2015-12-31-莱坊-Kenya_Market_Update_2nd_Half_2016_6页_545kb

Kenya Market Update: Q3-Q4 2016

Highlights

• Economic Growth: Marginal GDP growth in Q3/3Q 2016 (5.7% vs 6% same period 2015).
• Office Market: Prime office asking rents stable at US$21/sqm/month. Grade A office absorption increased.
• Residential Market: Prime residential prices dipped (3.3% YoH) and rents declined (5.96%).
• Currency: Kenyan Shilling stabilised against major currencies, notably against the Pound Sterling.
• Policy Changes: Finance Act 2016 and Land Value Index Laws passed.

Detailed Summary

GDP Growth and Construction

• GDP expanded by 5.7% in 3Q2016 compared to same period 2015.
• Construction sector maintained a positive outlook.

Currency

• Kenyan Shilling stable against major currencies except Sterling.

Finance Act

• Corporate tax reduced from 30% to 15%, encouraging real estate development.

Office Sector

• Grade A office absorption rose by 50% in the review period, outpacing demand.
• Asking rates remained stable at US$21/sqm/month.

Residential

• Prime residential prices dipped (3.3% YoH) and rental rates declined (5.96% YoH).
• Reduced supply and high vacancies observed in prime properties.

Retail

• Premium retail developments expanding, notably in Kisumu and Nairobi.
• Prime retail rents under pressure, although strong occupancies exist in established malls.
• Absorption of Grade A office space rose, but supply outstripped demand in some segments.

Tourism & Hospitality

• Sector diversifying via MICE events.
• Occupancy rates high across hotels, particularly beach and resort destinations.

Bank Interest Rates

• Capped at 400 basis points above Central Bank Rate (10%).

Real Estate Investment

• REITs initially faced challenges with volatility and low valuations.
• International investors establishing a presence.

Logistics

• Industrial zones being developed, notably in Athi River and along the SGR corridor.

Risks & Outlook

• High supply in premium residential and retail.
• REIT performance remains a challenge.
• Election (2017) and external shocks affecting market sentiment.
• Potential for demand-supply mismatch impacting rental yields.