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Wealthy Kenyans are investing significant amounts of their wealth outside the country with Britain being their preferred destination for property purchases.
Knight Frank, the publisher of a new report on real estate and wealth, said the rich hold an estimated 30 per cent of their property portfolio outside the country with most putting money in building of retail shopping property in Britain.
Ultra-high net worth individuals in the country, each with wealth amounting to more than Sh2.8 billion or $30 million, prefer to put the rest (70 per cent of total) of their property investments in the local real estate sector.
Investors from India were identified as having become the main investors in Kenya’s real estate market with residential property being their main focus.
“With $1 million you can get 511 square feet of prime residence in Nairobi which is good value for money,” Mr Andrew Shirley, editor of the wealth report, said during its release Thursday.
Knight Frank said it was aware of four Indian consortiums undertaking huge residential and retail projects in Kenya. Two of them were working with real estate company Knight Frank. Mr Anthony Havelock, head of agency at Knight Frank, said the value of the two projects was estimated at Sh6 billion.
Kenyans working abroad were also identified as key players in the real estate market.
“Some are diversifying their portfolios as they gain more experience with property investing, while others may be from a particular diaspora investing back into their homelands — for example expatriate Kenyans,” reads part of the report.
Kenya’s real estate has recorded a rally in the last decade, riding on improving infrastructure which has attracted investors seeking high returns.
The high-end property prices, however, dropped pace last year recording a 1.4 per cent growth lower than the global average of two per cent.
Mr Havelock attributed the slowdown to increased supply which gives potential buyers more options and room for bargaining.
According to the survey, carried out for Knight Frank by Australian research firm WealthInsights, Kenya has 115 super-wealthy individuals, 32 of who are centa-millionaires (have more than Sh9.1 billion or $100 million) with only one dollar billionaire.
Ms Anjali Harkoo, head of wealth and investments at CfC Stanbic, said the bank had noted a growing number of high net-worth individuals, which had advised their opening of a department dedicated to them.
The department offers them traditional banking services and also advises them on where to put their money in sophisticated options such as equities, bonds and offshore markets. Ms Harkoo said that the wealthy were largely entrepreneurs. Land and property developers were also coming into a lot of wealth, she said.
The government is positioning itself to reap from the real estate sector with the introduction of a five per cent capital gains tax on transfer of property beginning of this year.
Professionals such as doctors and lawyers were also joining the wealthy. The preference of Kenyans rich to invest in Britain goes against the direction of trade between the two nations, which has lately been on the decline.
The value of goods sold by London to Nairobi declined last year for the first time in seven years, with Kenya’s export to her former coloniser declining for the third year in a row.
Britain has, however, remained an attractive destination for investments by the super-rich in Kenya.
– Business Daily