It has always been a Kenyan dream to own your own house for a long time
The reason being the value of the investment was perceived to be in the land, so the focus was on buying houses where the land value would appreciate for years to come.
However, with the rapidly increasing population, a growing trend of people preferring to live in apartments close to infrastructure and offering great facilities, plus the high cost of buying real estate, apartments are increasing in popularity and proving to be a high performing investment choice.
So let us look at the key benefits of buying an apartment and some points to consider when making your selection.
Benefits of investing in apartments
Affordability
Apartments offer an affordable entry point for first time investors. The lower outlay means fewer risks and more investment choices. It also gives investors who are cashed up the opportunity to buy multiple apartments, enabling them to create a diversified portfolio and spread their risk.
Housing Kenya’s expanding population
More Kenyans than ever are choosing to live in an apartment, whether out of preference, convenience or for other reasons. Over the past few years, the number of occupied apartments in Kenya has increased significantly.
The Zoning in many areas in Nairobi and other towns where apartments were not allowed are now being rezoned and open to apartments. This is significantly increasing the supply for the apartments for investors.
So what does this mean for investors? More people wanting to live in apartments means:
- More renter demand
- More choice over who rents your apartment,
- Potential to charge higher rent
- Higher rental yields
- Greater investment security
Mass buyer appeal
Apartments are also popular for a wide range for buyers – for first time buyers, downsizers and other investors. So when it’s time to sell your investment, your buying audience is broader, giving you more opportunity to appeal to the mass market which creates competition for your property and drives the price higher.
Building management
Another advantage of owning a unit is that everyone shares the cost of building repairs, maintenance and building insurance. Keep in mind the more facilities and amenities your building has the higher the fees. But with this also comes greater potential for higher future value and the opportunity to increase your rent.
Tips for buying an apartment as an investment
Be aware of the fees
Once a seller hands their property over, you immediately inherit all of the attached fees and service charges.
Service Charge cover the property’s grouped maintenance and building insurance fees and are collected by the building’s owners’ or manager. These fees are ongoing costs that will continue to absorb your finances, generally quarterly, even after your initial property purchase payment, so it’s important to incorporate these into your ongoing budget.
Understand the ratio of renters vs owner occupiers
The more central a building is the more popular it will be with the rental market and as an investor this can be positive. However, if the whole block is rental stock, it can affect demand. Tenants have more choice putting the power in their hands to negotiate on the price. Try and find out the ratio of renters to owner occupiers.
Orientation
Property experts agree that buyers should look for an apartment with light, views and practicality. In addition to that buyers should avoid units with no outlook or those that look on to air conditioning or a solid brick wall. If you own a property like this expect the price to allow for this negative as many buyers won’t consider this aspect no matter how cheap.
What level is best?
The current trend where apartments have lifts, the investors are always looking for higher floors. This affects the price of the higher floors as they are priced at a premium.
Some investors are looking for lower floors due to age and health issues.
Outside space
Whenever possible you should buy an apartment with a balcony or terrace and ideally ensure it is big enough to put a table and 2 chairs. It offers a huge bonus to the people who live there and makes your property more popular for renters and buyers down the track.
There is a whole generation of people leaving rural area and moving to cities, who are looking at apartment living as their preferred choice. Buying an apartment as an investment is as safe as houses – if you buy the right one.
Thinking about buying an apartment? Talk to us and we shall be able to assist you with the right apartment for your needs.
