The real estate market of East Africa’s largest economy has scored poorly in a global property transparency index, mainly attributed to its unreliable data despite emerging fourth best in the African continent.
According to the 2012 Global Real Estate Transparency Index, which was released by London-based property consultancy firm Jones Lang LaSalle, the rapid growth in the Kenya property market over a decade notwithstanding the shortage of information, likely limits the country’s capability to lure foreign direct investment.
The index showed that Kenya has been ranked in the 65th place in terms of transparency, out of 97 countries. The country was also ranked for the first time in the ‘semi-transparent’ category. The report noted that with Nairobi as one of the most important business hub in the East African region, Kenya has historically been one of the most stable countries in sub-Saharan Africa, and is classified as semi-transparent.
The new rankings indicate that the country is showing positive signs of transparency and is positioned behind Mauritius, Botswana and South Africa.
The report said that while the country is not positioning itself well in the global arena, it fares better compared to its regional peers. This was mainly due to its solid contractual and legal framework as well as higher levels of property market maturity compared to its West African counterparts.
However, lack of data on property market, which hinders potential foreign direct investments over solid valuations, contributed to its low score in the global ranking.
The report added that potential international investors can only fly blind and guess about market risk-return profiles if a country lacks historical returns indices. Office and research space, which together account for nearly 50 per cent of all property spaces, is a major factor due to their strong yields. Other factors include the industrial, hotels, residential and retail sectors.