Kenya’s luxury property market records highest growth globally in 2011
BY
Claude Harding | March 29, 2012 at 21:39 http://www.howwemadeitinafrica.com
Kenya’s luxury real estate saw the greatest price increase
globally in 2011, according to Knight Frank’s Prime International
Residential Index (PIRI), which monitors price changes across the
world’s top-end property markets.
Price growth in both Kenya’s capital Nairobi and the country’s Indian
Ocean coastal hot spots was more than any of the other global locations
included in the Index, with the value of Nairobi’s prime real estate
growing by 25% in 2011 and the Kenyan coast by 20%.
Knight Frank defines “prime property” as a location’s most desirable and usually most expensive real estate.
Kenyan luxury real estate prices grew faster than major cities such
as Miami (19.1%), London (12.1%), Moscow (9.8%), New York (3.1%),
Shanghai (-3.4%) and Singapore (-4.7%).
It should, however, be noted that Kenya’s growth comes from a base of relatively low luxury
property
prices. The average price per square metre of prime real estate in
Nairobi is only US$1,700, which doesn’t even compare with cities such as
Monaco ($58,300/sq m), London ($48,900/sq m), Beijing ($17,400/sq m) or
Mumbai ($11,400/sq m).
Increasingly affluent buyers from emerging markets are boosting
residential property prices in developed world locations such as Miami,
London and Vancouver. “When asked which nationalities will become most
important as prime property buyers over the next five years, Chinese,
Russian, Middle Eastern, Latin American and those from other growth
economies consistently top advisors’ lists,” notes Liam Bailey, head of
residential research at Knight Frank.
The reason for this is that many of the newly rich in the developing
world fear that issues such as corruption and politics can pose a risk
to property investments in their home countries. They therefore prefer
safe haven locations such as London, which has a cosmopolitan
environment, good education and both personal and property security.
Bailey says that New Zealand’s isolation from the world’s conflict
zones makes it possibly the ultimate safe haven destination for the
world’s super-rich.
Although ‘safe haven’ isn’t necessarily a phrase many people would use to describe
Kenya
in a global context, compared to its neighbouring countries it is just
that, commented Ben Woodhams, managing director of Knight Frank Kenya.
Woodhams added that Kenya’s fast economic development is attracting
domestic and international private equity. However, recent events such
as the kidnapping of tourists staying on Kenya’s north coast and a steep
rise in interest rates to almost 25% also highlight the potential
vulnerability of some emerging prime markets.
Saskia Sassen, co-chair of the Committee of Global Thought at
Columbia University and the person who coined the term ‘global city’,
said that Nairobi is becoming “increasingly important in a rapidly
urbanising world”.
