Why is it worth investing in real estate in Kenya?
1. Strong economic growth and urbanization.
Kenya is one of the fastest-growing economies in Sub-Saharan Africa. GDP growth in 2023 was 5.3%, and forecasts indicate further development. The increase in population, particularly in urban areas, is driving demand for housing, offices, and commercial spaces..
3. Preferential tax conditions
The Kenyan government offers investors favorable tax incentives, such as exemptions from capital gains tax on the sale of a primary residence after three years and deductions for property maintenance costs.
2. Attractive returns on investment
The average annual rental returns on real estate in Kenya range from 5% to 8%, and property values in cities like Nairobi and Mombasa are increasing by 7–12% per year.
4. Dynamic development of infrastructure
Investments in infrastructure, such as the Nairobi Expressway, Standard Gauge Railway, and the development of economic zones, improve the accessibility and attractiveness of investment locations.
Availability of various forms of investment
Investors can choose from various forms of investment, such as purchasing property outright, REIT investment funds, joint ventures, or investment groups, allowing them to tailor their investments to individual needs and financial capabilities.
Where to invest in Kenya
Here are some locations in Kenya that attract real estate investors:
- Nairobi: The capital city, a business and financial hub, with high demand for residential and commercial properties.
- Mombasa: The main port city, attractive for investments in the tourism and hospitality sectors.
- Nakuru: A rapidly growing city in the Great Rift Valley, with increasing demand for housing and commercial spaces.
- Kisumu: A city on the shores of Lake Victoria, with growing economic and investment significance.
🧭 Summary
Investing in real estate in Kenya can be a profitable strategy for investors seeking long-term capital growth and stable passive income. However, before making a decision, it is advisable to conduct thorough market analysis, consult with local experts, and consider potential risks.
Over the next 20 years, property prices in Mombasa, particularly for beachfront apartments, could increase by 15–25% annually, resulting in a total increase of 300–500%. Such forecasts are based on current market trends and planned infrastructure investments.
Factors influencing the increase in property prices in Mombasa
1. Dynamic development of the real estate market
Over the past 5 years, property prices along the Kenyan coast have increased by more than 15%, with some locations experiencing increases exceeding 400%. Mombasa, as the second-largest city in Kenya, benefits from this trend, attracting both domestic and foreign investors.
2. Infrastructure investments.
Planned projects, such as the Dongo Kundu Bypass, Mombasa Gate Bridge, and the modernization of the Kipevu port, improve the accessibility of the region and enhance its investment attractiveness.
3. Increase in tourism
In 2023, Mombasa was visited by 2.1 million tourists, representing a 45% increase compared to the previous year. The rise in the number of tourists boosts demand for short-term rentals and raises property values in coastal locations.
4. Attractiveness of locations
Locations such as Nyali, Bamburi, and Diani Beach are highly sought after due to their proximity to the beach, developed infrastructure, and investment potential. For example, in Nyali, property prices can reach up to 120 million KES for an unserviced plot of land measuring 1 acre.
📊 Estimated increase in property value.
| Investment period | Estimated annual growth | Total increase (%) |
|---|---|---|
| 5 years | 15–25% | 75–125% |
| 10 years | 10–20% | 100–200% |
| 20 years | 7–12% | 300–500% |
Note: These estimates are indicative and depend on various variables, such as the economic and political situation, as well as changes in demand and supply.
🏡 Investment recommendations
- Premium locations: Nyali, Bamburi, Diani Beach – ideal for investors seeking high returns from short-term rentals.
- Emerging locations: Tudor, Likoni, Port Reitz – offer potential for value growth as infrastructure develops.
- Investments in apartments: Short-term rentals (e.g., through Airbnb) can generate annual incomes of 3.5–5.1 million KES from investments in beachfront apartments.