High-net-worth Kenyans allocate largest portion of wealth to real estate investments

08 March 2017

Nairobi, Kenya – High-net-worth individuals (HNWIs) in Kenya have allocated the largest portion of their wealth (28%) to real estate investments, which excludes primary residences and second homes, according to the Knight Frank Wealth Report 2017.

Personal businesses make up 20% of their wealth, while investments in equities, bond, cash, precious metals and similar items makes up 18%, according to the survey of nearly 900 of the world’s leading private bankers and wealth advisors. Primary residences and second homes, which are excluded in calculating individual net worth in the Wealth Report, make up 14%, while collectables (art, wine, cars etc.) make up 8% of total wealth for Kenyan HNWIs.

Globally, HNWIs allocate 25% of wealth to investments, 24% to real estate investments, 23% to personal business, 16% to primary residences and second homes, 6% to collectables and 6% to other categories of investments.

Ben Woodhams, Managing Director at Knight Frank Kenya, said: “Kenyan HNWIs clearly realise the long-term stability that property investments offer in an otherwise volatile market together with the good returns that the sector has demonstrated in the past.”

The 11th edition of the Wealth Report shows that up to 900 Kenyans became dollar millionaires in 2016, raising the tally of local HNWIs – those worth US$1 million (Sh102 million) or more in assets excluding primary residences – to 9,400 people from 8,500 in 2015. Majority of them – 6,800 – live in Nairobi.

In deciding where to buy properties to live in, Kenyan HNWIs are prioritising education for children, followed by personal security, safe havens for capital, opportunity for capital appreciation and lifestyle.

Kenya’s super-rich typically own up to three homes (primary and second homes) on average, much as their global and Africa counterparts. Majority of them own homes locally (74%), in Europe (74%) and North America (16%), while 5% have bought houses in the Middle East.

Over the next two years, 46% of resident Kenyan HNWIs are likely to buy additional homes within the country, while 43% are looking at outside the country.

In addition, 59% of HNWIs in Kenya are looking to invest in commercial properties locally, while 44% are looking to buy abroad. Globally, 44% of HNIWs are looking to invest in commercial property in countries of residence, while 32% are looking at outside their countries. Of the Kenyan HNWIs looking to invest in commercial property abroad, 53% prefer Europe, 12% North America and 6% the Middle East.

Kenyan HNWIs are raising their interest in property sectors, with 63% eyeing residential, 56% offices, 31% retail, 25% leisure and 13% industrial, according to local data from the Attitudes Survey.

The survey’s respondents said 68% of Kenya’s wealthy are likely to own a home locally, while 4% of the global HNW population look to own homes in Kenya – led by the UK HNW population where 63% fancy owning a home in Kenya, followed by 16% of South African HNWIs, and 11% of Spanish, Mauritians and US HNWIs. About 5% of the super-rich in Uganda, Tanzania, Nigeria, Ghana, Switzerland, France, Canada and Lebanon are also likely to acquire homes in Kenya.

Interestingly, Kenya is currently among the top-five most popular second-home locations for Africa’s ultra-high-net-worth individuals (UHNWIs). These insights come even as prime residential prices in Nairobi decreased by 2.1% in 2016, making it more attractive for trophy house hunters. Prime residential houses are currently priced from US$800,000 (Sh81.6 million) in Nairobi.

“With the upcoming election, we have noted a slow-down in development. This will allow the market to re-absorb the oversupply which will reverse the marginal price decline,” Woodhams said.

The survey also established that 69% of Kenyan HNWIs are likely to invest in commercial property locally, while up to 4% of the global HNW population would consider investing in Kenya’s commercial property sector. The latter are led by 38% of UK’s and 25% of South Africa’s HNW populations, with 6% of the super-rich in Ghana, Nigeria, Mauritius, Greece, UAE, Germany and Canada also expressing interest.

“The current foreign interest stems from the East, with investors from India and China making inroads, whilst much of the interest from South African funds seems to have been distracted by opportunities in Eastern Europe,” Woodhams said.

US$1 = Sh102

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For further information, please contact: james.waithaka@ke.knightfrank.com

Notes to Editors

Knight Frank LLP is the leading independent global property consultancy. Headquartered in London, Knight Frank has more than 14,000 people operating from 413 offices across 60 countries. The Group advises clients ranging from individual owners and buyers to major developers, investors and corporate tenants. For further information about the Company, please visit knightfrank.com.