Investing in Kenya’s Real Estate Market
Kenya is a prime location for real estate investors, in part due to its fast-growing GDP, booming property market and secure financial returns. In fact, earlier this year, CNBC Africa reported: “The country’s investment climate is the strongest in the region with foreign direct investment flowing in from markets in line with its economic blueprint.”
However, foreigners looking to buy property in Kenya will face some restrictions. Non-nationals can only acquire land on a leasehold basis, with leases granted for a maximum period of 99 years. Once the lease has expired, it can be renewed, according to the Constitution and the Land Control Act (Cap 302). Foreign investors are often led to believe that they are unable to own land in their own name, and therefore look to locals to purchase property for them. However, internationals can in fact own property in their own name.
Like many nations in Africa with booming real estate sectors, including neighbouring Uganda, foreigners cannot own property outright. Instead, international buyers can acquire property in the country on a 99-year lease. It is believed this law was enacted to prevent foreigners from holding land on a freehold basis in perpetuity, something which was common under colonial rule.
The number of expatriates in Kenya has grown in recent years, as a result of international companies settling down in the country. This has led to increased demand for residential real estate, with employees looking for accommodation near work. Furthermore, many foreigners have access to affordable credit, which means they have the advantage of making quick investments in large real estate developments. Local investors often do not have this luxury, and have to fight against high interest rates from local banks.
ccording to Knight Frank’s 2015 Africa Report, Kenya’s commercial real estate market has seen increased interest from international companies, entering the market either as individual ventures or local partnerships. The report reveals that this year, renowned companies such as Carrefour and Debenhams are forecast to enter the market.
With this development, we expect the commercial real estate sector to go from strength to strength, with consumer demand and the rising desire for international brands on the market, driving the retail space forward. However, when it comes to buying real estate for your business, as per the constitution, a company is only regarded as Kenyan, if it is wholly owned by one or more Kenyan citizens. If a company has foreign shareholders, it is considered a foreign company, and therefore cannot own freehold land. Equally, foreign investors and private companies owned by foreigners cannot own agricultural land; however, you can apply for exemption, granted by the president.
While investing abroad can seem daunting, it can be a straight-forward process if you have all of the facts, and a reliable, well-informed and, of course, qualified lawyer to guide you. Make sure you thoroughly research the laws and legal provisions in Kenya, while contacting educated professionals who can help you along the way.