Real estate agents expect rents to move up further in the medium term to match rising cost of borrowing and high rate of inflation. Landlords of newly built rentals are already paying higher installments for mortgage loans as lenders adjust their rates following cues from the Central Bank, and may be pushed to adjust rents to recoup their investment. The rising cost of borrowing is also expected to slow-down inflow of new build into the market, the effect of which will be felt within five years. Already, providing adequate and affordable housing in Kenya remains a major challenge.
Rising rents contributed significantly in the Consumer Price Index which showed overall inflation edge up to 19.72 per cent in November, according to latest Kenya National Bureau of Statistics (KNBS) data. “The high demand from tenants, along with a shortage of properties, means that rents will rocket over the next five years by an average of 20 per cent,” said Tumbo Mzungu, a property manager at Kisumu-based Lake Estate Agency. The World Bank estimated that the annual unmet housing need in urban Kenya is already about 80,000 units, and this is expected to rise to more than 200,000 units in the years to come as urbanisation gathers pace.