East Africa's real estate sector set for major growth

The East African real estate sector is experiencing a significant surge in growth, with over $1.2 billion raised and invested in the region over the past year. This substantial investment has been a game-changer for the industry, propelling East Africa to the forefront of property development in the continent. Ben Woodhams, the Managing Director of Knight Frank Kenya, shed light on the driving forces behind this growth in a recent interview with CNBC Africa. Woodhams highlighted the increasing demand for quality infrastructure and stability in the East African economies as key factors fueling the region's property boom. The growing trend of property development in East Africa has attracted developers from South Africa and other parts of the continent, drawn by the diverse opportunities available in countries like Kenya, Tanzania, Rwanda, and Uganda. Woodhams pointed out that the stability of the East African economy and the relative resilience to external shocks, such as fluctuating oil prices, have made the region an attractive destination for property investors. The focus on East Africa's property market at the Africa Property Investment Summit in South Africa indicates a shift from West Africa to the more lucrative East African markets. With cities like Nairobi, Dar es Salaam, Kampala, and Kigali offering a range of opportunities in different sectors including office, retail, and industrial spaces, developers are finding a wealth of possibilities in the region. Woodhams emphasized the economic stability and growth potential of East Africa, making it a prime location for property development. Despite the high property prices in Nairobi compared to other African cities, the lack of a robust mortgage industry in Kenya has led to a predominantly cash market. With less than 25,000 mortgages in a population of over 40 million, many Kenyans opt to rent rather than buy due to the high mortgage interest rates. However, the influx of over $130 million remitted into Kenya monthly from the diaspora contributes to the cash liquidity in the market, driving demand for rental properties. Woodhams addressed concerns about the possibility of a property bubble in the East African market, mitigating fears by pointing out the absence of a heavy mortgage industry that typically precedes a burst. He noted that any potential oversupply situation would likely lead to a correction in prices rather than a catastrophic bubble burst. The focus on East Africa's property sector and the significant investments pouring into the market indicate a bright future for the region's real estate industry. With stable economies, diverse opportunities, and growing demand for quality properties, East Africa is poised for continued growth and development in the real estate sector.