities: Pipeline hotels (Sheraton, JW Marriott, Four Points) and planned refurbishments.

EMERGING TRENDS
• Increased foreign investment in real estate.
• REITs attracting institutional funds and government guarantees.
• SEZs aiming to boost regional trade.
• Logistics sector showing growth.
• Development of mixed-use complexes targeting diverse income levels and demographics.