A recent report by Cytonn Real Estate dubbed a Buyer’s Market amidst A Global Crisis revealed, that due to Covid-19 pandemic there is a possibility for detached units such as bungalows in the lower mid-end areas attracting more interest from buyers.
This is because of the relatively good infrastructure and their proximity to key commercial nodes thus boosting demand for homebuyers.
According to the report areas such as Runda Mumwe, Ridgeways and Ruiru have been recording the highest price appreciation and annual returns for detached units because of the relatively low supply coupled by presence of good infrastructure, amenities as well as proximity to high-end areas.
When releasing the report, Cytonn Real Estate’s research analyst, that reviews emerging trends between July 2019 and July 2020, Wacu Mbugua, Cytonn’s Research Analyst said that though apartments continue to perform better, they expect to see detached units in the lower mid-end areas attract more interest from buyers.
Apartments registered average total returns of 5.3 per cent, compared to detached units at 4.6 per cent as well as higher uptake and occupancy, which averaged at 19.4 per cent and 86.3 per cent respectively,
“Runda Mumwe and Ruiru present the best opportunity for detached units driven by relatively high returns of 5.5 per cent and 5.8 per cent, respectively.
This is in comparison to the detached market average of 4.6 per cent, and relatively higher annual uptake of 24.1 per cent and 20.6 per cent respectively,” reads the report.
According to the report, Dagoretti and Thindigua were the best performing apartment nodes with average returns of 9.3 per cent and 7.9 per cent, respectively, driven by the continued demand from young middle and working populations due to affordability and proximity to key commercial.
Apartments recorded strong rental yields with areas like Dagoretti and South C achieving average rental yields up to 6.2 per cent.
“In terms of supply, the sector is expected to experience a slowdown in construction activities, due to the pandemic that has resulted in supply chains disruption, reduced revenues for developers coupled by high development costs and insufficient access to credit,” Wacu concluded.
Affordable housing plan
Early this year, Cytonn Investments announced plans to build 10,000 units in its Affordable Housing Investment Plan.
The plan will see subscribers deposit up to 3 million shillings to access the housing units with a targeted yield of 11 per cent.
According to the investment firm, Cytonn Affordable Housing Investment Plan will provide secure savings to potential homeowners. Under the plan Cytonn revealed, investors, benefit from reductions of their taxable income to a maximum of Sh8,000 monthly in addition to a tax exemption on interest income earned by the depositor on a HOSP deposit of up to a maximum of Sh3million.