Knight Frank has described Nairobi in Kenya as its “access city” to the African continent, as it ramps up its expansion across the globe.
The property consultant is in the midst of a five-year expansion plan covering 12 target cities and markets: San Francisco, New York, London, Berlin, Paris, Dubai, Mumbai, Nairobi, Singapore, Hong Kong, Shanghai and Sydney.
Knight Frank chairman Alistair Elliott said the African continent is likely to become more stable, more transparent and generate more business confidence over the next decade.
In an interview for Hong Kong’s The Peak magazine, Elliott said rising investments in infrastructure generally foretell an increase in property values.
China, in particular, has been ramping up its infrastructure investments in Africa.
In June 2017, Kenya opened up a new 470-kilometre rail connection between the port city of Mombasa and Nairobi, a US$3.2 billion project funded by China. In May, the Nigerian government awarded a US$6.7 billion railway project to a subsidiary of China Railway Construction Corporation to build a line connecting the capital, Lagos, to Kano, the second largest city.
Hong Kong residents have also made substantial investments into London’s property market, where they have not fared so well.
London’s prime market fell 0.7% in the year ending December 2017, according to Knight Frank data, while prime property in Amsterdam, Frankfurt, Madrid and Munich all saw double-digit growth over the same period.
In the UK, Brexit uncertainties and rising stamp duties have caused prices to drop, but Elliott said he remains optimistic about London’s longer-term prospects.
“The markets have stood up (to Brexit fear) incredibly well. If you roll back the clock two years, people were giving gloomy forecasts; it hasn’t happened. We have the details of Brexit to come [and] I do not believe it will be as aggressive an experience for London real estate markets as people originally thought,” he told the magazine.
Elliott thinks London will offer good buying opportunities over the next year or so, but for longer-term purchases.
“Buying to sell in six or 12 months’ time, I would be cautious. Buying to sell in five or 10 years, I’d say: carry on.”
Elliott said he is also excited about sectors that leverage the new economy, with the rise of e-commerce a boon for logistics and warehousing. Knight Frank is also paying more attention to the automotive sector, setting up a dedicated team devoted to it.
The investments complement the Kenyan government’s announcement to build 100,000 housing units under the Big Four Agenda proposed by President Uhuru Kenyatta.
DealMakerz thinks Knight Frank’s expansion into Nairobi is a sensible move. Kenya’s real estate sector is attracting large investments as investors seek to benefit from the country’s housing deficit, high returns and infrastructure development.
Analysts expect real estate investment in the East African nation to pick up in the coming months, with both local and foreign firms investing in the sector.
Cytonn, a Nairobi-based investment firm, recently stated: “We expect the real estate sector to maintain the expansionary trend due to the high returns from the industry averaging at over 24.3% as at December 2017, investment in infrastructure, and continued growth of the hospitality and tourism sectors.”