Real estate investment in Kenya can be a lucrative venture. However, with the many available options, it presents a challenging task to determine an opportunity worth pursuing. For this reason, it is very important to make some careful considerations on a number of factors for maximum returns. By doing this, an investor is able to pinpoint a good opportunity for investment to allow him/her make an informed investment decision.
The following highlights the most critical factors to consider in this respect:
- Location: Location of a property is the most critical aspect to consider in a real estate investment. This is because it can significantly influence the property’s present value, resale value and its rental income potential. An investor should therefore consider a property with proximity to essential amenities, good infrastructure and easy accessibility. Moreover, a property near hospitals, schools, shopping centers and such like amenities will have high value and high demand subsequently.
- Demand in the Market: Market demand is a crucial aspect to consider in a real estate investment decision. This is because a property’s present and future demand can greatly determine its potential to appreciate in value over time, plus its ability for substantial rental income. For this reason, any investor should do a thorough research of the market to determine the demand level of the targeted area/location. For instance, a person targeting a residential property should assess the rental demand and the standard rental rates in the targeted area beforehand. An investor can establish the demand level by assessing the vacancy rates in the specific area, which can subsequently imply low demand level for rental properties. On the other hand, low vacancy rates may indicate high demand for rentals. A thorough check of the area’s trends and historical data could also be helpful in determining the demand level of rental properties in a certain locality.
- Potential for Growth: Any real estate investor in Kenya should consider the growth potential of their investment. It should have the ability to appreciate in value over time. To determine this possibility, the following factors should be evaluated:
- Demographics: A region with a growing population especially of the young generation has high growth potential due to probable increased real estate demand. Other valuable factors to consider include high urbanization and immigration levels, which may imply a population surge in the area.
- Property Price Rates: A potential investor should analyze the trends of the rent rates in the targeted region. A consistent trend of price increase signifies a growth potential.
- Development Plans: An interested investor should check out for any development project in an area of interest. New shopping centers, business parks and housing projects indicates a high growth potential that can consequently increase the demand for real estate properties.
- Economic Growth: A region that has a growing economy with increased business activities can result in heightened need for real estate properties. An increasing industrial growth is also a good sign for such an investment.
- Infrastructure: Infrastructural developments in an area has the potential to boost the property’s value. Such may include public transport, roads and bridges, among others. Moreover, an enhanced infrastructure attracts new businesses and new residents leading to increased real estate demand.
- Legal Aspects: Legal aspects are very crucial considerations in a real estate investment. Failing to follow the right legal procedure can lead to legal disputes, fines or worse still, loss of a property. An investor should therefore do thorough due diligence to ensure proper documentation is followed. In Kenya, this will include:
- Title Deeds: An investor should confirm the availability of a valid title deed of the property. The identity of the real owner should also be verified. Such can be confirmed through conducting an in-depth search at the land’s ministry.
- Agreements and Contracts: The investor must confirm that all the contracts and agreements linked to the property are enforceable and binding. In this respect, seeking professional advice from a legal expert can be very helpful in reviewing the legal documents before signing.
- Zoning Laws: Confirm that the property is zoned in the right manner for the right purpose. Substantiate if its commercial, industrial or residential.
- Building Permits: An investor should ensure that the property has got all the essential permits and approvals from the relevant authority.
- Tax Requirements: Establish all the property’s tax requirements plus all tax arrears.
Invest with Mhasibu Housing
Head Office: Maendeleo House, 5th Flo or, Along Monrovia Street
Postal Address: P.O. Box 47427 – 00100, Nairobi, Kenya
Tel: +254 722 668700, +254 722 668887