De­vel­op­ers slow down new projects ahead of elec­tions

Prop­erty lobby group chair­man Mu­cai Kun­y­iha avers elec­tion­eer­ing pe­riod damp­ens eco­nomic ac­tiv­i­ties, and most in­vestors wait for clar­ity from the gov­ern­ment

The Star (Kenya) - - News Business - WEITERE MWITA @MwitaMartin

The real es­tate sec­tor is ex­pe­ri­enc­ing a slow­down in new in­vest­ments as de­vel­op­ers adopt a wait-and-see ap­proach ahead of next year’s gen­eral elec­tions, the Kenya Prop­erty De­vel­op­ers As­so­ci­a­tion said yes­ter­day.

Planned new projects are ex­pected to take a slug­gish im­ple­men­ta­tion un­til Au­gust, the as­so­ci­a­tion said, with de­vel­op­ers mov­ing to sell ex­ist­ing prop­erty be­fore the elec­tions.

“Dur­ing elec­tions there is damp­en­ing of eco­nomic ac­tiv­i­ties. Peo­ple say let’s start when there is clar­ity from the gov­ern­ment,” KPDA chair­man Mu­cai Kun­y­iha said.“Peo­ple in the market sell­ing now are how­ever not af­fected, but new projects will slow down.”

The res­i­den­tial, com­mer­cial and in­dus­trial prop­erty lobby group says many in­vestors are cau­tious. It avers their fears are based on ex­pe­ri­ences of the bun­gled 2007-8 gen­eral elec­tion that sparked vi­o­lence af­ter the dis­puted pres­i­den­tial re­sults, lead­ing to loss of prop­erty worth mil­lions.

The busi­ness com­mu­nity is cross­ing its fin­gers in an­tic­i­pa­tion of peace­ful elec­tions sim­i­lar to the March 2013 ex­er­cise.

“It is a re­spon­si­bil­ity for us as Kenyans to be­have and do the right thing,” Kun­y­iha said. The sec­tor is, how­ever, pos­i­tive that cap­ping of in­ter­est rates will in­crease mort­gage up­take.

A re­cent re­port by real es­tate in­vest­ment firm, Cy­tonn, shows up­take of mort­gages re­mains low. It notes there are only 22,000 mort­gages worth Sh164 bil­lion in a coun­try that has an es­ti­mated pop­u­la­tion of about 43 mil­lion peo­ple.

“We hope to see an in­crease. High in­ter­est rates have been keep­ing peo­ple away from mort­gages. We hope the new rates will open up the market,” he said.

The build­ing and con­struc­tion sec­tor reg­is­tered a 13.6 per cent growth in 2015, the eco­nomic sur­vey 2016 shows, with for­mal em­ploy­ment in the sec­tor grow­ing by 11.4 per cent to stand at 148,000 up from 132,900 in 2014.

Mean­while, the as­so­ci­a­tion has raised con­cerns over skill gaps in the sec­tor, which could hurt con­struc­tion stan­dards. It has also called for eth­i­cal stan­dards in the sec­tor, warn­ing against un­pro­fes­sional ap­proval of build­ings.

Many build­ings in Nairobi have col­lapsed, es­pe­cially in East­lands. This has put the sec­tor un­der sharp crit­i­cism for fail­ing to curb il­le­gal con­struc­tions that do not meet the re­quired stan­dards. “Peo­ple are look­ing for cheaper al­ter­na­tives,” said Gikonyo Gi­tonga, di­rec­tor at KPDA.

/ FILE

Build­ings un­der con­struc­tion at Mom­basa Road on March 31 last year

Newspapers in English

Newspapers from Kenya

© PressReader. All rights reserved.