How to Invest in Real Estate in Kenya

Investing in real estate in Kenya is one of the most profitable investment options. With a high and increasing population, real estate in Kenya is an ideal long-term investment option. The demand for housing is high especially in towns, while the demand for agricultural land is also high in rural areas. Recently, people are opting to build and settle in the suburbs unlike in the past when people preferred building and settling in towns. In this article, we will look at real estate investment in Kenya.

Investing in Real Estate in Kenya

  • The real estate business in Kenya is in high demand due to the high population. People are looking for rental buildings and raw land where they can build residential houses.
  • The Kenya government is very keen on providing affordable housing to Kenyans through the Big Four Agenda initiative. The government intends to build 500k houses through public and private partnerships.
  • Some of the best places to invest in real estate in Kenya with a limited budget are the suburbs with the potential to grow. It is because land prices are low and prices shoot within a very short period.
how to invest in real estate with little money in kenya
Nairobi, Kenya’s capital.

How to Start Real Estate Business in Kenya

The real estate business in Kenya is growing very fast since the demand for land and housing is high. This has necessitated the rise of many real estate companies in Kenya. To start investing in real estate in Kenya, follow these simple steps:

Identify the Type of Real Estate Property to Invest in Kenya

Real estate is wide and as such, you need to identify what real estate properties to invest in. some of the real estate properties to invest in in Kenya include raw land, rental building, your own home, industrial property and commercial investments.

Look for Startup Capital for Real Estate Business in Kenya

The real estate business in Kenya is a profitable venture, but capital intensive. You need large startup capital to get started. As such, you need to identify reliable sources of capital for real estate Kenya. Some of the best sources of startup capital include loans from Saccos and savings. Saccos advance loans to members at low and fixed interest rates.

Identify Best Places to Invest in Real Estate in Kenya

You need to identify areas to invest in in Kenya. Finding some of the best places to invest in real estate in Kenya will earn you high returns. Some of the best places to invest in Kenya include Nairobi, Kiambu, Nakuru, Mombasa and Murang’a.

Buy a Piece of Land

To start investing in the real estate business; you need to buy a piece of land first. To do so, first identify some of the best real estate companies in Kenya that can sell you affordable land. You can buy a piece of land from real estate investment companies in Kenya. Ensure that the investment company is ideal and legit to avoid buying land from scammers.

Also, when buying land, make sure to involve a lawyer. He will help you follow the due process of buying land in Kenya. For instance, you need to do a land search from the Ministry of Land to know the legitimate owner of the land you are about to buy.

If you have a limited budget, think of places outside urban environs. For instance, if you are in Nairobi, you can look for land in the city’s outskirts like in Kikuyu and where land is more affordable.

Kenya Real Estate Investing

Find a Reliable Contractor

To become one of the best real estate investors in Kenya, you need to find a reliable contractor to build your real estate properties. Shop around and research before you can settle on a contractor. Once you have found a contractor, you need to sign a contract with them. This will ensure that the contract adheres to the terms and conditions of the agreement.

It is best to build using a contractor to save you time you would have spent supervising the construction. It also ensures that your house meets all construction requirements.

Build Rental Property Investment in Kenya

Once you have bought land, you need to decide what kind of rental properties you want to invest in. for instance, you can invest in your own home, rental buildings, or commercial investments. The market needs will help you identify the list of suitable rental properties to build. For instance, if your land is located near an institution, you can build rental buildings with bedsitter units. If your land is located in a residential area, you can build 1-bedroom and 2-bedroom units.

Market Your Properties

If you have followed all the procedures, the time taken to build a project is not all that long. If your project is large-scale in nature, we recommend that you build it in phases. You should then start marketing the project to likely buyers. You can use real estate agents that are available to help you sell the homes. Some of the popular real estate agents in Kenya are Villa Care, Lloyd Masika, and Hass Consult.

Manage Your Real Estate Investment in Kenya

Once you have set up property investment in Kenya, the next thing you want to do is to manage your properties. This involves handling tenancy leases, collecting monthly rent, inspecting premises before and after occupancy, and arranging for payback deposits for tenants. If you are too occupied with other activities, you can hire a professional real estate management company to help you manage your real estate properties.

How to Invest in Real Estate with Little Money in Kenya

Even if you have a limited budget, you can still invest in real estate in Kenya. Some of the best places to invest in real estate in Kenya with a limited budget are the suburbs with the potential to grow. It is because land prices in these areas are low and since they are growing fast, land prices are likely to shoot within a very short period.

Why Invest in Real Estate in Kenya?

There are several good reasons why you might want to invest in the Kenyan real estate sector.

  1. First, real estate business in Kenya has seen significant growth over the past few years. This growth has led to a surge in property prices, which has delivered significant returns to the investors.
  2. Second, the Kenyan government has started to place an emphasis on housing the population. The Kenyan president, Uhuru Kenyatta has unveiled his Big Four agenda, which is meant to be his main legacy project. Part of the Big Four agenda is on the need for housing. He intends to help build more than 500k houses using a public, private partnership.
  3. Third, in 2010, Kenya promulgated the new constitution. Devolution was the biggest part of the new constitution because it took power from Nairobi to local areas. As a result, many people who used to live in Nairobi are moving back to the local areas to work with the counties. This has led to a surge in property prices in these places.
  4. Fourth, the Kenyan economy is experiencing growth that is higher than the global average. In 2019, the economy is expected to grow by 5.7%. This is a bigger growth than in most African and developing economies countries.

“Real estate is an imperishable asset, ever increasing in value. It is the most solid security that human ingenuity has devised. It is the basis of all security and about the only indestructible security.”
Russell Sage

real estate investment kenya
The Big Four agenda includes affordable housing.

How to Invest in Real Estate in Kenya

How much do you need to invest in real estate in Kenya? If you want buy property in Kenya through a bank, banks in Kenya generally require at least 20% – 30% of the value of the property as a down payment.

In the developed countries like the United States and United Kingdom, people interested in the real estate industry have several options. They can do house flipping, peer to peer lending for real estate, invest in real estate companies or REITs, and invest in crowdfunding projects like Fundrise and RealtyMogul. In Kenya and the rest of Africa, all these options are not available.

While you can invest in REITs in Kenya, there is no diversity in them. Indeed, only one REIT is listed in the Nairobi Stocks Exchange. The REIT is known as the Stanlib Fahari i-Reit. However, you should do a lot of research on it before you invest your money. The other listed real estate company is Home Afrika, which is relatively small and not worth your time.

Best places to invest in real estate in Kenya: The best places to invest include Nairobi, Naivasha, Mombasa, Kisumu and Eldoret.

What are the Real Estate Returns in Kenya?

Is real estate a good investment in Kenya? This is a question that is often asked by people interested in the real estate sector. Like in all countries, there are no standard returns for real estate investments in Kenya. It all depends on the location you build them and the uptake. However, many investors in Kenya have doubled their money within less than a decade by investing in underdeveloped areas.

Conclusion on Real Estate Investment in Kenya

Real estate in Kenya is a good industry to invest in if you want to make good returns. However, unlike in developing countries, the process of investing in real estate in Kenya is relatively complicated and delicate. Indeed, we have seen many investors lose their money or experience very long delays. We have also seen some good investments being demolished by the government. Therefore, you should do a lot of research before you invest in the Kenyan real estate sector.

Crispus is a finance professional with more than a decade experience in the industry. Over the years, Crispus has written in-depth articles on leading platforms like CCN, Marketwatch, and Seeking Alpha. He also runs a Forex education and managed account company called WestEndFx.