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Why off-plan housing might be on its deathbed

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Off-plan property investment might become one of the biggest casualties of the coronavirus pandemic that has wreaked havoc on economies and crippled activities in the real estate sectors.

And with more people finding themselves holed up indoors, uncertain of what tomorrow will look like, the desire to ditch off-plan investments for completed units has been growing.

The closure of many businesses and the increase in layoffs and pay cuts has grown Kenyans’ desire to own their homes so that they are not at the mercy of landlords and employers to keep a roof over their heads.George King’oriah, who teaches at the University of Nairobi, projected that people will start rushing to secure houses as soon as normalcy returns.

“There will be a scramble for single houses and flats.

However, we are likely to experience a cashcrunch; there will be restricted demand owing to a lack of money in the economy,” said Prof King’oriah.

Andrew Kamau, an off-plan housing developer, said the off-plan scheme may lose favour to ready units, with smaller developers hit harder by this change.

Under off-plan housing, a developer sells an investor the design to a home before it is built, often at a discount, and in most cases uses the upfront payment to complete construction of the property.

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“With this crisis exposing many to the immediate need to own homes, there is a likelihood that investor confidence in off-plan developments will wane,” said Mr Kamau.

He added that investors will shift their focus to ready units as they seek to mitigate against any unforeseen circumstances.Off-plan developers, especially those with smaller portfolios, may not survive post-Covid-19 due to a dependence on customer deposits.

Cytonn Chief Executive Edwin Dande, however, said the off-plan scheme will only take a hit in the short-term.He is optimistic that the situation will get better, with off-plan remaining a tenable option to address the housing shortage in the country.

“There is a deficit of two million houses in the country, and it grows at the rate of 200,000 annually. The off-plan investment programme will only weaken for some time, but it will of course recover,” he said.

Mr Dande, however, said the payment plans for the acquisition of off-plan property will have to be restructured owing to people’s reduced purchasing power.

Investors, he noted, will likely have to pay smaller installments for a longer period of time.The Cytonn boss further observed that the government’s drastic reaction to Covid-19 will help the country overcome the pandemic in a short time, which offers long-term hope for the off-plan scheme surviving the impact of the coronavirus disease.

READ ALSO:   Student housing investors bear the brunt of Covid-19

“This is the greatest tragedy of our lifetime. It is greater than 9/11. But it will come to pass. It took China around three months to go back to near normalcy, and our government has arguably reacted faster,” Dande said, adding that the economy will have taken a hit forcing some readjustments.

“This is like for private schools: when the tragedy passes, parents might not manage to enrol their children in those prestigious, high-cost schools. But that does not mean that the school owners will have to close. Within due time, things will stabilise and parents will afford to pay the school fees.”

There is also the question of whether housing prices will readjust to favour potential buyers who will have been hard hit by the tough economic times.Wahoro Ndoho, the chief executive of Euclid Capital, an investment consultancy firm, said it is high time property pricing in Nairobi went through a correction.He believes property in and around the metropolis has always been overvalued.

The city’s position as the region’s business hub has led to cost of property constantly rising as more investors make their way into Kenya’s capital.

“The property market is now driven by speculation more than by fundamentals,” said Mr Ndoho.This leads to a massive price bubble created by a surge in asset prices and driven by exuberant market behaviours.King’oriah concurs, saying rogue real estate dealers have made properties in the city rise beyond reasonable levels.

READ ALSO:   Editors, KUJ to snub Kenya Pipeline journalism awards

Owners’ attitude on the property leads to a ratchet effect, where property remains at the current value despite other factors in the market that should lead to adjustments.

The price determination for the most properties is unconventional.For real property market analysis, King’oriah said most estate agents utilise crude surrogates, such as auction market results, to indicate the equilibrium price – the market price where the quantity of goods supplied is equal to the quantity of goods demanded

“The highest bid in an auction is often characterised as the equilibrium price. At times, advertised rental and capital values by estate agents are described as market values,” he said.

“When challenged in courts as to how he (a property owner) arrived at his valuation, he wins by quoting as many examples of rent and sales as possible; and convinces the court that his valuation reflects an ‘equilibrium market price’,” said King’oriah.

By Standard


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Certified Homes Ltd Free Christmas & New Year Holiday Gifts

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Your developer of choice Certified Homes Ltd in partnership with Bonfire Adventures is giving you Christmas Gift of your lifetime.
You automatically qualify for free holiday to your destination of choice once you book a unit with Certified Homes Ltd.
SUKARI HEIGHTS located in the most exclusive Kahawa Sukari neighborhood comprises of;

Spacious Studio 380ft2 kes 2.7m, projected rental income kes 20,000

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Executive 3 br master ensuite plus SQ 1346ft2 kes 5.7m, rental income kes 55,000

Flexible payment plan, deposit kes 1.5m bal in 24 months.

Call/WhatsApp 0711 128 128
www.certifiedhomes.co.ke


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Deep-Dive Analysis: Studying Master’s At Jacksonville State University

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BY BOB MWITI

Have you ever wondered what it takes to study your master’s in America?. Well, in this episode of Success With Bob Mwiti Show, I take a deep-dive analysis of taking your master’s at Jacksonville State University. If you like my work, please subscribe to my YouTube channel.

A Little Bit About Me!

I am a former international student in USA and I am a senior IT consultant in the areas of Oracle EBS Financials and Robotics Process Automation (RPA) here in USA. I am the programs director of Appstec America – A consulting company based in Tampa, Florida, USA.

I’ve been blessed to have learned a lot in my career as an IT consultant. My life has truly changed, and I’ve made it my mission to give back and serve others beyond myself. Whether that be helping you to relocate to USA as an international student, train you as an IT consultant, help you start and build your own online business, creating your financial freedom, motivating you to pursue your goals and dreams, to being more productive, to inspiring you to constantly improve yourself.

My mission is to get you to wake up to the unlimited potential within you and achieve what you’re truly capable of through my various self-development training programs.On the internet, I openly and passionately share my life experiences and all of the very best concepts, strategies, tools, and resources that I continue to discover that have made a measurable difference to my life, and will do for you as well.

READ ALSO:   Student housing investors bear the brunt of Covid-19

Keep your dream alive and never give up! To learn about my company’s amazing programs, please go to;

www.appstecamerica.com or www.successwithbobmwiti.com

Contact me at;
success@successwithbobmwiti.com
info@appstecamerica.com
+1 813-573-5619 ext 402


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KQ resumes direct flights to New York

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The national carrier Kenya Airways (KQ) resumed its direct flights between Nairobi and New York on Sunday.

In a tweet, KQ announced the move and topped it up with an offer to passengers who book their flights before December 10 that they will enjoy discounted prices.

Welcome back to the Big Apple! Today we resume our service between Nairobi and New York, and we can’t wait to welcome you on board. Book your ticket via https://t.co/hitS3Whxtp before December 10th to enjoy discounted rates ✈️🌎 *Disclaimer – video from our pre-COVID archives pic.twitter.com/1kET4h0kRK

— Kenya Airways (@KenyaAirways) November 29, 2020

“Welcome back to the Big Apple! Today we resume our service between Nairobi and New York, and we can’t wait to welcome you on board,” the airline said.

The national carrier last operated the passenger flights using the Nairobi-New York route in April after disruptions caused by the Covid-19 pandemic.

KQ resumed international flights in August after suspending all its operations in March following the government’s directives after the firsts case of Covid-19 was confirmed in Kenya.

On Saturday, October 31, KQ announced that it had postponed New York flights’ resumption.

READ ALSO:   Student housing investors bear the brunt of Covid-19

Through a notice, the airline said the decision to postpone the flights was informed by the increased cancellation of flight bookings to New York.

“We regret to announce that due to increased cancellations of flight bookings to New York City, we have pushed back the resumption of our service to this destination to November 29. We sincerely apologise for the inconvenience caused,” read the statement then.

Kenya Airways inaugurated direct flights to the US in October 2018, cutting the journey to the US by 15 hours and by October 2019 KQ had flown at least 105,084 passengers after completing 594 flights to and from New York.

by NN


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