Do Kenyans Pay World’s Highest Rent?
The Standard reports that Kenyans pay the highest rent rates globally, but what they should perhaps clarify is that this is in terms of spending a higher proportion of income on rent than counterparts in other parts of the world.
Launching the 2013 first quarter Hass Property Index, Sakina Hassanali, head of research and marketing at Hass Consult, said rent prices for town houses and apartments continued to increase — a scenario that strains a majority of Kenyans who are already suffering declining purchasing power. Tenants in Kenya pay a higher proportion of income in rent than their counterparts in any other part of the world, a new report has shown. Further, 80 per cent of Kenyans living in urban areas do not stay in their own houses.
The Hass Consult report supports a 2012 Wealth Report[PDF] by Knight Frank that rated Nairobi and its coast the best performing prime residential property markets in the world — a reflection of the sky-high rent charged. Among 71 international prime residential property locations, Nairobi recorded the highest growth with a 25 per cent increase in high-end residential properties, while Kenyan coastal resort towns came second with a 20 per cent increase. According to the Hass Property Index released yesterday, rental prices increased in January, but eased in February in the run-up to the March elections.
“The rental market slowed down as the elections got into full swing, with asking prices for rentals rising by 1.9 per cent down from a 4.4 per cent rise in the same quarter last year,” Hassanali said.
The report notes that rental values for town houses have increased by 2.58 times since 2001 — a 3.8 per cent rise in the last quarter and 154.8 per cent rise in the last year. The average asking rental price for a town house is Sh110,198 from Sh42,688 in December 2000. Rental values for apartments have increased by 2.95 per cent since 2001, 0.2 per cent in the last quarter and a 9.3 per cent in the last year. The average rent for an apartment is currently Sh68,528, up from Sh21,638 in December 2000.
The report also captures the paradox that is Kenya’s housing industry — where more than 80 per cent of new houses produced target high and upper middle-income earners. This is despite the fact that up to 83 per cent of urban residents are in the low income and lower middle-income tier. According to the Ministry of Housing, it is this discrepancy that has fuelled the growth of informal settlements. Speaking at the launch of the report, Caroline Kariuki of the Mortgage Company said mortgage payments are now typically twice the prevailing rents.
“This has deterred landlords from buying mortgage-financed property to let — leaving developers with unsold property,” she said.
Currently, the country requires more than 250,000 housing units a year to meet demand. However, the Government and private developers construct an annual average of 50,000 units.
Original story: Kenyans Pay World’s Highest Rent, Property Report Shows
Published on Thursday, April 18 2013 in The Standard