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Kenya's middle class property boom

Monday, November 10, 2014 - 02:13

Luxury properties are springing up across Kenya's capital Nairobi, fuelled by foreign investors and an emerging middle class. But as Melanie Ralph reports despite robust growth over half the population still live on low or no income at all.

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Life here in Nairobi is changing. A growing middle class means Kenya is trying to catch up with the demands of a more prosperous demographic. This is the layout for a 850,000 square feet shopping mall in one of Nairobi's wealthiest suburbs. The head of communications at Centum Investment, Fred Murmi, says the build is bound to be a success. (SOUNDBITE) (English) FRED MURIMI, HEAD OF COMMUNICATIONS AT CENTUM INVESTMENTS, SAYING: "You'd think that some centres would be empty. But that is never the case. Every new centre that opens, there is always footfall coming in because people have got spending power." Heavy-hitting tenants like French retailer, Carrefour, have already signed lease agreements for space at the Two Rivers mall. Investors see huge investment opportunities in Kenya, which have benefitted from recent oil discoveries. Plush high rise blocks with contemporary architecture with restaurants and indoor swimming pools are being built to tap into the demand. The head of marketing for one local developer says clients are aiming higher - literally. SOUNDBITE) (English) AVINASH TRIBHUVAN, HEAD OF MARKETING AT KINGS DEVELOPERS LTD SAYING: "People used to go for... maybe 5, 6 years back, they wanted 1st floor and 2nd floor only. But now the trend has changed -people want to go on the higher floors, be it residential or commercial.'' But some attending a local homes expo say few would actually be able to afford the properties on sale. (SOUNDBITE) (English) LAWRENCE KANAMPU HOMES EXPO ATTENDANT SAYING: "I find that some of the properties are pretty expensive. Like for example you find houses going for (Kenya Shillings) 14 million, 10 million and 8 million. For an average Kenyan, that is quite on the higher side." Samuel Muthoka, a social research director, says developers' drive for profit is not the only reason why building and owning a home in Kenya is out of reach for many. (SOUNDBITE) (English) SAMUEL MUTHOKA, DIRECTOR FOR SOCIAL RESEARCH AT IPSOS SYNOVATE KENYA SAYING: "The cost of land is completely way out and not even comparable with other developed economies including America. Where else in America it would be completely varied, the cost of land would be much lower but then the cost of labour is very expensive and things like that come into play." The target market for property owning is still small in Kenya. According to the Kenya Bankers Association, there are only around 22,000 residential mortgages in a country with a population of over 40 million people.

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Kenya's middle class property boom

Monday, November 10, 2014 - 02:13