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Look for urban cycles, property investors told.

Analysts have cautioned real estate investors to look out for urban cycles playing out in the country where buyers begin to exit former hotspots.

During the two-day 2018 East Africa Property Investment Summit which began yesterday, EAPI managing director Kfir Rusin said East Africa was now running a full cycle from initial generation of new conurbations, to the regeneration of older centres.

A conurbation is an extensive urban area resulting from the expansion of several cities or towns so that they merge but usually retain their separate identities.

"The new Hass County Land Prices Report shows a clear picture of early waves of development driven by advantages of accessibility, location, local activity, and resources such as strong water supply. But as development intensifies, many conurbations experience an evolving character that triggers waves of buyer flight and then a new type of influx," he said.

The survey found county land prices had grown an average 7.37 per cent in 2017 compared to 12.07 per cent in 2016. The slowdown was attributed to the general slowdown on election uncertainty and effects of the interest rate cap regime.

"We see clearly from price growth of 12 to 14 per cent in Nakuru and Kisumu last year that areas enjoying an influx of business and finance, and underpinned by robust agricultural economies, were only slowed marginally by the elections and rate cap," Rusin said.

This, according to HassConsult head of development consulting Sakina Hassanali, highlighted the country's market strength.

"Countrywide, infrastructure development continued to drive strong price growth," she said.

The county land report, which covers 10 counties and 75 towns across Kenya, also analysed the towns and suburbs that experienced the greatest growth in land prices, and those that suffered falling land prices, finding evidence of pricing cycles playing out within multiple counties.

The report signaled a shift to new residential beacons as developers moved from former hot spots.

"From the more than 20 per cent surge in land prices in Utange, which delivered the strongest growth of the year on an influx of elite residents vacating Nyali, to a similar movement to Ngata by residents from Nakuru,' she said. "For many investors, the magical key still remains follow the roads."

Thika was one of the spots where prices overheated, rising 30 per cent in 2016 before falling more than four per cent last year.

"Investors need to be wary of surges that fly over and above any development norm, as spots that will very often suffer subsequent price corrections, or, at the very least, subdued and even depressed pricing for some years to follow, as is the case of Ridgeways in Kiambu," Hassanali said.

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Publication:The Star (Nairobi, Kenya)
Date:Apr 25, 2018
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