Purple Dot International: The Residential Market and Real Estate Sector in Kenya

Jiten Kerai, General Manager of Purple Dot International, gives an overview of the real estate sector in Kenya and explains what makes Purple Dot different from the competition.

“One of the agendas on the Big Four Agenda is the government’s focus on affordable housing. Given the incentives, most developers in the country are now targeting low-priced, affordable housing schemes. The average, rising middle income population in the suburbs, who are trying to buy their first home, cannot afford them yet. Their monthly income is around 30,000 to 40,000 Kenya shillings but the developers are selling houses at lowest prices upwards of 4 to 5 million. Their annual earning is about 5,000 USD which is not enough for them to buy a home in that affordable housing scheme, without taking on a long term mortgage facility. So there seems to be a gap in the actual supply and what people are willing to pay. As Purple Dot, we remain focused on developing housing with the mid and upper level middle income population or LSM2 upwards in mind. At this cost, the right buyer cannot only afford, but is willing to buy a quality home. Overall, the residential market is highly competitive, saturated in some cases but looks hopeful even with the affordable housing scheme being challenging”, says Jiten Kerai.

“What we see is that a lot of developers start selling a project off plan and they look for the buyers first to kick off the project. When the project start date comes around, they do not have enough funds to start. In our case, we come up with a feasible project and we put it in the market while simultaneously looking for investors. If we are building an apartment building with 60 units, we will give 30 of those to investors that are standing by. The investor will get a different price from the market buyers. Now, when people see that the project is kicking off and the development is ongoing, then the buyer will take an strong, positive interest. They feel assured that the project will be completed at a certain time. The timeframe is also important. If you tell a buyer that the project is going to be completed in 18 months and you delay for 6 to 7 months, buyers will lose hope in the project. Not to forget the financial impact on the buyer who may have taken on a loan. This year alone, many projects have halted because the buyers are not getting assurances from the developers that the project will actually be completed”, he adds.

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