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Investment Options at the Kenyan Coast

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David Gikandi, Director at Rainmaker Realty, is happy that Kenyans are today waking up to the reality of owning high-end beach properties.

Gikandi, who manages the Diani Paradise Villas, had never listed a Kenyan on his buyers’ list. Every time they called on investors to buy the property, all he saw were German nationals.

“Since the inception of the property company in the 1980s, over 400 villas have been sold but mostly to German citizens,” he says.

“Diani has some of the best beaches in the world yet very few Kenyans were interested in taking advantage of this fact.”

However, today he is looking at a totally new scenario as young Kenyans flood the coast looking for secure investment vehicles with good returns. They are not looking for a house to live in, but a property that will make money for them. This is what has made Gikandi’s property a target for Kenyan investors.

“Upcoming professionals are starting to emulate global standards. Today, a number of them are choosing to buy houses by the beach and making this their new “upcountry,” he says.

Kenyans are now steadily defining the property ownership in places like Diani and mingling with their foreign neighbours who were hitherto the only owners of such property.

Concrete jungle

Away from the concrete jungle of Nairobi and competitive real estate prices that are now beyond the reach of many Kenyans, investors are opting for investments on the shores of the Indian Ocean. They are investing in spacious villas away from the overpriced, squeezed high rise apartments in the city.

“The villas’ airiness and the outdoor living experience is exactly what people come to the coast to experience. You cannot have that kind of an ambience with a regular house or apartment,” says Gikandi, who is currently handling four projects - the Diani Paradise villa which has over time improved its designs to suit the current market needs; Frangipani Residence, a more upmarket property behind Mombasa Serena whose selling price is from Sh35m.

Kenyans in the diaspora and corporates heads are among those who are looking to put their money in these properties.

Apartment

The other two are Watamu villas and an upscale project in Kilifi, between Vipingo Ridge Golf Resort and the ocean. If you missed an opportunity to own a holiday home at Vipingo Ridge, this might be your chance to get another right next to it at a cost that is way below the Vipingo Ridge price.

Whichever way you look at it, investing in this property which you can rent out when you are not using it is a good bet for anyone looking to make some good cash apart from owning a high-end property.

The return on investment for an investor buying one villa, say, in Diani and another buying an apartment in Nairobi will give you an idea on where it’s best to put your money.

Let’s assume that both properties cost Sh10milion. How much will each make at the end of the month if they both rent out the properties? The villa in Diani fetches between Sh15,000 and Sh20,000 a day especially during the high season. This means it comes to about Sh140,000 a week.

On the other hand, the Nairobi apartment will fetch between Sh100,000 to Sh300,000 a month depending on location and size and whether it is furnished or not. This means a villa at the coast will have double returns to that of a furnished apartment in Nairobi.

“Factor in the middle and low season and do the average and you will realise the kind of returns you are looking at. Plus, you have the double advantage of being able to use your villa whenever you like, because your tenants are short-term. And the land value is rising fast as well,” added Gikandi in an interview with BDLife.

However, according to Knight Frank, a global real estate consultancy firm with offices in Kenya, investment in holiday homes at the coast is a risky venture which fully depends on the tourism traffic, leaving owners with almost empty houses during low seasons.

Worthwhile

In contrast, Ben Woodhams, Knight Frank’s managing director Kenya, observes that investments in Nairobi are more worthwhile given the fact that the city is quickly becoming a regional hub thus raising demand of apartments.

“There is more demand from clients looking to rent houses in Nairobi than at the coast which solely depends on tourists be they local or foreign. So before you part with your money, make sure you look at the pros and cons of both places,” says Woodhams in a telephone interview with Business Daily from London.

- Business Daily







 
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